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Porters Five Forces Model Analysis Essay

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Added on  2020-07-23

Porters Five Forces Model Analysis Essay

   Added on 2020-07-23

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1PORTER’S FIVE FORCESMODEL ANALYSISBargaining power of buyers: HighBargaining power of suppliers: LowThreat of new entrants: HighThreat of substitute: HighIndustry Rivalry: HighMARKET STRUCTUREOffering low prices to the customersHigh competitive marketPossess secondary airports and shorter dispatch timeShorter routesProduct differentiation for competitive advantageAirlines tend to loose their market share due to new entrants easily. The major concern of this industry is that whether the businessmodel of these airlines is profitable enough? However, thesecompanies are able to generate profits and thereby leading topositive growth through cost advantage, point to point businessmodel and no frills being offered to the customers. It results inattracting large number of customers than usual.MAJOR COMPETITORS AND THEIR FEATURESThe major competitors of Low Cost Airline industry are:Rynair Airline: €6.648 billion (2017)WizzAir Airline: €1,571.2 million (2017)Easy Jet Airline: £5.047 billion (2017)Thomas Cook Airline: £7,812 million (2016)They all share certain common features. One of them is pricing policieswhere the cost of fare is quite dynamic with the help of discounts andpromotion of tickets. Some airlines tend to charge additionally for taxes andbaggage. Others gives a leverage to carry baggage up to a certain weight.Differentiation policies are also applied by some airline companies wherethey offer food and beverages to their customers as well. Other differentiatethemselves in terms of offering reclining seats, comfortable seat covers etc. PRIME FOCUS OF LOW COST AIRLINES INDUSTRYThese types of companies tend to focus on the following aspects:Point to point operationsShort haul routesAdequate amount of focus on price sensitive traffic Comparatively low fareFocus of leisure passengersOffer single class service with no or limited customer loyaltyprogrammes.Absence of non-essential feature such as, schemes for frequentflyers, reclining or comfortable seats.Online sale of tickets and check in Passengers are loaded via stairs and not through jet waysMEANING OF LOW COST AIRLINES INDUSTRYA low-cost airline is a type of airline which do not provide traditionalservices in the offered fare which results in comparatively low fare andfewer comfort to the travellers. To cope up with the lost revenue, airlinescan charge for food, baggage, priority boarding, seat allocation etc. LOW COST AIRLINES INDUSTRYREFERENCESAkamavi, R.K., Mohamed, E., Pellmann, K. and Xu, Y., 2015. Key determinants of passenger loyalty in the low-cost airline business.Tourismmanagement,46, pp.528-545.Bilotkach, V., Gaggero, A.A. and Piga, C.A., 2015. Airline pricing under different market conditions: Evidence from European Low-CostCarriers.Tourism Management,47, pp.152-163.
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