Airline Industry Ray KhorasaniGustavo GarciaErnest CasianoJenna vrzal

Introduction09/11/01$8.3 Billion lossGovernment interventionBankruptciesUnited, Delta, Northwest 2 types Airline carriersMajor (A.A , Delta ,United, U.S airway, continental)Region ( Southwest, Jetblue, Alaska Air, AirTrans)

09/11/01

$8.3 Billion loss

Government intervention

Bankruptcies

United, Delta, Northwest

2 types Airline carriers

Major (A.A , Delta ,United, U.S airway, continental)

Region ( Southwest, Jetblue, Alaska Air, AirTrans)

Metric measurementAircraft UtilizationLoad factorAvailable Seat-Miles (ASM)Revenue Passenger-Miles (RPM)Fuel Costs

Aircraft Utilization

Load factor

Available Seat-Miles (ASM)

Revenue Passenger-Miles (RPM)

Fuel Costs

44443Porter’s Five Forces industry analysis5 (strongest)1 (weakest)

BARRIERS TO ENTRYLARGE CAPITALHIGH CONGESTION OF MAJOR AIRPORTSTIGHTLY REGULATED INDUSTRYBRAND LOYALTY

LARGE CAPITAL

HIGH CONGESTION OF MAJOR AIRPORTS

TIGHTLY REGULATED INDUSTRY

BRAND LOYALTY

Barrier to entry –HIGHPorter’s Five Forces industry analysis45 (strongest)1 (weakest)

Substitutes ROADRAILMARINE

ROAD

RAIL

MARINE

Threat of Substitutes–ModeratePorter’s Five Forces industry analysis35 (strongest)1 (weakest)

BuyersDeregulationTechnologyCustomer loyalty

Deregulation

Technology

Customer loyalty

Bargaining power of buyer–HIGHPorter’s Five Forces industry analysis45 (strongest)1 (weakest)

SuppliersDegree DifferentiationAirline ManufacturerJet fuelLaborSubstituteSwitching cost

Degree Differentiation

Airline Manufacturer

Jet fuel

Labor

Substitute

Switching cost

Bargaining power of Suppliers–HIGHPorter’s Five Forces industry analysis45 (strongest)1 (weakest)

Competitive RivalryCrowded, 34 U.S based companiesIntense price competitionSlow Growth rateHigh fixed costlow marginal cost

Crowded, 34 U.S based companies

Intense price competition

Slow Growth rate

High fixed cost

low marginal cost

Competitive RivalryHigh exit barrierLow product (in this case service) differentiationfrequent flyer programs

High exit barrier

Low product (in this

frequent flyer programs

Degree of competitive rivalry –HIGHPorter’s Five Forces industry analysis45 (strongest)1 (weakest)

AccountingAircraft UtilizationLoad Factor Available Seat-Miles (ASM)Revenue Passenger-Miles (RPM) Fuel Costs

Aircraft Utilization

Load Factor

Available Seat-Miles (ASM)

Revenue Passenger-Miles (RPM)

Fuel Costs

SummaryBarrier to entry –HIGHThreat of Substitutes–ModerateBargaining power of buyer–HIGHBargaining power of Suppliers–HIGHDegree of competitive rivalry –HIGHOverall NOT attractive Industry

Barrier to entry –HIGH

Threat of Substitutes–Moderate

Bargaining power of buyer–HIGH

Bargaining power of Suppliers–HIGH

Degree of competitive rivalry –HIGH