Air Travel Industries - Assignment Example

Industries In Today’s world, air travel remains a bigger and growing industry. It facilitates global trade, economic growth, tourism, and international investment and is thus central to the globalization occurring in many other industries. It is basically the action of traveling in the air. Global market analysis in the past three decades indicates that the air travel industry’s grown by 6% per year. Travel for both business and leisure or holiday purposes grew strongly globally (Eaton, 2001). Annual growth
in
air
travel
industry that has
been
about
twice the annual GDP is expected
to
double
over
next
10
–
20
years.

There are several substitutes for air travel, particularly over short distances. These include taking other forms of transport. Similarly, there is strong rivalry among different airlines within the industry. For instance, in the pre-deregulation era when prices charged were mandated by the worldwide aviation board, airlines competed majorly on aspects such as service, in-flight movies, meals, etc. However, in the post-de-regulation era, this competition has taken on the form of pricing where individual airline companies are counter-checking the daily prices they offer ( Schmid, 2011).

These facts have attributed to more customer power in the industry. Most notably, the airline industry requires huge capital investment. Based on these facts, entry, and existence become very costly. When you enter, there are a lot of regulations, and the initial capital is also very high. On the other hand, when airlines have to exit the sector, they require writing down and absorbing several losses. All these features make the airline industry cede authority to the consumers and thus, the power of buyers is moderate to high.

Despite all, there is the power of the supplier as there are only two major manufacturers of large commercial aircraft. In the case of a major accident, the structures of the industry always tend to change. The airline industry is likely to undergo a technological revolution that will make air travel even safer. Normally, key aspects of the change may witness heavy investments from various industry players (Cento, 2009). Leadership within the industry also changes to help reform the industry.

The assumption always is that leadership had failed prior to the accident and as such, a change in leadership may help bring normalcy. Coupled with technological advancements, undoubtedly this makes air travel a pleasurable experience and risk-free— both for the crew and passengers. Firms within the airline industry are using different strategies to ensure survival, and they make excessive profits. The airline industry is dynamic and as such competitive (Schmidt, 2008). Southwest Airlines, for instance, has developed its strategy around its valuable resources and capabilities.

Southwest Airlines has employed a differentiation strategy to gain a competitive advantage over other competitors in order to better position its products. It thus limits their scope to those business activities where they have a clear competitive advantage. Southwest Airlines thus uses this strategy of differentiation and tries to grow by replicating its business success in new markets and achieving the highest economies of scale (Gittell, 2003).