The paper "About UK Airline Industry" is a wonderful example of a Marketing Case Study. Micro-environmental analysis of current firms in the UK airline industry can be analyzed using the porter’ s model to serve as a tool for assisting the UK airline industry to identify various external forces depending on five factors which are new entry threats, the buyer’ s power, supplier’ s power, substitute’ s threats, and competitive rivalry. Threats of new entrants Currently, there are two industries in the manufacturing of airline which are Airbus and Boeing. These companies have been engaging in deep competition over who will have the highest share of the market.
In order to overcome the threats of competition from new entries, these companies have acquired different strategies in order to target different certain sections in the airline industry. Airbus is focused on transporting passengers in large numbers between major hubs while the Boeing is focused on direct travels from point to point particularly between cities. The Airbus A380 construction was designed to carry a capacity that is more than twice the Boeing capacity but having a lesser range. On the other hand, Boeing constructed a low-cost aircraft, B787 which had great speed and the range was farther.
Each company were able to maintain its market share and to prevent any threat of new entrants by raising the entry barriers for newcomers ( Clark 2010). The UK airlines are incurring the highest taxes on a flight due to numerous increases in the charges in air passenger duty. These charges have increased the overall flight charges in UK airline to a point that, other airlines from Ireland and France have low flight charges due to low taxes on air passenger duty.
As they are all traveling at the same destination with different fares, UK airlines are losing its market share in such regions due to high charges as compared to other airlines. This makes it difficult for them to prevent threats from the new entrants. Due to weaker economic performance in Europe, the European airlines have been observed to be lagging behind as compared to other parts with mature airline industries. This has resulted in low profit and even falling with high values.
Due to weak economic performance, the region may not be in a condition to get rid of the new entrants (Clark 2011). For other airlines such a budget and Ryanair they keep their airplanes flying for around nine to ten hours per day. In addition, they look for chances of cheap plane deals and by reducing the costs of the crew. Even if they are faced by the challenges of rising prices of fuel, they can manage to maintain the travel costs or even cut down these cost.
Management of these factors makes the cost of traveling an entry barrier for other airlines and even if the new entries manage to get in, they find themselves in a competitive disadvantage due to uncomfortable traveling costs (Scheers 2001). Buyer’ s power The presence of strong buyers in the industry results in a forced reduction of prices with corresponding low profits in the firms producing the product. Boeing was considering redesigning its most widely used commercial jet by constructing a new aircraft that consists of a body which is made of the composites of plastics while maintaining the traditional aluminum wings.
This move was made in order to increase their customers by reducing the costs of the aircraft which will also be reflected through reduced travel costs. On the other hand, Airbus also had a plan to look for ways of reducing the costs of its aircraft. Due to pressure from Boeing, Airbus decided to redesign its most frequently used A320 and 737 families of jets by putting a new engine that would reduce the consumption of fuel by around 15%. The power of buyers for reduction of their costs has to lead to bargaining for aircraft with higher quality, increased levels of service, and more efficient aircraft with lower prices.
The achievement of these outcomes has been through encouraging competition battles among the Boeing and the Boeing and Airbus manufacture of aircraft (Clark 2011).
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