Degree of Rivalry
The degree of rivalry among existing competitors in airplane industry is very high. Firstly, there are many other existing airline companies in the industry. For JetBlue, it has to not only come up with ideas to attract customers from its opposite group, but also compete with the competitors of its own group. Legacy carriers, JetBlue’s opposite group, offer customers non-stop flights to destinations domestically and internationally with a wide variety of fares and classes on different models of aircrafts. Companies in this group also take part in alliances and corporate with its partners to fly all over the world. As for the competitors that use similar operation strategy as JetBlue, such as Southwest, typically just fly one type of aircraft and do not gain market share using get in unions with its own partners. Furthermore, low cost airlines attract customers who prefer to get lower priced tickets rather than enjoy the comfort and convenience during the flight. In most cases, LCCs do not provide seating reservation service, but just based on a first come first serve basis. Also, LCCs compete domestically but not on an international level. Secondly, for existing airline companies, there are high fixed costs for them to complete their daily operation. Moreover, increasing oil prices cause increased variable costs to all airlines in the industry. The price of oil has a significant impact on both airline companies and travelers, because the higher oil is, the higher airline companies would charge their customers to recoup their business operation costs. To achieve this, airline companies usually use pricing wars at large hubs to attract customers from their competitors in order to keep their capacity utilizations at acceptable levels. Last but not the least, when the industry growth is slow, it attracts low margins companies to become competitors fighting for market share. In this situation, it is a good opportunity for new entrants and low...
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