Porter's Five Forces Analysis

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Register to read the introduction… The capital costs of entering the business have been very high, but running costs have been low. Large firms have therefore been able to spread their capital costs over greater volumes of output and achieve lower unit costs. As a result there are only four significant players in the global GDS industry the US based SABRE and Worldspan, and European Galileo and Amadeus according to Das (2003). All were set up by airlines of consortia of airlines, through in recent years their ownership has become more diverse. The GDS industry has also shown a trend towards the establishment of geographical monoplies. For example, a high proportion of travel agents in the Uk use Galileo. An equally high proportion in France and Germany are Amadeus customers. …show more content…
It should equally be of no surprise that as soon as the internet offered a viable alternative distribution channel, airlines would embrace it enthusiastically.

Conclusion:

Any company must seek to understand the nature of its competitive environment if it is to be successful in achieving its objectives and in establishing appropriate strategies. If a company fully understands the nature of the Porter’s five forces, and particularly appreciates which one is the most important, it will be in a stronger position to defend itself against any threats and to influence the forces with its strategy. The situation is fluid, and the nature and relative power of the forces will change. Consequently, the need to monitor and stay aware is continuous.

Overall, Porter’s Five forces model provides a valuable backcloth against which to view airline strategic decision making. Any airline strategy, if it is to be successful, must deal with a complex interplay of often conflicting

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