Delta Airlines

Topics: Southwest Airlines, Airline, Low-cost carrier Pages: 2 (575 words) Published: March 16, 2014
Delta Airlines Assignment
Market Life Cycle Analysis:
There are three significant factors indicating that the U.S. airlines industry is in the growth stage. The airline industry has been introduced to the public and demand has been generated from consumer therefore the development phase has passed. Secondly, revenues have been growing every year, with the major exception caused by the terrorist attacks of September 11th, 2001. Lastly, we see that product and brand differentiation is happening in the U.S. airlines industry. There is a fierce competition between companies to gain a loyal consumer base. In addition, prices differ between competitors and new entrants who are trying to grow by using lower prices, such as Southwest Airlines and JetBlue Airlines. Money is being invested into marketing and loyalty programs to secure positions and remain competitive. The U.S. airlines industry is in a growth stage and this will continue after the effects of the terrorist attacks in 2001 begin to fade. Porter’s Five Forces Analysis:

Bargaining Power of Suppliers (high): Since there are only two main suppliers, it is relatively easy for them to compete directly with each other. This is because they are both in a fierce rivalry to gain and maintain more business from airlines. If an airline chooses only one of the two then the supplier may have some leverage due to switching costs. Threat of New Entrants (low): There are supply-side economics of scale in the airline industry, with high fixed costs needed for purchase or lease of passenger aircrafts. These fixed costs can be spread over larger volumes of customers, meaning a higher load factor with more flights by existing airlines allows them an advantage over new entrants, who would need to first provide a significant upfront investment. Bargaining Power of Buyers: (high) There is bargaining power for buyers in air transport as they push to receive the best service at the lowest cost. With...
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