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Analysis of the Force
Overall, the five forces model suggests that the overall intensity of competition in the airline industry is likely to be severe. Back in the early 1980's competition was very intense. During the late 1980's the monopolization of major routes by a few major carriers, the limited availability of free landing spots at major hubs and the emergence of limited brand loyalty and tacit price agreements have all helped reduce the intensity of competition. However, as already mentioned, slumping demand in the early 1990's plunged the industry once more into a severe price war. Airline travel is a commodity-type product, with limited potential for differentiation.
Rivalry among Firms: High
Rivalry among firms within the airline industry is high because low cost airlines have entered the market forcing existing competitors to control costs. Intensely competitive industries generally earn low returns because the cost of competition is high or buyers are receiving......

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Approximate Word Count: 2609
Approximate Pages: 11 (250 words per double-spaced page)

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