Air France Klm Case Study

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Register to read the introduction… New Entrants: The barrier for new entrants is high due to high competition, government regulations, high fixed and start-up costs; complicated exit strategy due to unionized work force. Substitutes: A number of large and discounted airlines are available for passengers to choose. Other transport options are available; however, airlines provide the fastest way of long and medium distance travel. They are usually substituted by the alternatives for short distances. Cargo services, warehouses, training and maintenance programs are also core businesses for airlines in addition to carrying passengers.
Industry Rivalry: in 2007, 249 airlines were registered globally, with 100 airlines spread between 30 European countries. This creates a high rivalry between the airlines.

Analysis Summary: Aviation industry is highly regulated with strong and increasing buyer power. The barrier for new entrants is high. The supplier power is strong but weakening as AirFrance-KLM benefit from the economy of scale and strong bargaining power. The company protects oil prices by purchasing cost fixing insurance. There are substitutes available but
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BUSM3922 Case Study:
Air France – KLM: Changing the Rules of the Game

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