Estonian Air's Big Buy Case - Assignment Example

Estonian Air’s Big Buy Case Estonian Air’s Big Buy Case The airline industry is a high income earning industry. Therefore, it is a highly competitive industry. On the other hand, it involves high risks as well as maintenance and running costs. In Estonia, Estonian Airs are the official airline. It was founded by the Estonian government, the Scandinavian Airlines System and an Estonian investment bank. The competing groups of the worldwide airline industry include: regional carriers, low cost carriers and legacy carriers.

The legacy carriers are highest income earners, they have a large fleet and hence they cover a huge network of destinations. They offer flights to overseas destinations and among their home countries. These include: the US Airways, British Airways, and Air France, among others. A common characteristic of these airlines is that they are fully or partially owned by their governments; which brought them into existence. The low cost carriers set their network of short routes with fleets consisting of one type of airplane.

This strategy helped in minimizing maintenance cost as well as the cost of training. Some of these include: Southwest, Jet Blues, EasyJet, AirBerlin and Sky-Europe among others. The third type of competitive groups was regional carriers that specialized in connecting small cities with the larger capital cities in the nation and region. However, the charges by regional carriers were higher than those of low cost carriers. For instance, Air Nostrum connected cities in Spain, whereas SATA Air connects the Canary Islands to the mainlands of Portugal and Germany.

Eventually, the Estonian Air Airline faced competition from other airlines that flew through Estonia while connecting to major European cities such as: Amsterdam, Barcelona, Copenhagen, London, Paris, Rome and Vienna. The main competitor of Estonian Air’s is an A/S Air Baltic Corporation, whose network consists of the major European cities as well as the Baltic region. The second main competitor is EasyJet of Britain that has almost 400 routes across Europe. The third main competitor Aero Airlines of Finland specializes in connecting Tallinn with three main cities in Finland.

In conclusion, the Estonian Air has a continuously growing transport market. Considering the fact that the air transport market in Estonia grows at a rate of 10% to 15% due to increased tourism activity in Estonia, its market will continue to expand.