Malindo Airline Services Case Study: Entering the Airline Industry
Threat of Entry
There is a high barrier entering airlines industry since it requires high capital to set up everything such as purchase or lease air craft, set up office, hire staffs, and etc. Thus, this has reduced the treat to Malindo Airline. Moreover, brand awareness is quite important in this industry. Hence, to enter this industry not only required high capital but also have to take some time to create brand awareness. Consumers always choose the product or service they really trust. Thus, instead of creating brand awareness, new entry has to create so called brand loyalty. Hence, this is reducing treat to Malindo too. However, the government legislation is one of the barriers for entering airlines industry. For example, MAS has been protected by Malaysia government on the route to Sydney and Seoul Incheon. Therefore Malindo find itself very difficult getting a new route from government. This not only affects the timeline set by Malindo but also influence their profit. Nevertheless, this has limited the new entrance due to the government policy. In overall, the treat of entry is low to Malindo.
Power of suppliers
Every industry has someone to play the role as suppliers. Power of the suppliers is important as it will affect the industry. In airline industry, the power of suppliers is quite high since there are only two major suppliers which are Airbus and Boeing hence there are not many choices to airline industry. Nevertheless, the global economic crisis has limited the new entrant and also reducing the upgrade of planes in the immediate future. However, both suppliers provide almost same standard aircrafts and hence the switching to Malindo is low. Moreover, Malindo placed a large amount of order from Airbus in order to expand its routes to international routes. As a result, the power of suppliers may be reduced as Airbus's profit may be influenced by Malindo. Generally, the power of supply is moderate low to Malindo.
Power of buyers
Buyers are one
There is a high barrier entering airlines industry since it requires high capital to set up everything such as purchase or lease air craft, set up office, hire staffs, and etc. Thus, this has reduced the treat to Malindo Airline. Moreover, brand awareness is quite important in this industry. Hence, to enter this industry not only required high capital but also have to take some time to create brand awareness. Consumers always choose the product or service they really trust. Thus, instead of creating brand awareness, new entry has to create so called brand loyalty. Hence, this is reducing treat to Malindo too. However, the government legislation is one of the barriers for entering airlines industry. For example, MAS has been protected by Malaysia government on the route to Sydney and Seoul Incheon. Therefore Malindo find itself very difficult getting a new route from government. This not only affects the timeline set by Malindo but also influence their profit. Nevertheless, this has limited the new entrance due to the government policy. In overall, the treat of entry is low to Malindo.
Power of suppliers
Every industry has someone to play the role as suppliers. Power of the suppliers is important as it will affect the industry. In airline industry, the power of suppliers is quite high since there are only two major suppliers which are Airbus and Boeing hence there are not many choices to airline industry. Nevertheless, the global economic crisis has limited the new entrant and also reducing the upgrade of planes in the immediate future. However, both suppliers provide almost same standard aircrafts and hence the switching to Malindo is low. Moreover, Malindo placed a large amount of order from Airbus in order to expand its routes to international routes. As a result, the power of suppliers may be reduced as Airbus's profit may be influenced by Malindo. Generally, the power of supply is moderate low to Malindo.
Power of buyers
Buyers are one