International Management

2. Airline Industry Analysis of your country (not the same as the US airline industry): You must complete an analysis of Porter’s five forces: Buyers, Suppliers, New Entrants, Substitutes, and Competitors of the airline industry in your chosen country.) This section of the paper should be around 4-5 pages with information about at least 3 competitors, suppliers, buyer groups (what age groups fly most and provide the most income to the airline industry in the country), substitute travel offerings (i.e.: train system in Germany and UK), and any new entrants in the last 5 years. You must use each of the 5 forces as a heading ad cite your references within each heading information.

This is NOT supposed to be a focus on one company. The directions clearly state that it should be an INDUSTRY analysis. 58/100 for the industry analysis.

Porters

            The paper focuses on Porter's five forces of British Airways, airline industry one of the many airlines operating in the United Kingdom. According to Porters' five forces, every industry is facing obstacles or threats in their business. Porter's five forces consider different objectives that a company faces. British Airways (BA) is facing competition from other airlines. The airline industry faces uncertainties due to human resource supply and fluctuating cost of fuel and the pandemic. These problems and many more are inevitable, but the company industry can maintain the business afloat with proper management. The analysis of the operating situation of BA will help in the formulation of strategic decisions.

 The threat of new entrants -12

           A simple google search shows the threats now are near zero due to the pandemic. Blybe was struggling prior to the pandemic but it filed for bankruptcy reorganization in March of 2020. CityJet filed for bankruptcy. Level Europe filed for bankruptcy and insolvency in June of 2020. Much more information out there.. check businessinsider.com There are many barriers and challenges to enter the airline industry. Some of these challenges include colossal investment, which is required to join the industry, and the effort needed to gain market share due to the competition by established airlines. Moreover, the airline business has high maintenance costs and little product differentiation, making a firm struggle to develop a competitive edge. New entrants need to get permits from different authorities, and this is time-consuming. The quickest way to enter the airline industry is to form a merger with an established company. These operations and start-up barriers reduce the chances of new entrants to the business—companies that manage to penetrate experience a weak customer base. (References) Therefore, British Airways have a low threat of recent entrants.

Threat of substitutes

            Many substitutes are readily available to customers both in the UK and outside. The United Kingdom is an island, and its principal mode of transport is through air or ocean. Recently, a channel tunnel from France to the UK gave an alternative route for travelers to Europe. The new path increases the speed of travel to Europe compared to the use of the airline, which is characterized by a long waiting time after arrival and before boarding. The new development presents a threat to British Airways and other the airline industries in the United Kingdom. Also, passengers can opt to use train, bus, ship, and car as alternative modes of transport. The available substitutes pose a threat to the British Airways airlines’ customer base. The danger, however, depends upon how these travelers’ value? and how fast they want to get to their destination. For example, a client who wants cheap service will opt for other means of traveling further than the airline. But the airline operates in many countries around the world, and this means it has a wide customer base or target (Robinson & Stanger, 2016). Moreover, if customers are looking for fast and convenient means of transport, they will probably choose British Airlines, this is the target market for the airways. Therefore, the level of threat of substitutes is moderate for British Airways the airline industry.

Bargaining power for travelers

            Most of the consumers of services and products are sensitive to price. Also, the expansion of the Internet and social media has resulted in high connections with other travelers who can share reviews about the travel experience. The Internet has helped happened people compare prices of different service providers and this further increase chances of customers switching choice of airline. The simplified and quick communication has made consumers more aware of their rights and options when deciding to use airlines. A customer will only use the airways despite the price if only he or she is loyal to the airways or he or she is much satisfied with the services offered (Doganis, 2013).

In many cases, when a group of people is traveling, they use travel agents. The travel agents look for a different airline, which serves the purpose of travel, and this further gives power to the consumers. As there are many available options, the customer has more power. British Airways needs to provide extra service which will attract clients. In this light, customers have high bargaining power for British Airways.(reference)

Didn’t discuss other airlines.. .only BA. -10

Bargaining power of suppliers

            Many suppliers are working with British Airways the airline industry. These suppliers supply fuels, laborers, and other consumables. However, there are few suppliers of British Airways, and it is costly to be a supplier because of the cost implication in the investment. There are few suppliers in the market, and this includes Boeing and Airbus and Embraer (Brazillian). These are the primary suppliers of airplanes. Other British Airways (BA) m suppliers are oil companies, and the airline industry is not the leading consumer of their products. What companies provide the airline industry with jet fuel and other oil-related products? The crew working with most of the airlines BA are members of labor unions, and this means they have the power to engage in collective bargaining and strikes. That doesn’t tell us who provides these employees. Do UK airlines recruit their own people or use outside recruiters? When the number of suppliers is less, the emphasis is lost from the buyers, concentrating on the suppliers, which is the case with British Airways. The company cannot operate effectively without the supply of airplanes. British AirwaysAirlines need to develop solid relationships with all theirits suppliers. The same applies to other suppliers, for example, those delivering fuel or crew. There is a high bargaining power of suppliers in this firm. What food companies provide food for inflight passengers? -5

Industrial rivalry who are the other rivals? No mention of their names and what kinds of businesses they operate, long haul or regional?? -15

            British AirwaysThe airline industry faces serious competition on various operating levels. The United Kingdom airline industry can be divided into schedule airlines and budget airlines. The schedule airlines operate worldwide while budget airlines are for local travel. British Airways has to compete in both schedule and budget airlines. The company faces local competition, and on a global scale, there are other established airlines who are the rivals in the industry? (Light, 2020). The rivalry is intense at the worldwide level. The market share of the company is not significant. Different airlines which ones?? offer quality services at affordable prices. Some airlines provide better services which are essential to maintain order and remain in the industry which ones??. Similarly, all airlines the company needs to maintain high standards to stay competitive in the local competition market. Therefore, the company industry rivals faces a high level of industry rivalry. 

References

Doganis, R. (2013). The Airline Business in the 21st Century. London: Routledge.

Light, L. (2020, April 14). British Airways Needs To Revitalize Its Brand. Retrieved May 26, 2021, from Forbes: https://www.forbes.com/sites/larrylight/2020/08/14/british-airways-needs-to-revitalize-its-brand/?sh=5fa20225747e

Robinson, S., & Stanger, M. (2016). Developing a simulation strategy for British Airways OR. Simulation Conference Proceedings, 2. doi:10.1109/WSC.1998.747236