Michael E. Porter's Airline Industry Analysis

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Register to read the introduction… However the rivalry between competitors is high and the current negotiating power of suppliers is variable, and, in general terms, medium / high.

3 Strategic Groups

In the airline industry two main strategic groups stand up, flag airliners and Low-cost airliners.
The Flag Airliners group is characterized by the Network or Hub-and-Spoke business model. The Hub and Spoke system allows the airlines to maximize passenger occupation on each flight by offering connections to both domestic and international destinations by using their own Hub (airports used as a distribution centre for air traffic). This more complicated route system provides customers with a much larger number of route option, which in turn maximizes revenue opportunities.

The Low-Cost group is characterized by the Point-to-point business model. This model is based on flights that are provided to and from a city. Unit costs are lower in this model as aircraft are utilized more often because they do not have to wait for connecting flights, thus reducing fixed costs, which accounts for a large percentage of operating costs.

4 External Factors that can affect the
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Porter 1985 8 SWOT Analysis
8.1 Internal Analysis
8.1.1 Strengths
• Image, differentiation on price and brand
• The geographic location of the Lisbon Hub
• Average age of aircrafts 6 to 10 years
• Maintenance and engineering activities
8.1.2 Weaknesses
• limited coverage of destinations with direct flights allow foreign companies to compete for the traffic that has no direct link from the national airports
• high weight of the traffic input from abroad (inbound) attracts foreign companies to increase the frequencies and thus limited the competitive position of national airlines in major international routes
• Lisbon Hub almost in is maximum capacity
8.2 External Analysis
8.2.1 Opportunities
• Emerging markets in Asia, Africa and South America
• More fuel efficient aircrafs
• Decrease of the price of aircrafts due to the competition between Airbus and Boeing
8.2.2 Threats
• Increase market share by Low-costs
• Loss of stakeholder privileges, alliance and brand strength by competing with Low-Costs carriers [3]
• Alienation of core customers who value additional services at reasonable prices
• An overall lack of

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