Business

Profits Sky High within the Flying Industry Executive summary The purpose of my brief report is to analyse the environment surrounding the Airline Industry in New Zealand. It will concentrate on the competitiveness within the airline industry; the agreements airlines have made to increase revenue as much as possible and the major costs within the industry. It will deliver information about how the airline industry makes profits even though there are certain threats that influence the profits. Introduction This report will discuss the airline industry in New Zealand, with the main airlines dominating the market, which are Air New Zealand and Qantas. The report will provide the main issues about other low carrier airlines entering the industry affecting the main airlines profits, which led to the agreement between Air New Zealand and Qantas to still achieve those profits. Also another factor is fuel prices, which is a major cost for airlines especially with the prices fluctuating. These three essentials will affect the industry environment causing some variation in the industry and the way it works. Discussion Competitiveness of the Airline Industry The regional airline industry reveals trans-­‐‑Tasman flights as a densely competitive sector given the size of the Australasian markets. The reason is because in 1996 an agreement called ‘single aviation market’ was established to have freedom to travel between Australia and New Zealand with no constraints opening the market, which is known as Trans Tasman (Vowles & Tierney, 2007, p.348). The main two airlines that dominate the Trans-­‐‑Tasman are Air New Zealand and Qantas, which have dense rivalry between them with Air New

References: Hazledine,  T.  (2008).  Competition  and  Competition  Policy  in  the  Trans-­‐‑Tasman  Air  Travel  Market       Retrieved  from  http://cecil.auckland.ac.nz/Cecil.aspx?SessionID=4ac3700f-­‐‑db12-­‐‑4263-­‐‑     a093-­‐‑3e9bcde3f6b1&UserID=57fbe13c-­‐‑1e0d-­‐‑417e-­‐‑8268-­‐‑8650da2cafbc     Hill,  H.W.L.,  Jones,  G.R.,  Galvin,  P.,  &  Haider,  A.  (2007).    Strategic  management  an  integrated         approach.  Queensland:  John  Wiley  and  Sons  Australia,  Ltd.     Loudin,  G.F.  (2004,  December)  Financial  Risk  Exposures  in  the  Airline  Industry:  Evidence  from       Retrieved  from  http://cecil.auckland.ac.nz/Cecil.aspx?SessionID=4ac3700f-­‐‑db12-­‐‑4263-­‐‑     a093-­‐‑3e9bcde3f6b1&UserID=57fbe13c-­‐‑1e0d-­‐‑417e-­‐‑8268-­‐‑8650da2cafbc     Stavin,  J  (1996).  Price  Discrimination  in  the  Airline  Market:  The  Effect  of  Market       Concentratiohttp.  http://www.bos.frb.org/economic/wp/wp1996/wp96_7.pdf     Vowles,  T.M.,  &  Tierney,  S.  (2007,  December).  The  geographic  impact  of  ‘open  skies’  policies       onTrans-­‐‑Tasman  air  passenger  service.  Retrieved  from     http://cecil.auckland.ac.nz/Cecil.aspx?SessionID=69b0fc0e-­‐‑41ea-­‐‑4618-­‐‑bbad-­‐‑     54e0ef30ab37&UserID=57fbe13c-­‐‑1e0d-­‐‑417e-­‐‑8268-­‐‑8650da2cafbc