Supplier Concentration Theory In The Airline Industry

The Airline industry, which was regulated by the government, through a liberalisation policy. The airlines was supplied to the public, this was done to regulate competition and privatisation that occurred through the airline industry theses regulation however were lifted and the policies were more open.
The supplier concentration theory is one of Porters five forces in which it suggest that the supplier influence, refers to the the excessive demand that suppliers can exert on business. This can be by suppliers raising prices of services, minimising the quality of the services that they do provide, or through their reduction of the availability of services. Supplier concentration is one of the main drives in shaping the competitive structure …show more content…
This would be because of other airlines reactions to the prices and the competition to match or provide a lower price, however evidently still being able stay around the price range of the rest of the airlines. The elasticity would increase if other competitor refuse to follow the price increase and cause the demand to be relatively elastic and a rise in price would lead to a fall in the total revenue of firms, so Easy Jet providing hotel service at the cost for £920 in comparison to the other airlines could be seen as the cause of the downward reaction in the demand curve. (Richard G, Lipsey, Harbury, C …show more content…
The idea is to encourage efficiency in which it creates a wider choice for consumers and evidently would reduce the prices and improve the quality of the business. Competition enables the expansion of the market share due to it encouraging businesses to improve on their quality of their services in the airline industry such as flight experiences, better deals involving hotel and car rentals, this is attractive consumers, it also provides consumers the ability to choose the right deal in which it would offer the right balance between the price and