Power of Suppliers-The bargaining power of suppliers is relatively low because there are not many airplane manufacturers and they all are very similar in product quality. Mergers such as Boeing and McDonnell-Douglas allow such companies to gain a slight degree of power because they create many opportunities for market domination. The increase in capital and reputation of the involved companies says a lot to potential buyers of their carriers.Bargaining Power of Buyers-The bargaining power of buyers is also relatively low. They do not have many suppliers o choose from and none of them are of any higher quality on average than another. There are also so many planes that have been produced that buyers have the option to buy used planes and save on production costs of new ones. Buyers are also unable to buy in volume and planes are a standardized product so there is no chance of product diversification leading to an airline choosing one over another.Threat of Substitutes-There is a great amount of threat of substitutes in the airline industry. With so many different carriers, one becoming an outright leader, especially a new entering firm, is almost unforeseeable. Consumers are more likely to fly on carriers that have been around for along time and that have a good reputation. A new firm will struggle to gain these things for many years and may be overtaken by the larger more established firms rather easily. Also, with the existence of price wars, it is very difficult for new firms to compete without a significant capital base, leading to easy substitution of services buy competitors.Current Developments in the Airline IndustryNew InnovationsThe airline industry has many new innovations that will help individual carriers to gain a competitive advantage, even if only temporary. The change from booking travel arrangements through a travel agent to booking arrangements electronically or on the Internet will undoubtedly change the in...
