Porter's 5 Forces
1. Competitive rivalry
Pre 9/11
The central force of Porter’s model is Internal Rivalry within the industry. In case of the Airline industry, this is the most important force today, especially since the market is completely saturated.
The competition was based on route structures, technology and price. As an example the success of the Southwest airlines was transporting passengers over relatively short distance at competitive airline rates.
Use hub-and-spoke networks to service the market with fewer planes, fewer staff and more frequent service to provide customers a single ticket and lower price which created a competitive advantage
Post 9/11
Large FSC focus upon staff cost reduction to survive in the industry since 30% reduction of passengers
Introduced new security measures
2. Substitutes
Pre 9/11
Road transport, rail transport and ship transport was exist air travels come. But the passengers carefully selected the transport media according to their choice and purpose.
Post 9/11
The passengers are seeking alternatives such as video conferencing in business discussions, driving for distances for 500 miles, high- speed rail.
3. Suppliers (Bargaining power of supplies)
Pre 9/11
Plane manufacturers are the one who dictates the prices on the planes, which are over-value because of the scarcity of plane manufacturers. Only two manufacturers in the airplane industry are Boeing and Airbus. Switching costs too high for any airline to switch to another provider since substitutes are non-existent. And not to mention, the price of the oil is high
Post 9/11
Decreasing of the bargaining power of the supplier as the airline can bargain for more sophisticated air airplanes due to security reasons
4. Buyers (Bargaining power of supplies)
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