Competitive Advantage and its Application within the Aviation Industry

In order to fully understand competitive advantage and its application with in the aviation industry, it is first important to consider its definition. According to Chaston (2012), a sustainable competitive advantage is long-term strategic thinking adopted by a firm through which they exceed the other firm’s performance dealing with the same customer(s) and same market area(s). An alternative definition is, the power of an organisation to do something that its competitors cannot achieve. This means the organisation should: ensure customer retention; expand its business by attracting additional customers and on a basis that is more profitable than the business’ counterparts over a long period of time (The Fallible Investor, 2010).
Porter (1998) identifies three generic strategies for a sustainable competitive advantage. These include: cost leadership, differentiation and focus.

Through the cost leadership strategy, the business aims to become the low cost provider with in that market (Porter, 1998). Cost leadership gives firms a competitive advantage as decreased costs allow for higher profitability (Sørensen, 2005). In order to implement this strategy, the firm has to devise methods to create cost-effective amenities, apply cost minimising techniques in terms of service, sales and marketing and so forth (Sørensen, 2005). However, it is important to note that this strategy works best in a market where passengers are more price sensitive, thus prefer cheaper airfares (Flouris & Oswald, 2006). In the context of the aviation industry, this strategy has had an influence on Low Cost Carrier’s business model. LCC have to reduce costs significantly in respective to their FSC counterparts in order to build a sustainable competitive advan...

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