Pestel , Swot and Porters 5 Analysis of Emirates Airlines and Cathay Pacific

Suppliers generally have a moderate to high bargaining power within the industry due to the limited number of suppliers which forces aviation companies to choose from the number available and accordingly to accept their prices. In fact, fuel is the second highest cost for aviation companies. There are highly depended on supplier’s prices and the availability which indicates on a relatively high bargaining power of suppliers. In addition, there are high switching costs which are strongly in favor of the suppliers and means that the company experiences an increase in operating costs when switching to another supplier as flying another type of aircraft leads to additional costs (maintenance, training etc.).Aircrafts are vulnerable to delays due to the location of gate locations which leads to a decrease in utilization and therefore to an increase in costs.

In today’s business industry, the globalization process has become an important aspect and fundamental force. The elements that contribute to globalization is the environment, culture, regulation and technology and production. While the advancements globalization has increased greatly, so has the advancements in airline industry with their aircraft (Shevell, 1999). Globalization also provides a great amount of potential profits to nations and their corporations (Button, 2008). Air transportation has evolved into a major industry (Kroo, 1999). The airline industry’s continuously grows and is facilitated through its international investment, tourism, world trade and economic growth (Kroo, 1999).

So does not matter if it’s a holiday flight, last minute flight or just a flight back

This paper is about American airline, it explores the business philosophy, Effects of the Economy, business philosophy and labor. The report that follows delivers complete accounting for AA’s estimated impact on regional economies of the U.S. and its territories, including detail on straight expenditure, employment, total economic impact and contribution towards GDP. This report measures AA’s impact on the economy in two forms: the economic activity that motivates the production of the company’s profitable products, and the economic activity that supports our passengers’ non-airline travel spending (e.g. hotels, rental cars, etc.). Total Economic Influence is a measure of all incremental economic activity that underlies the manufacture

In an oligopoly market like Emirates airlines, there are few enough firms to create barriers to be raised against the entry of new firms (Sloman, J. et al, 2010). Firms like Emirates Airline, Qatar Airways and British Airways are the few firms that dominate the market by providing flights domestically and internationally so it would be hard for new firms to enter the market as they would need a large amount of capital to be able to purchase new aircrafts and hire experienced pilots to bring up the name of the company. They may also collude to change prices of air tickets which makes them price makers. Emirates embraced the methodology of dynamic pricing which helps

During this time the estimated total economic output has grown from 1.01 trillion to 1.53 trillion. Included in these estimates are employment effects, airport activities, and the transport of cargo and passengers. These metrics are designed to estimate the total impact of the airline industry has on the economy. While it is important 2 have an understanding of the industry as a whole this analysis will focus on the domestic passenger market.

A steady and growing economy helps most industires grow. Changes in prices are anindication of the current economic environement. Government regulations monitored by the FAA and interference influence an industry by regulating prices and safety rules and guidelines that all airline companies must follow. Air travel is more in demand than ever. Because of the number of carriers and their low prices, more people are able to fly and choose from a variety of places. Things such as terrorist threats and disease epidemics are definitely a factor when trying to decide where they want to go. Technology of course is a huge part of any industry the airlines in particular. Advances technology is a cost saving mechanism for many airlines. Most older airplines are being replace with newer planes with better technology to save on fuel and provide a safer and more confortable ride for passengers. The safety of the crew an passengers and American Airlines realizes the need to invest in better customer service in the air and on the ground

Airline industry is a customer service based industry. They sell their services by enabling the movements of their customers by transporting them from one place to another, to include their belongings too. Airlines industries require a large amount of capital in order to provide these services. They need to maintain their expensive equipment, the facilities they function from and maintain a large amount of staff because they serve their customer making it a labor intensive industry requiring people to do the work for its customer such as transporting their luggage, and serving them in the aircraft during a flight.

A latest study of Oxford Economics showed that aviation’s contribution to the global economy sustains 57 million jobs and some $2.2 trillion in economic activity. They have predicted that this growth will increase 5% annually. [1] IATA AMC April 2013.

The Bargaining power of buyers – The aviation industry depends on airlines and governments for almost the all of its total

The buyers for the airliners consist of various flight operators each of whom has varied requirements. A transition which has gone on to dominate the airline industry is the operation of budget airlines such as Ryanair, which focus on least cost operations and overall short-haul flights. This increased demand for narrow-body models which accounted for 75% of the total airliners demanded from 2000-2010. The airliners have been able to address these needs using the models such as Airbus A320 and Boeing 737. But the effect on margins of flight operators due to both volatile fuel prices and decreased passengers as a result of developments in high speed rail, has forced them to demand new airliners with lesser operating costs. With more options now being available to buyers in terms of manufacturers when compared to 80’s and 90’s, the bargaining power can be said to be increasing.

Economical can be another major factor for the airline industry. Airlines ' profitability is closely tied to world economic growth and international trade. Due to the rate of war and terrorist event, the growth rate of economy dramatic slowdown, capacity in Europe outstrips demand, which gains the low yield to the airline industry. The airline industry is now faced with significant capacity overhang and high cost platform, especially in the US. The report shows that, two major airlines American Airline and United airline losses of more than US$ 3billion for 2002, which makes world airlines get struggle.

The airline industry is probably one of the biggest industries in operation today in the world. Each country has their own standard airlines to operate. They could be small, or large players in the industry depending on how big the investment or how successful the country. The forefront of an industry like this of course is technology. When the first commercial flight took place in 1914, it was a big advancement in the world of technology and just a glimpse of how far we would progress in the future. Since the beginning of the first mass produced commercial jet, companies have been innovating time and again to reduce the cost of producing these machines at the lowest cost possible but without any decrease in safety. As of today there are numerous manufacturers such as Airbus, Boeing, Cessna, and Bombardier to name a few.

Airline is a complex industry. It involves major capital requirements for aircraft, monitor by government regulations, restrictions and state policy, competitive reaction from other tourist transport and requiring high level of expertise to operate and manage. Airline facing increasing globalization, rising fuel prices, heavy repair & maintenance cost, raising labor costs, increasing competition and requirements for higher service levels and greater flexibility.

Aviation provides the sole worldwide transportation network that makes it essential for international business and tourism. It plays a significant role in facilitating economic growth, notably in developing countries. Flying transports close to two billion travelers per annum and four-hundredth of interregional fares of merchandise (by worth), four-hundredth of international tourists currently travel by air. The air transportation industry generates a total of twenty nine million jobs globally (through direct, indirect, induced and catalytic impacts). Aviation’s international economic impact (direct, indirect, induced and catalytic) is calculable at US$ 2,960 billion, comparable to 8 may 1945 of world Gross Domestic Product (GDP)