Porters Analyis for Indian Airlines Industry

India’s airlines industry has had a smooth take-off ever since the government initiated its open skies policy a few years ago. After encountering some initial turbulence, it is now cruising smoothly across clear blue skies. India is today one of the fastest expanding aerospace markets in the world, as a growing number of airlines and corporate are expected to acquire about a thousand planes over the next 5 years.

Every region- the east, west, north, south and center - has five airlines. India has Indian Airlines, which is the mother of the Indian Aviation Industry, followed by Jet Airways, Spice Jet. Deccan Airways, and Kingfisher. Sahara has been taken over by Jet Airways. These are airlines, which fly into Metro’s and are well connected.

PORTERS 5 FORCES ANALYSIS

1) Rivalry among competition firms

Competition among major competitors is extremely intense in many aspects. Since most of the competitors are directly competing, each is emphasizing a low-cost strategy. Many consumers look only to cost as a determining factor in a purchase. This creates an intense environment. Switching costs are generally low, even though companies have tried to increase switching costs with the use of “frequent flyer” programs.

2) Potential entry of new competitors

Entry in the airline industry is very hard due to many factors. These include government regulations and licensing, brand loyalty and identification of major airlines, contracts between airlines and airports for use of runways and terminals and the substantial cost associated with forming an airline (airplanes purchased, labour costs, fuel costs, maintenance, etc.). The three consolidated groups Air India, Jet Airways, and Kingfisher dominate the Indian skies with an 85% market share.

3) Potential development of substitute product

Substitute products are of little threat to the airline industry. No other product domestically competes directly with airlines in terms of speed of travel. The First...