Airline Industry Competition-Free-Samples for Students-Myassignment

Question: Discuss about the Factors Contributing to Stiff Competition in Airline Industry. Answer: Introduction Airline industry began to have continuous drastic growth after the and during the both world wars. The commercial airline began operation in Europe where it has since spread throughout the entire world and has become a great dependence as means of fast and safe transportation. There are over 2000 airlines in the global market serving also approximately over 3700 airports in the world. As the world is changing in the diversity of different cultures and the business world, the airline industry has also continued to grow with an average of about 5% growth per year in the last 30 to 35 years. The statistics record show that it is set to hit double the growth in the coming 10 to 5 years. Airlines are governed by the international body known as IATA (International Air Transport Association) with about 247 member airlines that belong to 117 countries in the world. It formed in the year 1919 and was formally known as International Air Traffic Association but as it expanded it was later changed to International Air Transport Association in the year 1945. The body is mandated major airlines priorities such as safety, security, environmental standards, services, provision and management of strategic partners (Barnhart, et al., 2012). Factors Contributing to Stiff Competition in Airline Industry The airline industry is a key back bone structure to many country economies where apart from becoming a key source of revenue generation many countries. Many business, organizations and non-governmental and governmental corporates rely on air transportation in daily business activities such as importation and exporting of cargo, business trips and also governments rely a lot on the airline transport for tourism growth and development. The airline industry faces a great competition and challenge which act as set back in the airline transport system. A major increasing threat in the airline industry is the ability of every individual airline to maintain its customer loyalty from the continuous growth of customer expectation. The airlines have a dramatic change of events in the service offering of their customers; some even offer their customer hotel accommodation at their various stopping points. The class and standard of an airline have been the greatest field that the airlines compete for one another and also through offering their customers a great discount price. Through this advantage given to the customer, they have high bargaining power due to the even being able to get access information easily. Oil price is one major factor that affects the price tickets of the airlines, and thus this may become a unseeingly fair competition to the airline industry. The oil price is a direct factor that creates the price of a flight to be either high or low; the operating cost of fuel in airlines with the oil dominating regions can be ve ry different in comparison to one another. A good example, North American airlines, and Middle East airlines enjoy favorable economic scale which as compared to other airlines in non-oil producing regions. The operational cost has also been a great challenge to the entire airline industry, and its a huge task for every airline to have the ability to cut down its cost and also to continuously improve the efficiency in the operation and high-quality standards. For the airlines to have proper cost reduction, the airline should be able to implement efficient operation structure and technological advancement that will also enhance efficiency (Ishii et al., 2009). According to the research the entry of airline industry is very open although the existing airlines continue to enjoy the low entry competition in the market. Airline service requires a very great amount of capital to start and be able to operate effectively. Although the existing airlines enjoy low entry of competition in the market, airlines have formed alliances to maximize their profits and also compete effectively with other airlines. The joint airline ventures have given the strong airline that has a great number of customer loyalty ability to explore even more on the market on another airline customer through the extension of airline routes. Also, good examples of airlines that greatly rely on joint tariffs are the Middle East countries airlines that have a low population that provides very poor market. The airline industry also in general faces stiff competition from other substitutes of transport and communication such as trains, ships, yacht, ferry, and most widely used transport through vehicles. The improvement of the technology and communication has also greatly been a great competition to the airline industry. A good example, through telecommunications and internet the world has been made like a global village where it does not require one to move from one place to another to carry their usual business activities. Also, people may prefer to use the other means of transport such trains which are far much cheaper than air transport and also very fast especially the electric trains. Findings and Discussion Other Challenges that Affect Airlines Operation The other major challenges that will affect the operating system of airline and also even create competition are the improvement and the purchasing power of airlines, airport development with the required set standards, weather, government support and regulation, and the ability to cope with change in the customer preferences and technology. The issue of safety is also a major concern to all the airline industries; this also reflects directly to environmental management hazard where the high expansion of airline industry this means the environment is also at a much higher risk of destruction. Conclusion In summary, the airline industry is a very competitive economic sector, and this to have good records of performance, the airlines should be able to have good customer relation thus as to know how best to maintain customer loyalty. Also, the technological advancement is a major great factor in maintaining competition through meeting customer expectation. Through joint tariffs, airlines should be able to have good customer advertising and maintain its customer loyalty. The challenges also can curb through proper strategies that will enable the airlines to operate effectively and also gain good customer loyalty (Clemes et al., 2008). References An, M. and Noh, Y., (2009). Airline customer satisfaction and loyalty: impact of in-flight service quality. Service Business, 3(3), pp.293-307. (theory research). Barnhart, C., Fearing, D., Odoni, A., Vaze, V. (2012). Demand and capacity management in air transportation. EURO Journal on Transportation and Logistics, 1(1-2), 135-155. (quantitative research). Clemes, M.D., Gan, C., Kao, T.H. and Choong, M., (2008). An empirical analysis of customer satisfaction in international air travel. Innovative Marketing, 4(2), pp.50-62. (qualitative research). Ishii, J., Jun, S. and Van Dender, K., (2009). Air travel choices in multi-airport markets. Journal of Urban Economics, 65(2), pp.216-227. (qualitative and quantitative research).