Airline Industry Analysis

Fajar KGP
Putri Roudina
AndrivanNK

041411331020
041411331084
041411331172

Definition of Airline
An airline is a company that provides air transport
services for traveling passengers and freight. Airlines
utilize aircraft to supply these services and may form
partnerships or alliances with other airlines for
codeshare agreements.
Some examples are:
Emirates Airlines
Lion Air
FedEx Express (freight)

Categories of Airline Industry

The airline industry can be separated into four categories by
the U.S. Department of Transportation (DOT):
International - 130+ seat planes that have the ability to take
passengers just about anywhere in the world. Companies
in this category typically have annual revenue of $1 billion
or more.
National - Usually these airlines seat 100-150 people and
have revenues between $100 million and $1 billion.
Regional - Companies with revenues less than $100 million
that focus on short-haul flights.
Cargo - These are airlines generally transport goods.

Establishing Visions and Missions

In establishing visions and missions, the important thing to
note is how the company select the target market
Markets segmentation in passenger airline industry:
Frequent flyers
Loyal to loyalty
Urgent travelers
Business travelers
Budget conscious

Obtaining Aircrafts
In obtaining aircrafts, most commonly, companies will
choose from 3 choices:
Secured lending
Finance leasing
Operating leasing
Currently, more and more airline choose the leasing
option

General Environment

Political and legal factors that impact the airline industry

Regulations and restrictions related to international trade, tax policy,

competition.
Issues like war, terrorism, and the outbreak of diseases.
Require government intervention to protect the passengers interests and
airline operations safety measures.
Deregulation on the supply side: more competition among airlines
Regulation on the demand side: passengers and fliers are in a position
where they can press for more amenities and low prices.

Economic factors
Fluctuation in Exchange rate (Tourism demand)
Fluctuation in oil prices (according to the Air Transportation Association
(ATA), fuel is an airline's second largest expense)
Fluctuation in market demand (higher income consumers will likely spend
more on leisure travel).

 Social and
Demographic factors
The demand for air travel has
increased significantly over
the years.
Demographic factors play an
important role in forecasting
demand and future travel
preferences.
Knowledge of different groups
travel preferences can help
companies plan their target
segments.

 Technological and environmental factors

Companies must adopt the latest technology (include ticketing, distribution,
and customer service).
The use of advanced aircraft technology results in lower fuel consumption.
Technology is also one of the four pillars under the International Airline
Transport Associations (or IATA) strategy to address climate change.

 Environmental
Passengers are now more environmentally conscious.
Airlines being forced to adopt green flying and be more responsive to
the concerns of the environmentalists.
Sustainable aviation fuels are processed from a variety of feedstock
(renewable sources of energy that can be blended with fossil fuels)
Weather - Weather is variable and unpredictable. Extreme heat, cold,
fog and snow can shut down airports and cancel flights, which costs
an airline money.
Labor - According to the ATA, labor is the airline's No.1 cost; airlines
must pay pilots, flight attendants, baggage handlers, dispatchers,
customer service and others.

Airline Industry Environment

Threat of new entrant (barriers to entry and
expected retaliation): Low
Bargaining power of suppliers: High
Bargaining power of buyers: Low
Threat of substitute products: Low
Rivalry among competing firms: High

Competitive Rivalry and Competitive

Dynamics
Competitor Analysis: Market Commonality and Resource
Similarity
Drivers of Competitive Behavior: Awareness, Motivation,
Ability
Likelihood of Attack: Mover, Organizational Size, Quality
Likelihood of Response: Type of Competitive Action,
Actors Reputation, Market Dependence
Competitive Dynamics: Fast-Cycle Markets

Global Alliance Airlines: Makes Sense or Not?

Global Alliance Airlines: Makes Sense or Not?

Global Alliance Airlines: Makes Sense or Not?