Case Study
Question #1Discuss the five forces of competition inthe regional airline industry.
5. Competitive Rivalry• Competition is intense• A regional carrier has to: • Develop and maintain high levels of customer service • Develop and maintain a strong safety image • Maximize on-time arrivals • Have the ability to acquire new aircraft
6. Threats of Potential New Entrants• New entrants are always a threat to existing airlines• A few airlines are making an attempt to enter the American domestic air travel industry• Many foreign competitors to the United States international airlines are starting to look into the possibility of extending flight operations on American soil
7. Power of Substitutes• With increased efficiencies in modes of transportation, greater threats to the airline industry present themselves: • Railway • Oceangoing Vessels • Motor vehicles• Consumers price-performance evaluation and the industry wide price elasticity have led to a more complex travel industry
8. Power of Suppliers• Two main suppliers (92%): Boeing and Airbus• Little rivalry and a lack of industry intensification• Vertical integration with Boeing or Airbus
9. Power of Buyers• Overall bargaining power of buyers is weak to moderate • Switching ones ticket from one airline to another is fairly high • Airlines set ticket prices without allowing consumers to barter on price• Websites such as Travelocity and Kayak receive ticket information from all airline websites • Nearly all consumers search on price
10. Question #2Discuss the driving forces in the regionalairline industry.
11. The Driving Forces• Operating Constraints and problems • Over booking flights • Not allowing enough time to load and unload passengers and luggage • Flight cancellation• Outsourced routes from major airline partners• Pressure to cut cost
12. Question #3Discuss the key success factors in theregional airline industry.
13. KSFs• Strong Management• Capable workforce• Service
5. Competitive Rivalry• Competition is intense• A regional carrier has to: • Develop and maintain high levels of customer service • Develop and maintain a strong safety image • Maximize on-time arrivals • Have the ability to acquire new aircraft
6. Threats of Potential New Entrants• New entrants are always a threat to existing airlines• A few airlines are making an attempt to enter the American domestic air travel industry• Many foreign competitors to the United States international airlines are starting to look into the possibility of extending flight operations on American soil
7. Power of Substitutes• With increased efficiencies in modes of transportation, greater threats to the airline industry present themselves: • Railway • Oceangoing Vessels • Motor vehicles• Consumers price-performance evaluation and the industry wide price elasticity have led to a more complex travel industry
8. Power of Suppliers• Two main suppliers (92%): Boeing and Airbus• Little rivalry and a lack of industry intensification• Vertical integration with Boeing or Airbus
9. Power of Buyers• Overall bargaining power of buyers is weak to moderate • Switching ones ticket from one airline to another is fairly high • Airlines set ticket prices without allowing consumers to barter on price• Websites such as Travelocity and Kayak receive ticket information from all airline websites • Nearly all consumers search on price
10. Question #2Discuss the driving forces in the regionalairline industry.
11. The Driving Forces• Operating Constraints and problems • Over booking flights • Not allowing enough time to load and unload passengers and luggage • Flight cancellation• Outsourced routes from major airline partners• Pressure to cut cost
12. Question #3Discuss the key success factors in theregional airline industry.
13. KSFs• Strong Management• Capable workforce• Service
Cited: About. (n.d.). Retrieved May 6, 2012, from SkyWest Airlines: http://www.skywest.com/ about-skywest-airlines Gamble, J.E., Peteraf, M.A., Strickland III, A., & Thompson, A.A. (2012). Crafting and Executing Strategy: The Quest for Competitive Advantage – Concepts and Cases (18th ed.). New York, New York, United States of America: McGraw-Hill/ Irwin. (n.d.) Retrieved May 6, 2012, from Investopedia: http://www.investopedia.com E.L. & C. Baillieu Research. Skywest Airlines Limited. March 30, 2010, from www.bailleu.com.au MBA Lectures. Key Success Factors of Airline Industry. November 1, 2011, from mbalectures.com