porter five forces airlines
analysis of airlines by using porter's five forces
Threats of Substitutes (Low)
Product that able to represent other product function can be defined as substitute product (Wheelen and Hunger, 2002). Currently, there are no perfect substitutes for airline service, as airline service has the best range of destination, time-efficient and convenience. However, the fact that trains and air-transports are substitute is true, but the threat will only be high if it’s applied in domestic travel. Currently, the threat of substitutes for airline industry is low. In regards to the threats, Airline Company should keep innovate their service to prevent a perfect substitute.
2.2.2 Power of Buyer (Moderate-Low)
The power of buyer can be defined as the ability of customers to affect an industry. This view has been supported in the work of Coulter (2008). The bargaining power of buyer in airline industry is relatively low because the number of buyers for this service is enormous and keeps increasing (IATA, 2010). Additionally, due to different specialty of countries, customers tend to go overseas for particular purpose that the destination country is good at (i.e. Singapore good at Medication), subsequently, going overseas somehow is becoming part of the lifestyle today. Hence, this can also be seen as the service is essential for particular customers which further down the bargaining power of buyer. Looking at another factor which is internet, it allows customers to easily make a comparison through information and price transparency and switch to other airline service. Overall, the bargaining power of buyer is still moderate to low, so organization can take this opportunity to provide excellent service and charge premium price.
2.2.3 Power of Supplier (High)
According to Collis and Montgomery (1997), power of supplier can be defined as the ability of suppliers to affect an industry. The power of suppliers in airline industry is relatively high, as fuel is one of the
Threats of Substitutes (Low)
Product that able to represent other product function can be defined as substitute product (Wheelen and Hunger, 2002). Currently, there are no perfect substitutes for airline service, as airline service has the best range of destination, time-efficient and convenience. However, the fact that trains and air-transports are substitute is true, but the threat will only be high if it’s applied in domestic travel. Currently, the threat of substitutes for airline industry is low. In regards to the threats, Airline Company should keep innovate their service to prevent a perfect substitute.
2.2.2 Power of Buyer (Moderate-Low)
The power of buyer can be defined as the ability of customers to affect an industry. This view has been supported in the work of Coulter (2008). The bargaining power of buyer in airline industry is relatively low because the number of buyers for this service is enormous and keeps increasing (IATA, 2010). Additionally, due to different specialty of countries, customers tend to go overseas for particular purpose that the destination country is good at (i.e. Singapore good at Medication), subsequently, going overseas somehow is becoming part of the lifestyle today. Hence, this can also be seen as the service is essential for particular customers which further down the bargaining power of buyer. Looking at another factor which is internet, it allows customers to easily make a comparison through information and price transparency and switch to other airline service. Overall, the bargaining power of buyer is still moderate to low, so organization can take this opportunity to provide excellent service and charge premium price.
2.2.3 Power of Supplier (High)
According to Collis and Montgomery (1997), power of supplier can be defined as the ability of suppliers to affect an industry. The power of suppliers in airline industry is relatively high, as fuel is one of the