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China Airlines

In: Business and Management

Submitted By EilishO35
Words 1485
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China Airlines

1.) The airline industry allowed for both good and bad macro enviroment because of the financial issues of the airlines in the 2000’s. Due to major airlines being in debt, they had to rollback their operations and outsource more of their routes to the regional airlines (Lohman, pg. 201). This then created opportunities for regional airlines to expand their service areas. By being able to expand their service, this enabled them to compete with low-cost carriers. Overall, the airline industry correlates with the economy. The recent recession and the post 9/11 fear-of-flying effect hurt the airline industry. The regional airline industry had the same problems as the major airline industry when it comes to increasing fuel costs and competitive pressures for low-cost carriers, like Southwest Airlines. This shows the relationship between the regional and national airline industry. Although the regional airline industry was able to gain some opportunities from the recession, they still had to deal with a lot of the same problems as the national industry. 2.) Which Rivalry among competitors- Within the regional airline industry, there exist fierce competition. Factors like major and low-cost carrier competitors and low-buyer demand have contributed to this competition.
Threat of new entrants- The regional airline industry has a low threat of entry. It takes large capital investments to purchase planes and hangars. Also, with new regulations after the 9/11 attack, it posed additional costs which makes entry much harder. Bargaining Power of Suppliers-The major suppliers of the airline industry are the airplane manufacturers. There are few suppliers like Brazil’s Empresa Brasileria de Aeronautica SA, Bombardier, and Jetstream. With having fewer suppliers, it gives them leverage

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