Strategy in Travel and Tourism

This report discusses airline deregulation and its impact on the travel and tourism industry. It also assesses the market opportunities available to companies and analyzes Porter's Five Forces model to determine the significance of barriers to market entry. The report emphasizes the importance of developing effective strategies to increase efficiency and profitability in the industry.

Strategy in travel and tourism

Table of Contents
INTRODUCTION...........................................................................................................................1
Section 1...........................................................................................................................................1
SECTION 2......................................................................................................................................3
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Travel and tourism is a vast industry that involves various activities and also significantly
contributes to the overall development of a country. Some of the nations had favored total
advertising freedom, i.e., deregulation, as soon as viable. Others wanted more time to defend
their home routes(Aydın, 2020). As a result, a 4-year transitional duration turned into agreed
upon to meet both sides, which means that 1997 will mark the start of overall deregulation in EC
countries. Deregulation lifted regulations on wherein airlines should fly. To increase their
efficiency, airlines adopted the hub-and-spoke machine-using a few predominant airports as
valuable connecting points. This approach maximized aircraft use, extended passenger masses,
and saved greater plane flying. The respective report will explain the concept of airline
deregulation and how should airline deregulation provide a better deal for customers with regard
to service quality as well as air fares. Apart from this, an assessment of the variousmarket
opportunities available to the respective company is also included in the report.
Section 1
Airline deregulation can be referred to as the process wherein any government imposed
entry as well as price restrictions on airlines that can affect the carriers which are permitted to
serve specific routes are removed. This allows the private airlines that fly commercial aircrafts
domestically to operate scheduled services within the country(Baumannand and et.al., 2021). An
open skies agreement can be referred to as a type of agreement that allows the various airlines an
unlimited access to the other country’s market as well as the right to fly to all beyond as well as
immediate markets. The EU–US Open Skies Agreement is an open skies air shipping agreement
between the European Union and the United States. The settlement lets in any airline of the
European Union and any airline of the USA to fly between any point in the European Union and
any factor in the United States. The Open Skies agreements are inside the centre of the European
Union’s outside aviation policy. They form the premise of liberalisation of aviation among the
EU and the relaxation of the sector, opening up markets and selling fair competition.
Airline deregulation can be referred to as the process of removing any entry as well as
price restrictions that are imposed by the government on the airlines and affect the various
carriers that are permitted to serve the same route. There can be various causes that can lead to
deregulation of the airlines within the industry. There are many people who work in different
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airline companies and state that airline deregulation transforms the industry across the world and
that there was a reduction in the overall fares for airlines in the past. On the other hand, as far as
the open skies of EU and US is concerned, it is an open skies air transport agreement between
the United States as well as the European Union. And as per the agreement, any of the various
airlines of the European Union as well as the United States can fly between any point between
these two points. Apart from this, they are also allowed to fly to another country or destination in
another country. But it is important to ensure that the flight is an continuation to the one which is
in the United States.
It can be stated that airline deregulation can provide a better deal for the customers
because they can travel to any of the destinations between the European Union as well as the
United States. Also, they won’t be charged a lot of money as the commercial flights have the
permission to fly across the two points. Apart from this, it can also be stated that this will be
helpful for the people who have to travel for the business purpose and hence, this will ensure that
they receive effective as well as proper services (Lin and et.al., 2021). Therefore, it can be stated
that it is important for the different airline companies that operate within the aviation industry to
develop effective strategies as this will ensure that there is an increase in their efficiency as well
as profitability as well.
Deregulation lifted regulations on wherein airways ought to fly. To increase their
performance, airways adopted the hub-and-spoke system-the usage of some foremost airports as
principal connecting factors. This strategy maximized plane use, multiplied passenger masses,
and saved more plane flying. Deregulation of the airline industry, now more than two decades
antique, has been a resounding success for purchasers. It is important for the smaller airlines to
ensure that their services are better placed in order to deliver a much more customer-focussed
approach as compared to well established airlines in the market. In order to do so, they should
analyse their performance as well as the strategy of the competitors. This is important and will
provide useful insights about how can the small airlines improve their overall service offerings in
order to attract a greater number of customers. This should be done to a great extent to ensure an
increase in the overall efficiency as well as performance of the smaller airlines.
