European Airline Industry Essay

945 Words May 19th, 2012 4 Pages
The European Airline industry has gone through a lot in the past century since the establishment of the first public airline after the World War I. Until a few decades ago most of these airlines were national and at least partially state owned, and most of the European countries had at least one, with direct government control. Significant change in this only came in the 1990’s with the appearance of the low cost airlines. While the business model existed for some time (first such in 1973 US), the appearance of these in the European market needed the liberalization brought forth by the EU, implementing the „Freedoms of the air” in three stages. In 1997 the first LCC (Low Cost Carrier), the Ryanair began its operation, and in a few years a …show more content…
For both parties it is best to find a mutually working solution on a long term, because it is a industry with relatively small number of players loosing even one can have an impact on both sides.
Threat of substitutes
• Alternative transport (bus, car, train) ^
• Videoconferencing ^
• Global environmental awareness ^
The threat of substitutes includes a broad variety for the different needs. All-in-all it still only gives a medium threat, since the quick transport to a distance has no alternative.
Bargaining power of customers
• Price ˇ
• Internet/social media ^
• Customer orientation ˇ
• Choice ^
With the first LCCs the customers had no bargaining power: if you choose to go with this low price, accept the services as it is. However, nowadays with more alternatives and the ever-reaching internet and social media a bad customer satisfaction can be a disaster. This can however be mitigated with customer orientation, but still customer had the choice, it is a medium high level.
Rivalry within the industry
• Between LCC and national/network airlines ^
• Between LCCs ^
The rivalry within the industry is high due to the high number of big and

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