LONG HAUL TRANSATLANTIC AIRLINE MARKET

Changing Nature of the Long Haul Transatlantic Airline Market

Executive Summary

Transatlantic flights include all those airlines that run across the Atlantic Ocean. The flights can fly from Europe or Africa and terminate in North and South America. With the changing nature of air travelling, long hour flights, safety measures, etc., the passengers today have their own set of demands to get some extraordinary services by the airlines. Today passengers prefer airlines that provide them with most stops and they can easily cut down their long hour journey. All of this change in the functioning of the airlines industry has contributed to the mergers and alliances of airlines worldwide. In this manner, international airlines are being able to spread their networks all around the world with better services. The research has suggested that these alliances are getting their way in the airlines industry. In June 1996, around 171 global airlines created strategic airlines with 380 alliances. We have prepared this report by studying the alliance of British Airways and American Airlines. The demand side and supply side of the market has other implications on these alliances. The additional routes and flights that add up to the hub are major concern for these airlines now. All this adds up to frequency in flights and increase in the air traffic. The management has to be very efficient to deal with all these changes. The incremental utilization of system components reduces the average costs for the airlines. This way they can achieve economies of scale as well in the most cost-effective manner. The deregulation of the industry has led many airlines to get into strategic alliances with foreign airlines. To stay competitive in the global markets, it is necessary for airlines like British Airways and American Airlines to keep their position in the market intact and do not let any airline go ahead of them. All the new strategies that have worked out quite well and conferred big advantages for the larger airlines, has given them liberty and have authorized the larger airlines to utilize their huge size as a warhead against the smaller upstart airlines.

Executive Summary2

Part 15

Introduction5

Market Structure5

Demand Side6

Supply Side7

Competition in the Industry7

Consolidation to build ONE stronger system7

Competition8

Porter's Five Forces Model8

Threat of new entrants8

Threat of substitute products or services9

Bargaining power of customers (buyers)9

Bargaining power of suppliers10

Intensity of competitive rivalry11

Part 212

PESTLE Analysis12

Environmental12

Economical12

Political14

Social and Technological (Impact of the external environment)16

Legal16

Part 318

Conclusion18

Recommendations18

Changing Nature of the Long Haul Transatlantic Airline Market

Part 1

Introduction

Transatlantic flights include all those airlines that run across the Atlantic Ocean. The flights can fly from Europe or Africa and terminate in North and South America. The airline sector contributes the most to the economy. Any fluctuations or ups and downs in the Airlines sector have a direct on the economy of the region. With the changing nature of air travelling, long hour flights, safety measures, etc., the customers even now demand some extraordinary services by the airlines. They prefer airlines that provide more stop over, and they can easily ...