It is very important to ensure that the small airlines are well placed to deliver a more
customer-focussed approach. This is because it will allow them to deliver a better service to the
customers as well as gain their trust. Also, if the small airline businesses are well placed, they
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will be able to understand the needs as well as preferences of the customers and develop better
services. This allows them to gain a competitive advantage in the industry. Although, there are a
lot of different airline companies that are already well established in the industry and they can
offer a higher level of competition to the smaller airline organizations. By well placing
themselves in the industry or the market, the smaller airline companies will be able to offer an
effective as well as appropriate service to the customers and hence, this can lead toan increase in
the overall profitability as well.
SECTION 2
The broad market opportunities for the entrepreneur, and critically apply Porter’s ‘Five Forces’
model to assess the significance of barriers that may still inhibit market entry to that particular
route.
It is crucial for XYZ company to analyse and determine the different marketing
opportunities that will assist in enhancing its entrepreneurial practices as well as increasing
revenues of business. It has been identified that Porters five force model is one of the effective
and useful model that will help organisation to determine different aspects related to business as
well as taking right decision for business growth and development. The five forces model of
market competition gives the groundings to airline industry structure. This framework includes
five major forces of the market area that will lead to directly or indirectly influence the way of
functioning of business as well as the important decision (Lord and et.al., 2021). It is essential
for respective company that is XYZ to analyse these forces in order to take right decision for
enhancing business activities.
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Forces Impact
Threat of bargaining
power of suppliers
It has been analysed that airline company needs to correctly and
accurately analyse the bargaining power of suppliers in order to
take right decision. This force have crucial impact on respective
company as it is important that XYZ organisation have effective
supply of raw material and other resources which is needed for
functioning of the aircraft (Kun, Yuenan and Yingxue, 2021). It
has been analysed that suppliers of the airline industry play very
important role for effective and efficient functioning of the
business. The power of suppliers in the airline industry is massive
in light of the way that the three data sources that airlines have as
far as fuel, airplane, and work are totally impacted by the external
environment. For example, the cost of avionics fuel is dependent
upon the changes in the global market for oil, which can revolve
fiercely in view of international and different elements.
Additionally, work is dependent upon the power of the
associations who often deal and get absurd and costly concessions
from the airlines. Another factor is the need of aircraft which is
either on outright sale or the lease basis. The two pinnacle
suppliers currently within the world are Boeing and Airbus. The
manufacturing of the planes is pretty standardized and the only
region wherein corporations can differentiate is in phrases of
facilities(Zorpas and et.al., 2021). Airlines cannot without
difficulty switch their providers due to the fact they have got long
time contracts. Planes require large capital and most corporations
are on long time loan agreements. Based in this the chance of
bargaining energy of suppliers is extraordinarily low. However, if
the provider modifications their mortgage agreement or credit
even marginally then this may imply massive losses for airlines.
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In this situation, the hazard of the bargaining electricity of
suppliers can grow to be mild to excessive. It has been identified
that suppliers in the airline industry play significant role in
providing fuel, aircraft as well as the labour which is necessary for
successful functioning of the XYZ business. so this force of
airline industry market area will lead to have high impact on the
respective company.
Threat of bargaining
power of buyer
Customers and buyers are consider to be very important part of
the business of any industry. In the airline sector customers
capability and potential to bargain will lead to have influence over
the decision making of the business. It is essential to determine the
threat to the business for due to the power of the buyers (Jaiswal,
2021). The entry of low cost transporters and the resultant value
wars has significantly helped the fliers. Besides, the tight
guideline on the interest side of the airline industry implying that
passengers and pamphlets have been secured by the regulators
implies that the overall influence is tipped in support of
themselves. It can be stated that this is a strong force because the
demands of the customer keeps on changing because of the
different factors. The different buyers of the airline industry will
include various cultural tourists who take break as well as
business travellers. There is a high level of problem for his or her
safety and convenience (Nekmahmud, Farkas and Hassan, 2020.
