Essay About European Airline Industry Wikipedia And European Airline Industry

Strategy Maping – Competition in the European Airline Industry
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Strategic Analysis and Planning ST4S15-V1Group 10 – Ipha Miguel & Raquel Miller – HenryWeek 3 – Task 1 Mapping Competitive Advantage Competition in the European Airline Industry Wikipedia (2017) records the European Airline industry having a total of fifty (50) major players of which ten has been selected for this analysis and listed below in figure 1. Extract of 10 from 50 of Europe’s Airline Industry Players  1Virgin Atlantic  2Lufthansa  3Air France  4Norwegian  5Austrian  6Bristish Airways  7Ryanair  8Iceland Air Group  9Air Berlin Group  10Meridiana Fly Figure 1 Porter’s Five Forces of Competitive Advantage – The Airline Industry(Jurevicius, 2013) defines Porters five forces model as an “analysis tool that uses five industry forces to determine the intensity of competition in an industry and its profitability level”. Acquiring knowledge of an industry’s drive that enable profitability is the main feature of the framework and the five forces are; competitive rivalry, power of suppliers, power of buyers, new entrants and substitutes. Below in figure 2 is an analysis of the factors affecting the airline industry using the five (5) forces.Factors Strength Competitive Rivalry            HighBritish Airways (BA) signature flights are long hauls and short haul flights which are characterised by prices and services offering between their competitors.The short haul has the most players therefore it is the reason for being fragmented. Intense Price CompetitionHigh Fixed CostTight RegulationsCompetition has increased because of the consolidation of competitors.Power of Suppliers            HighThere are two aircraft manufactures with high bargaining powers. British Airways faces challenges such as restriction by being the sole supplier of fuel at the airport.Switching cost is highTo increase and protect their bargaining powers, BA employees utilises the services of trade union collectively.  Power of Buyers           MediumThe airline industry created positive competition decreasing concentration of buyers to supply which decreased their bargaining power. The application of technology via the usage of the internet has created positive interaction amongst customers.Customers are loyal to specific airlinesOpportunity to choose low cost carriersThreat of New Entrants           LowNumerous factors determine significant barriers to entry, amongst them are; competitive environment, high requirement and high capital cost requirement.New entrants are repelled by existing barriers.Historical records demonstrated why many airlines had failed also detour new entrants.Threat of substitutesMediumSubstitutes such as car, train and boat exist, however none compare, especially over long distance with time and costs. Airline is the fastest mode of transportation.Switching cost can be very high, especially when baggage is considered, it is more costly than other means and inconvenient especially when timing is a major factor to the consumer.                  Figure 2Porter’s Generic Strategies –  European Airline Industry Top Ten Airlines for 2014         Generic strategy is a concept developed by Michael Porter which seeks to help businesses to identify what they are good at and provide a guide to achieving a sustainable competitive advantage over its competitor.  Below is a figure 3 depicting the four types of strategies that a business can employ as sources of competitive advantage.        [pic 1]The competitive strategies European Airlines from extract in figure 1 along with data from SkyTrax World Airline Awards (n.d.) for 2014 was used to identify the competitive advantage in the industry and is depicted in the figure 4 below; Competitive Strategy Top 100 2015 Industry Quality Rank EUROPEAN AIRLINESSkyTrax 2015 Quality RatingCost Leadership(Broad)Differentiation (Broad)Cost Focus (Narrow)Differentiation Focus(Narrow) Top European Airlines extract (2014)     37Virgin Atlantic4 Yes  12Lufthansa4 Yes  15Air France4  Yes 33Norwegian4Yes   13Austrian4 Yes  20British Airways4   Yes Top Cheapest European Airlines extract (2014)      Ryanair3Yes   81Iceland Air Group3   Yes71Air Berlin Group3  Yes  Meridiana Fly3Yes