Threats from Suppliers – High The few number of aircraft manfactueres in the airline industry create low buying power for the all airlines including JetBlue. Neotioation power is limited for Jetblue since most key factors of production including fuel and aircraft are sold by suppliers with little competition. JetBlue has developed working relationships with manufactures Airbus and Embraer to maintain the cost-saving efficiencies that the airline requires. Threats from Substitues – Moderate (Inceasing) Even in today’s dynamic business environment there exists few substitutes for air travel, particularly in the United States. If traveling shorter distances consumers may decide to drive instead of flying.
High cost of entry into industry Bargaining Power of Buyers – High – No or very low cost in switching airlines Bargaining Power of Suppliers – High – two key supplies needed are planes and fuel. Fuel prices are negotiable on quantity. There are only two airplane suppliers, Airbus and Boeing. Threat of Substitutes - Low – Buses, boats, trains and cars are substitutes but usually not cost or time effective substitutes for most consumers Degree of Rivalry - Very High to Intense – Multiple competitors, high strategic stakes, innovation often easily imitated, and low switching costs for consumers Value Chain Support Activities Infrastructure – Flat organisational hierarchy – Terminal at JFK airport HRM – Staff have access to executives and CEO – a culture/ philosophy of treating employees well and a reputation as a great place to work. Company profit sharing, high productivity of people and rapid advancements Technology – Paperless cockpits, VoIP customer service, innovative culture Procurement – 9 new Embraer E190 planes.
Also, since barriers to entry are high, firm can earn super normal profit in the long run. Also the firms in oligopoly are Price setter, and not Price takers. Since there are very few firms, or few firms with large share, the action of one firm can have an impact on other. These types of firm often compete on other things like advertising, schemes, discount, service rather than price. The Indian Airline Industry is an Oligopoly because of having the above mentioned features in it, which we will be explaining in detail.
We’re competing with ground transportation.” This philosophy has led them to be very successful because they are priced below the competition, but don’t raise their prices when the competition does. Cost controlling is very important in the airline industry. Southwest is very good at controlling their costs. They offer a no frills service for people who want to get to their destination for as little as possible, and are not concerned about the bells and whistles like in-flight movies. Southwest also realized that when their planes are on the ground, they aren’t making money.
Ryanair’s 8.8. Furthermore, the load factor of EasyJet’s planes is 91.7% vs Ryanair’s 82.7%. Although Ryanair’s strategy is heavily dependent on economies of scale, it fails to outperform its main competitor in this area – EasyJet’s learning curve has steeper slope compared to that of Ryanair. In conclusion, there are some similarities between Ryanair’s and EasyJet’s strategy, but there are also significant differences. As Chris Zook suggests in his book ‘Profit from the Core’, a “sustained and profitable growth requires a strong, well-defined core”2.
SkyScanner doesn’t offer prices from all the airline companies, so you shouldn’t use it exclusively. It is good, but not perfect, so here are a few pros and cons. Pro - It Is Ideal If You Are Not Bound By Dates There are plenty of cheap flights for the taking, and the people that really benefit are the ones that are not bound by a date. For example, if you are planning to go somewhere and you can pick your day in the week or month, then you are going to find some great prices. If you have to fly on a certain day, then it is really up to the luck of the draw if you get a good price or not.
As of currently there is a low threat of substitutes, as the only currently available substitutes (cars, boats, and trains) in America today take exponentially longer to reach their destination than do planes. Lastly, there is a high level of rivalry among firms (or the alliances they are part of) because every airline is fighting to provide the most valuable product to the consumer at the cheapest price. Since most tickets are purchased on a criteria of minimizing cost there is very little product differentiation or extreme market specialization in the
Another pilot named Lee Jung Min was Lee Kang-Kook’s Boeing777 training instructor. According to (Irving, 2013), Lee Jung Min had 3,220 of experience on Boeing777. Both of them failed to work together as a team to spot issues such as the aircraft approaching angle, altitude and speed which eventually led to the crash. If they had communicated with each other, the c... ... middle of paper ... ... be sold for a very low price for a limited time period. If one is lucky, he/she could make further savings for air tickets.
The board of directors also expected development cost estimates to be substantially reduced prior to approving such a product. The demand in the market was for cheaper and more efficient planes, and that ideology needed to be part of Boeing’s development strategy. Airbus, the market leader, produced planes to serve the short, medium and... ... middle of paper ... ...R and was determined to be favorable. Assuming that the numbers used to calculate WACC and IRR are accurate or conservative, the 7E7 project should be successful if the risk factors are effectively controlled by Boeing. However, the most important factor in determining if a project should go forward or not is the NPV of the project.
It’s a fact that long flights are uncomfortable to many and this means that SWA would have to bring in new aircrafts accustomed to such distances, better entertainment and food. Their Boeing 737 may not be enough to fly the long-haul flights. These would be unavoidable items the company will have to consider. The company is a darling of many in air travel in the USA and if the same trend and culture is to be maintained, the company has to internationalize in terms of flight (Southwest Airlines.” Wikipedia. 2008).