Airlines move the more mile to make sure this. Also, quite a few
recognition is going on brand constructing, consumer loyalty and
taking pictures marketplace percentage. Many airways have all
end up unique functions to cap the market percentage and gain
client loyalty. The clients then again have many selections via
aggregator websites that promote several picks based totally upon
time, fee and layovers. The clients can tally fees on line and
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purchase from their desired airlines. In such instances, emblem
loyalty is low; however, brand positioning remains vital because
the customers can choose from some recognised options. The
switching price for customers is low and consequently the hazard
to the bargaining energy of clients is high. This large number of
variables cause the airline industry to surrender power to the
consumers and subsequently, the power of purchasers is moderate
to high according to Porters Five Forces. The bargaining power of
the customers will lead to directly influence the pricing decision
of the XYZ company in order to gain competitive edge over other
company. It has been determined that by setting low price of the
respective airline company it will lead to assist in attracting more
and more customers towards business as well as directly lead to
increase business performance.
Entry and Exit Barriers This force can be describe as the threat or issues that is faced by
new established company. It has been identified that airline
industry is one of the largest industry and it is providing high
quality services in order to meet with the different needs of
customers (Fiorenita and Dwianika, 2021). It is essential that XYZ
entrepreneur that is new venture in the airline sector to analyse
this force and its impact on business performance. This will help
in taking right decision for business growth. It has been identified
that functioning and conducting practices in the airline sector
requires more investment. The airline industry needs capital
investment to enter and in any event, when airlines need to leave
the sector, they need to record and assimilate numerous
misfortunes. This implies that the entry and leave obstructions are
high for the airline industry. As entry into the airline industry
needs a high mixture of capital, not every person can enter the
industry, which also, needs refined information and aptitude on
piece of the players, which is an obstruction. So through this has
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been determined that it is not easy for any company to entre in the
airline market area as well as compete with well established
company. XYZ is also newly started entrepreneur and it has
invested huge capital in establishing its business in respective
market area. So it is essential that respective company is following
all rules and regulation that is developed by the government for
conducting airline practices so that XYZ company can smoothly
perform organisational practices as well as attain desired goals.
Threat of Substitutes and
Complementarities
This force of the porters five force model is effective in order to
determine the issues and threat of the substituted products on
respective firm. It has been identified that there are different
products which could be consider as the substituted products for
the airline products and services. It has been identified that the
airline industry is not at danger from substitutes and
complementarities as dissimilar to in the creating scene,
consumers do not really take the train or the bus for ventures
(Raimundo and Domingues, 2021). It has been analysed that XYZ
company is considering route that will crosses national borders of
the London and Copenhagen. So for customer airline services or
the flight services are the most convient as well as effective source
to cover this route. This will be more cost effective for potential
customers as well as help in saving time as compare to other
substituted products and services in the market area. so this force
will lead to have moderate impact on performance and functioning
of the respective company.
Intensity of Competitive
Rivalry
It has been analysed that there are different strong and well
established company that is performing its business practices in
airline sector. It is essential to respective company that is XYZ
organisation to analyse and evaluate the threat of competitive
rivalry in the existing market area for taking right decision
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(Tanrıverdi and Lezki, 2021). The airline industry is incredibly
competitive as a result of various reasons which incorporate entry
of low cost transporters, the tight guideline of the industry
wherein wellbeing become principal prompting high working
costs, and the way that the airlines work as per a business model
that is somewhat obsolete particularly in the midst of quick
turnover and agitate in the industry. This can said to be a strong
force because if the rivalry among the competitors continues, it
will have a significant impact on the overall performance as well
as effectiveness of both the airlines. Therefore, it can be stated that
it is important to make sure that the same is taken into account(Lv
and et.al., 2020). As a result, it can be stated that this is a strong
force. The contention amongst existing gamers is very high due to
several motives. The aviation enterprise is saturated with simplest
key players who experience an similarly dispensed marketplace
proportion. Any new entrant will face intense opposition, and
existing gamers might also get pushed out of enterprise due to a
lack of capital. Each existing player is in the game for the long
term due to loan agreements with providers or excessive exit
costs. The centers in the aviation industry are pretty standardized
which includes the process of buying tickets, flying and luggage
take a look at in take a look at out. The airlines differentiate
themselves primarily based on their brand positioning and brand
values. One other distinguishing issue could also be facilities
consisting of food, beverage and wi-fi facilities. it has been
identified that it is difficult for XYZ organisation to deal with the
strong rival companies as well as gaining edge over these market
area (Pertiwi, 2021). The airline industry is managed on the
stockpile side more than the interest side, which implies that
rather than the airlines being allowed to pick which markets to
work and which fragments to target, it is the fliers who become
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spoiled by the regulators. So through this it has been identified
that threat from rival companies will have high impact on XYZ
airline company.
