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Essay Overview of This British Airline Industry

Project id 1002362
Subject area Other
Document type Essay
Words 1439
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I. Overview of this sector With a donation of #b 18.4 to the Gross National Product, #b7.8 in taxation to exchequer and applying 234,000 employees British Airline Industry could be regarded as among the major businesses of United Kingdom. As an overview of the airline business we could declare that "By their nature, airlines are exceptionally capital-intensive, fiercely competitive, fossil-fuel dependent, labor intensive, government controlled, politically influenced, and weather vulnerable". Thus, with an oligopoly market structure airlines are competing on price, cost efficiency and product differentiation. These all attributes allow this business hard to get into, highly aggressive and buyers oriented. Below we'll run an evaluation to identify the reasons, which makes this industry like this, with Porter's Five Forces model. I. Rivalry Based on Captain and Sickles (1997) that the European airlines have historically been sheltered from competition via bilateral agreements between member states and have been heavily subsidized. Thus, UK airline industry appreciated benefits of competition less surroundings. But regulation program started in 1984 and followed with the 1992 EU liberalization program has altered the competition environment in the industry. However, the 1992 liberalization program exposed these airlines to a more competitive environment with the entrance of the world's other airlines to this heavily protected market (Captain and Sickles, 1997). Therefore, now airlines are mutually competing on price/fares, cost of production and routes availability. Their solutions are distinguished in space and by time of travel as well as in different dimensions like relaxation and flexibility of ticketing (Charles and Se...

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