Airline Industry

1
Airline Industry

• Is this a profitable industry?
• How do Five Forces account for profits?
• How do airlines compete?

2
Major Players

• Delta
• US Airways
• United
• American
• Northwest
• Continental
• TWA

• Southwest
• Alaskan
• Midwest
• ComAir
• ASA

3
Differentiators/Niche Players?

• JetBlue
• Low cost Business-class only
• Virgin
• Sleeping space
• Showers
• Pick-up Service
• Back massage

4
Airline Industry Profitability
5
Capacity Utilization
Available Seat-Miles (in millions)
6
Keys to Profitability?

• Increase total utilization rate
• Which business-level strategies?
• Retire excess capacity?
• Decrease break-even utilization rate
• Efficiency (quick turnaround, new planes)
• High-load routes
• No-frills service
• Secondary airports