The vital perspective with regards to utilizing Porters Five Forces for the airline industry is
that the airline industry has been rocked by solid headwinds from a large group of external
factors that incorporate declining passenger traffic, expanding working costs, high fuel prices,
and more noteworthy landing and upkeep costs, aside from exceptional competition from low
cost transporters that has prompted a relentless value war which has stood out seriously
impacted. The five forces of this model is threat of new entrant, threat of bargaining power of
customers, threat of bargaining power of suppliers, Threat of substitute products and services as
well as threat from rival companies (Gray, 2021).
CONCLUSION
From the above report, it can be concluded that airline deregulation may be called the procedure
wherein any government-imposed entry in addition to fee regulations on airlines which could
affect the companies which are permitted to serve specific routes are removed. This permits the
personal airlines that fly industrial aircrafts domestically to perform scheduled offerings in the
country.Open Sky Agreements are bilateral agreements that the 2 nations negotiate to provide
rights for airlines to provide global passenger and cargo services. It expands international
passenger and load flights.
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REFERENCES
Books and Journals
Aydın, A., 2020. The strategic process of integrating gastronomy and tourism: The case of
Cappodocia. Journal of Culinary Science & Technology, 18(5), pp.347-370.
Baumann, C. and et.al., 2021. Guest editorial: Competitive productivity (CP) as competitive
strategy for hospitality, tourism and airline businesses. International Journal of
Contemporary Hospitality Management, 33(9), pp.2881-2885.
Bawono, S., 2020. Marketing Strategy For Hotel Business: The Secret Of Improving Hotel
Marketing Performance in the Tourism Industry. BookRix.
Lin, V.S. and et.al., 2021. Determinants of Chinese households' tourism consumption: Evidence
from China Family Panel Studies. International Journal of Tourism Research, 23(4),
pp.542-554.
Lv, X. and et.al., 2020. Understanding the emergence and development of online travel agencies:
a dynamic evaluation and simulation approach. Internet Research.
Nekmahmud, M., Farkas, M.F. and Hassan, A., 2020. Tourism marketing in Bangladesh.
In Tourism Marketing in Bangladesh (pp. 11-27). Routledge.
Sharma, A., Sharma, S. and Chaudhary, M., 2020. Are small travel agencies ready for digital
marketing? Views of travel agency managers. Tourism Management, 79, p.104078.
Zorpas, A.A. and et.al., 2021. Steps forward to adopt a circular economy strategy by the tourism
industry.
Lord, J. and et.al., 2021. Examination of nursing home financial distress via Porter’s five
competitive forces framework. Health Care Management Review, 46(3), pp.E50-E60.
Kun, Q., Yuenan, L. and Yingxue, L., 2021. Analysis of Dandong 99 strawberry market
competitiveness Based on Porter's five forces model. In E3S Web of Conferences (Vol.
253, p. 03058). EDP Sciences.
Jaiswal, L., 2021. Choice of Response Strategy Adopted by Indian Private Higher Education
Institutions Collaborated with Foreign Education Institutions: Applying Porter’s Five
Force Model. Education Quarterly Reviews, 4(2).
Fiorenita, F. and Dwianika, A., 2021. Penerapan Five Porter Analysis pada Efektifitas
Kelangsungan Usaha Pelaku UKM (Studi Kasus UD Rey Collection). JSMA (Jurnal
Sains Manajemen dan Akuntansi), 13(1), pp.37-47.
Raimundo, R. and Domingues, N., 2021. The Model of the Five Competitive Forces on
Portuguese Electricity Market. Modern Economy, 12(1), pp.140-153.
Tanrıverdi, G. and Lezki, Ş., 2021. Istanbul Airport (IGA) and quest of best competitive strategy
for air cargo carriers in new competition environment: A fuzzy multi-criteria
approach. Journal of Air Transport Management, 95, p.102088.
Pertiwi, Y.Z., 2021. Analysis Of Marketing Strategies Based On Porter Model In Freight
Forwarding Companies For Supporting Export And Import Activities (Case Study At
Pt. Global Trans Nusa Pekanbaru) (Doctoral dissertation, Politeknik Negeri Bengkalis).
Gray, D., 2021. What makes successful frameworks rise above the rest. MIT Sloan Management
Review, 62(4), pp.1-6.
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