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Analysis of the Airlines Industry

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Submitted By cp42692
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ANALYSIS OF THE AIRLINES INDUSTRY

Introduction
The airlines industry in the U.S. provides air transportation services for passengers. To determine the current state of the airlines industry, various analyses were performed. An analysis of the macro-environmental factors affecting the industry was first analyzed. Then, a Porter’s five forces analysis was used to determine the attractiveness of the industry, and current changes in the industry as a whole. Key success factors were analyzed to determine a firm’s ability to thrive within the marketplace. And lastly, a strategic group map was created to assess the companies that are best positioned and worse positioned in the industry, along with a financial analysis of major competitors in the industry.

Macro-Environmental Factors Affecting the Industry
Macro-Environmental components include, “demographics, social values and lifestyles, political and legal factors, economic conditions, environmental conditions, technological factors, and global forces” (Gamble, Thompson, & Peteraf, 2012, p. 79). The most influential factors in the airlines industry are economic conditions and environmental factors.
The economic recession in 2009 greatly affected the airlines industry. Poor economic conditions reduced the demand for consumer and business travel. According to the IBIS World database, “Rising unemployment rates and falling disposable income during the recession resulted in a stark 16.3% decrease in revenue” (Brennan, 2013). Consumers and businesses have become more cautious with spending their disposable income, however as the economy begins to recover, the demand to travel is anticipated to bounce back and increase (Brennan, 2013).
Consumer income is a key external driver that accounts for the majority of revenue earned in this industry. The ability for consumers to travel is relatively expensive and requires

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