The paper 'How Far Does Cathay Pacific Impact the Airline Market" is an outstanding example of a marketing research proposal. Cathay Pacific airline was developed on 24 September 1946 (Funding Universe n. d.). The founders of the airline were two an Australian Sydney H. de Kanyzow and American Roy C. Farrell with each contributing HK$ 1 for registration. Cathay Pacific is a flag career airline of Hong Kong. Its main hub and head office are located at Hong Kong International Airport. The operations of the airline entail cargo and passenger services with two hundred destinations located in the fifty-two countries all over the world, joint ventures and codeshares.
The airlines also have wide-body aircraft that consist of Boeing 777, Airbus A350, Airbus A340, and Airbus A330 pieces of equipment. The airline owns Dragonair subsidiary which operates in forty-four destinations in the region of Asia-Pacific. After the Second World War, Cathay Pacific Airways Limited grew from a minor regional airline to a stable international carrier due to tourism and trade. After the transition to the rule of Chinese in Hong Kong in 1997, the carrier was forced to redefine its function at Southern China.
It shifted its determination from doing it all alone to joining a one-world alliance which is spearheaded by British Airways and American Airlines. The move was aimed at economically maintaining the global presence of the company. In July 1998, the airline was the leading non-stop transpolar flights that were flying over the North Pole. The perspective of Cathay Pacific Airlines is what has made it outstanding over the years. It believes that a great flight should have the capability of anticipating the wants of its customers before they ask (Funding Universe n. d).
In explanation, the company argues that a flight should not be only about ensuring a smooth check-in, comfortable seats, and good food. The difference between Cathay Pacific and other airlines is the unique services that its staff provides. The company believes that service has a larger impact on the perceptions of the passengers. 1.2 Industrial Environment Industrial environment help determine the impact that an airline has on the market. It is important to understand the competitive forces in the airline industry since it is the determinant of success or failure of a given firm within it.
For the basis of Cathay Pacific and the airline industry, Michael Porter’ s five forces are important for the analysis (Dobbs 2014). The industry analysis using the five forces will help determine the implications and intensity of different issues concerning Cathay Pacific airlines and how it affects the industry. The fives elements or forces of analysis include competitive rivalry, new entrants threats, substitute threats, the buyer’ s bargaining power, and the suppliers bargaining power. Competitive rivalry entails the existing competition between the low budget and national careers.
Cathay Pacific Airline affects the share market of the national and low budget carriers. The company influences on the margins and prices thus profitability in the market. Any airline that is in the market will always be a threat of new entrant. In explanation, a new entrant will require a high capital investment to enter into an already inhabited market (Orhan & Gerede 2013). Furthermore, the presence of firms in the market makes it difficult to find suitable airports.
As a result, it is difficult for new entrants to challenge the already existing airlines due to their experience and solid name in the market. The substitutes that act as threats to an airline include other short and long haul airlines. In addition, the airline can be impacted with the land travels or an indirect substitute such as video conferencing that eliminates or minimizes the need to travel. However, all the cases named do not entail switching of costs on part of the customers thus no hesitation to choose. The bargaining power of the buyers can be affected by the level of awareness of the customers.
For example, today people are well informed of the deals and prices via several sources including the internet thus can affect the performance of airline if its prices are unfavourable. Most of the airlines today try to reach market segment through lowering their fares with the intention to acquire more shares in the market. The plan has always worked since the customers are sensitive to prices and will always switch to the airline that offers the lowest prices.
Lastly, the bargaining power of the suppliers is very critical determining the capability of an airline to influence its market. The suppliers can be in the form of regional airports, fuel, and aircraft (Porter 2008). Some of the main aircraft suppliers in the market are Airbus and Boeing. It is, therefore, important for an aircraft to have a good relationship with the suppliers for the purposes of training and technical support since the alternatives are limited. Suppliers also have the bargaining power of the fuel prices since the fuel prices are governed by the Middle Eastern countries and world trade that dominate the market.
Even though the regional airports were once deemed to have low bargaining power, the competition between the low-cost airlines has been increasing thus heightening their bargaining power.
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