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Porter’s Five Forces Analysis for Airline Industry

In: Business and Management

Submitted By graccey
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Porter’s Five Forces Analysis for Airline Industry
Threat of entry
The government imposes quite lot restrictions on the entrance of the airline industry. What’s more, the high cost and high early stages investment capital for purchasing airplanes are barriers of entry.
Threat of substitutes
The most threatening substitutes are traveling by trains and cars. Because of the high price of taking planes, many people choose to travel by trains or cars, especially short-distance trip. But it takes a long time for people to take trains or cars, so people tend to choose air when they will experience long-distance trip or when they want to save time. Therefore, the substitutes influence the industry a lot.
Threat of powerful suppliers
The government also imposes quite lot restrictions on suppliers. Therefore, there are not many companies have the rights to provide products for airline industry. Airline companies have few choices about suppliers, so the suppliers’ bargaining power is very strong.
Threat of powerful buyers
At most time, when people decided to travel by air, they do not have many choices, and it is very difficult for the buyers to unite to buy services. When sellers gives out the service standards and price, buyers have nothing to do but accept it. So the buyers’ bargaining power is quite weak.
Threat of rivalry
There are only several airlines in the market. In spite of most of them provide similar services, they share some differences in air routes. So, the threat of rivalry in air industry is not that...

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