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Airline Deregulation - Essay Example

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The essay "Airline Deregulation" analyzes five components of force measure that affected the airline industry after deregulation. These components include the threat of new entrant, the threat of substitute products, the intensity of competitive rivalry, bargaining power of customers and suppliers…
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Airline Deregulation
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Download file to see previous pages Although the different airlines were competing on different levels the major airlines Delta, American and United airlines adopted the hub- and spoke system that entailed a shift in the route structure, so as to increase their bargaining power as a supplier. The intensity of competitive rivalry Competition between airlines are increased as more and more airlines joined the market ever since.The impact of the five components consists, Entry of new airlines This made the customers enjoy low pricing from the different carriers, making customers have a variety of airlines to choose from increasing the quality of services from the airlines. The major airlines had to do product differentiation so as to keep their clientele base by opting for a method called the hub. The government had to do a distribution in the routing of the airlines so as not to affect the original Airbus so much making adjustments in who the carriers should operate to what destinations. Due to the competition that the deregulation enforced on the airlines, the major carriers opted for this FFP’s loyalty strategy. This was a way to win the trust and loyalty of their customers and to maintain their clientele base, they were rewarding their customer's free flights, if there could frequently be flying in their bus, this strategy brought about loyalty that was necessary to keep the hub operation going. Such products were able to put the big air companies on the market, increased their customer base and ensured sustainability of their business. ...Download file to see next pagesRead More
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