Strategy and Case Analysis of US Airline Industry

Strategy and case analysis
4/12/2018
U.S. Airline

Case and Strategy analysis 1
Contents
Introduction......................................................................................................................................2
Overview of the US airline industry................................................................................................3
Five forces analysis of US airline industry......................................................................................3
Bargaining power of suppliers.....................................................................................................4
Bargaining power of customers...................................................................................................5
Threat of Substitutes....................................................................................................................5
The intensity of competitive rivalry............................................................................................6
The threat of new entrants...........................................................................................................6
Advantages and disadvantages of the model...............................................................................7
Economic performance....................................................................................................................9
Identifying strategies for airline profitability................................................................................10
Discussion......................................................................................................................................10
Conclusion.....................................................................................................................................12
References......................................................................................................................................13

Case and Strategy analysis 2
Introduction
Strategic positioning defined as the positioning of an organization in the future which includes
the fluctuating environment along with the organized realization of the positioning. The strategy
identifies the contents and characters of the activities of the organizations (Hollensen, 2010). The
report is based on the case study of the United States Airline Industry. It focuses on the strategic
position of the Airline Industry of US. The report includes the five forces analysis of the US
airline industry and their components from the perspective of the US Airline. Along with this, it
includes the economic performance of the company. In the end, the paper will reflect the
strategies that contribute to the improvement of profitability of the US airline.

Case and Strategy analysis 3
Overview of the US airline industry
The air transportation network of US was is very extensive. In the year 2013, there were
approximately 86 airports in the U.S who per annum handled more than 1,000,000 passengers
(CAPA, 2018). The passenger of air transportation market is a thriving industry which is taking
individuals across the world. US airports were included in the list of the world busiest airports
considering the passenger volume in the year 2014 (Belobaba, Odoni, and Barnhart, 2015).
Considering the geography of the United States which reflects that places or major cities were
available at large distance due to which most of the visitors started using air transportation for
the trips. After the Great Recession in the year 2013, the air traffic in the US was a decline as
reported by the government of US.
At the same time, the airline of US has faced the rapid association of all the nation's largest
carriers experiencing mergers (Morrison and Winston, 2010). After all this, the average fare of
domestic airline started increasing as the demand of the airline was increasing. The analysis of
the US domestic Airline industry reflect the top costs and drivers of the airline which include
Labour cost (31.3%), Fuel cost (17.3%) and the Aircraft Leasing cost (2.9%)(Lim, Sharma,
Wang and Zhang, 2018). The rise in the cost of the domestic airline was one of the reason due to
which there was a rise in the prices of the fare.
Five forces analysis of US airline industry
Porter’s five forces framework is a tool that is used by the companies for analyzing the
competitors of the business (Kotler, 2015). This tool is helpful for the company to adjust the
strategy that can suit the competitive environment and this will also contribute to improving the