University Report: Analysis of the Airline Industry Growth

This report provides a comprehensive analysis of the airline industry, examining its growth trajectory and the various factors influencing its performance. The analysis delves into both micro and macro environmental factors, including customers, competitors, suppliers, and the competitive landscape. It employs Porter's Five Forces to assess the macro environment and presents a SWOT analysis to identify the industry's strengths, weaknesses, opportunities, and threats. The report highlights the increasing competition, the formation of alliances among airlines, and the impact of technological advancements. It concludes that the airline industry faces significant challenges and opportunities, emphasizing the importance of customer-centric strategies and continuous innovation to sustain growth. The study also references key industry reports and academic sources.

Running head: HOSPITALITY AND TOURISM INDUSTRY
Hospitality and Tourism Industry
Name of the Student
Name of the University
Author note

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Executive summary
The aim of the paper is to analyze the growth and opportunity of the airline industry and the
macro and micro factors affecting the industry. The industry is one of the fastest growing sectors
globally. The strength of the industry is its growing power, technological advancementand
alliances with other established companies. However, the growing competition is posing huge
threat on the companies operating in this industry.

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Table of Contents
Introduction......................................................................................................................................3
Micro Industry Analysis..................................................................................................................3
Macro Industry Analysis..................................................................................................................4
SWOT analysis................................................................................................................................6
Conclusion.......................................................................................................................................7
References........................................................................................................................................8

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Introduction
Airlines industry is one of the growing sectors of today’s world due to increasing demand
of flight service. The industry has always worked in alliance with the International Air Transport
Association. The industry has always formed an alliance because of the fear of staying behind of
others. The International Air Transport Association has recently formed association with three
big airlines company such as Star Alliance, Oneworld Alliance and the Sky Team Alliance.
Sincethe alliance the relation between the partner companies have grown deeper, benefitting the
industry (Belobaba, Odoni and Barnhart 2015). The paper analyses the micro and macro factors
that affects the industry directly or indirectly. Further, it presents a SWOT analysis to be
informed about the strength and weaknesses about the industry.
Micro Industry Analysis
Micro environmental analysis analyses the factors that affects the industry directly. The
factor also affects the internal process of the business (Indiatsy et al. 2014). Some of the factors
that are considered in the micro industry analysis are customers, competitors and suppliers.
Customers
Customers play a vital role in the growth and existence of the industry. The position of
the industry in the market largely depends on the competitors in a large way. With the rising
dead from the customers, many companies in the industry are forming alliance with each other.
This shows the importance customers play in this sector (Grant 2016). The customers of airlines
industry are the passengers that fly from one place to others with both commercial and personal

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purpose. Moreover, the customers have the powers on the industry as they have huge options to
choose from.
Competitors
Competitive nature of the industry is visible in the case study, which shows that with the
growing competitive nature, companies in this industry are finally forming alliance with each
other with the fear of being left behind others. As the number of airline companies is increasing,
the competitive level of the industry is increasing to a large extent (Fleisher and Bensoussan
2015). This is the reason the companies are being encouraged to form alliance and survive in the
industry for longer time.
Topic- Air Travel and cargo volumes
Source: Iata.org 2018

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Macro Industry Analysis
To analyze the macro environment of the industry a Porter’s Five Forces Analysis is the
ideal concept.
Threat of substitute
The industry faces moderate treat from substitute. The major substitute that poses a
threat on the industry is other mode of transports such as land transport and water transport.
However, the threat is limited because customers will have options to choose these substitutes
within the domestic zone (Iata 2018). While travelling internationally most of them only have the
option of choosing air transport.
Threat from competitors
The industry faces a huge threat from competitors because with the growing demand
large number of companies is adding in the industry. This makes the competitive environment
much severe. Due to huge competition and threat of being left behind has caused many airlines
companies to form an alliance with each other (Aapairlines 2018). This shows the level of
competition the industry is facing with growing time.
Threat from new entrant
The industry faces huge threat from new entrants because huge number of small and
medium size airline companies is continuously increasing in the industry. This is because with
the improvement in technology new companies are finding easy to enter the industry (Shaw
2016). Moreover, the industry needs one time huge investment, which a new entrant can plan and
successfully enter the industry.

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Bargaining power of suppliers
Suppliers of this industry face low bargaining power because the suppliers of this
industry do not want to lose business from such big airline companies. Due to no switching
cost,the companies can switch from one supplier to the other (Eaton 2017). Thus, this makes the
bargaining power of the supplier week in this industry.
Bargaining power of buyers
In case of bargaining power, the buyers’ faces high bargaining power in the industry.
This is because of availability of large number of competitors in the industry, which makes the
buyers choose from one company to the other. Moreover, due to no switching cost in case of the
buyers, the buyers can easily switch from one company to the other according to their preference
(Eaton 2017). Thus, the airline companies need to maintain their prices and facilities that would
be preferential for the customers to hold back the demand.
SWOT analysis
Thus, the resultof both micro and macro will help to recognize the strength, weakness,
opportunities and threat of the industry (Fleisher and Bensoussan 2015).
Strength
 Strength of forming alliance and
partnership within companies
 Partnership help to gain better customer
segments
 Huge control over the suppliers with
Weakness
 Huge competition from small and
medium size airline companies
 Huge control from buyers which forces
the airline to reduce flight fares

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their competitive position
 Fast growing industry on a global range
 Offering huge and advanced facilities
to the customers with the flight
 Strong management power with
improving technologies
Opportunities
 Huge growth potential in the coming
years
 Increasing chance of alliances with
great market leaders of airline industry
 Improving the position of the company
by offering extraordinary facilities to
the customers
 Develop future opportunities due to
uncertainties in the external
environment
 Better management with rising
computer reservation system that will
improve monitoring and controlling
power
Threat
 Huge threat from rising competitors
with much advanced technologies
 Elimination of price regulating powers
from the hand of the companies
Table: SWOT Analysis
Source: Author’s creation

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Conclusion
From the above analysis,it can be concluded that the airline industry faces huge threats
and opportunities both from the customers and from the competitors. The industry has
established its position by being one of the fastest growing sectors. The industry is experiencing
huge threat from competitors. This has led to the formation of alliance between many airline
companies in order to stay ahead of competitors. The growing technological advancement has
helped the industry to manage and control their processes such as booking, facility offered and
demand in a better way compared to before. Thus, businesses in this industry has to focus on
offering extraordinary facility to customers.