Wednesday, March 18, 2020

Airline Industry Analysis Essay Example

Airline Industry Analysis Essay Example Airline Industry Analysis Essay Airline Industry Analysis Essay Real and nominal growth Trends and cyclical variation around trends Hard to find much that is interesting in the macro data. Possible real growth is limited to 2 3% p. A. In the long-run. Add inflation for a possible 5% nominal growth. If costs are going to rise faster, consumption will be constrained. 4. Supply Analysis Degree of concentration who are the rivals, what are market shares? Easy of entry Industry capacity Returns to scale vs. returns to scope all the scheduled airlines are large. The niche players like Porter and North operate in limited markets, either cherry-picked or ones that major airlines cannot service. No such thing as scope in the airline market. There is an overcapacity, shown by the number of airlines that have failed 5. Profitability Supply/demand analysis Cost factors fuel volatile Pricing Discuss the factors that are most important to the profitability of airline industry Perishable inventory 6. International Competition and markets US mainly. Its airlines and Canadian airlines now compete cross-border. Competition lessened by code- sharing deals. E. G. United and Air Canada code share; so if you book with Air Canada, you may fly with either United or Air Canada. Reduces price competition and improves capacity utilization. 7. Porter Five Factor Analysis of the Industry (Assessment using the information from the preceding sections) Names and market shares domestic and foreign Big Jet Boeing and Airbus Smaller size Jets and turboprops Embrace and Bombardier . SOOT (Strengths, Weaknesses, Opportunities, Threats) of one company in the industry Strengths Look at the load and yield factors. Must do it, cannot Judge strength otherwise Deep pockets. This industry is so cyclical a company has to be able to ride out a downturn even with the very high fixed costs of the airplanes. Since 1974 some of the most famous names in the airline industry around the world have failed or been forced to merge. This can be a strength or weakness. Service. You make the argument that it matters and how well or badly AC or W] does. Chris believes WAS has much stronger reputation and it is a perceived weakness for AC, but you could find the evidence. AC claims in its annual report that it got more international quality awards than any airline in the world, but such awards are always a bit questionable, in Chrisms opinion. Threats Sustained rise in fuel prices with a simultaneous economic downturn What if American airlines could freely offer domestic flight in Canada High speed rail Montreal-Toronto or Montreal-Windsor Sustained economic recession Chris believes the party is over forever Is video-conferencing a significant threat to business travel

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