Download - Airline Industry
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Airline Industry
Ray KhorasaniGustavo GarciaErnest Casiano
Jenna vrzal
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Introduction
•09/11/01• $8.3 Billion loss
•Government intervention•Bankruptcies• United, Delta, Northwest
• 2 types Airline carriers• Major (A.A , Delta ,United, U.S airway,
continental)
• Region ( Southwest, Jetblue, Alaska Air, AirTrans)
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Metric measurement
•Aircraft Utilization•Load factor•Available Seat-Miles (ASM)•Revenue Passenger-Miles (RPM)•Fuel Costs
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Porter’s Five Forces industry analysis
5 (strongest)
1 (weakest)
4
3
4
4 4
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BARRIERS TO ENTRY
•LARGE CAPITAL•HIGH CONGESTION OF MAJOR AIRPORTS•TIGHTLY REGULATED INDUSTRY•BRAND LOYALTY
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Barrier to entry –HIGH
4Porter’s Five Forces industry
analysis
5 (strongest)
1 (weakest)
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Substitutes
•ROAD•RAIL•MARINE
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Threat of Substitutes–Moderate
3Porter’s Five Forces industry
analysis
5 (strongest)
1 (weakest)
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•Deregulation•Technology•Customer loyalty
Buyers
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Bargaining power of buyer–HIGH
4Porter’s Five Forces industry
analysis
5 (strongest)
1 (weakest)
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Suppliers
•Degree Differentiation• Airline Manufacturer• Jet fuel•Labor•Substitute•Switching cost
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Bargaining power of Suppliers–HIGH
4Porter’s Five Forces industry
analysis
5 (strongest)
1 (weakest)
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Competitive Rivalry
•Crowded, 34 U.S based companies•Intense price competition•Slow Growth rate•High fixed cost•low marginal cost
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Competitive Rivalry
•High exit barrier•Low product (in this
case service) differentiation•frequent flyer programs
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Degree of competitive rivalry –HIGH
4Porter’s Five Forces industry
analysis
5 (strongest)
1 (weakest)
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Accounting
•Aircraft Utilization•Load Factor •Available Seat-Miles (ASM)•Revenue Passenger-Miles (RPM) •Fuel Costs
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•Barrier to entry –HIGH•Threat of Substitutes–Moderate•Bargaining power of buyer–HIGH•Bargaining power of Suppliers–HIGH•Degree of competitive rivalry –HIGH
Summary
Overall NOT attractive Industry
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