What Does Porter's Five Forces Model Of The Airline Industry

The history of the airline industry went through a period described as challenging and soaring. The reason behind this description is the rapid increase in oil price which caused major financial losses and a cut in airline profits. Airlines which declared bankruptcy between 2004 and 2007 have all been a case of such losses. As of 2009, in the UK, airline analysts expected that airlines will have to face great challenges in the future. An example of this is British Airways which predicted a profit reduction of £250 million in 2008 (Robertson, 2008). Asian airlines are another example in which they were in financial danger as of 2008, the reason being high oil prices and decrease in the number of passengers. The airline faced negative effects
(Stonehouse, 2001). However, it is preferably to couple the characteristics of the industry with technological and economical environmental aspects. (Porter, 1980).
Michael Porter's five forces model was also subject of other author's criticism, such as Lynch. He explains that although the market is more laid out, there are no changes in the industrial environment. The analysis should be used continuously when using this tool. (Lynch, 2009, p. 101-102) Downes has developed three new forces, named Digitalization, Globalization, and Deregulation.
Downes refers to Porter’s five forces model as ‘obsolete’. The three new forces mentioned in the previous paragraphs have become powerful but the model rarely takes them into consideration. (Recklies, 2008)
The five forces model was criticised for being analytical rather static. There were suggestions by Rumelt, (1991) that companies have their specific desires of strategic development regarding profitability. Moreover, the five forces leaves out ‘’the human resources aspects of strategy’’ (Farnham, 1999), which will be highly important in the
SWOT is nowadays applied to the correlation of the observed system and its environment as well as to the decision-making procedures.
Solving the disadvantages of a SWOT analysis discussed by Hill and Westbrook (1997), and Menon et al. (1999), there is a suggestion of diverse adjustments. The SWOT/PESTLE analysis is a popular modification in which the factors influencing the organization are categorized into six categories. The concurrence between SWOT and PESTLE provides a more detailed study of a complex system. This can be shown in Vorthman’s (2008) explanation where he analyses that SWOT serves to highlight the factors, both internal and external. (Sunje et al. 2010) discusses an application where SWOT is used for the internal factors whereas PESTLE for the system environment. The planning of water resource used in third world countries was also used as an example by Mugabi et al. (2007) in which we can find a concurrence between SWOT and