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Strategic Analysis For American Based Airlines

Strategic Analysis Of Hospitality and Tourism Businesses

U54081

The US Airline Industry

Portfolio

Simon Houston
Jessica McCormack
Mark Surguy
Shuangshuang zhao
Jiaying Zhang

Table Of Contents Page

1.1 Background to the Industry 3

2.0 External Analysis – PEST 4
2.1 Political Factors 4
2.2 Economic Factors 6
2.3 Socio-Cultural Factors 7
2.4 Technological Factors 9

3.0 Porter's Five Forces 11
3.1 Threat of Competitive Rivalry 11
3.2 Threat of New Entrants 12
3.3 Bargaining Power of buyers 16
3.4 Bargaining Power of Suppliers 17
3.5 Threat of substitutes 18

4.0 Predictions For The Future 19

5.0 Key Success Factors 20

6.0 Bibliography 28

7.0 Appendices 31

1.1 Background To The Industry

In 1903 the aviation industry was born: the Wright brother's first successful flight was in Kitty Hawk. By 1927, the first US air transport company formed; American Airways, later becoming American Airlines. Nowadays, they are one of the largest commercial carriers. Soon after, several other airline companies were formed including Boeing and United Airlines. In 1950s, the capacity and comfort of commercial flights had dramatically improved, planes were modernised, and jet service was introduced in 1959, enabling even faster cross-country service.

Over the last 50 years the airline industry has consistently grown at a very fast rate, with dramatic increase in number of passengers, the airline industry generating some $300 billion in revenue, employing about 1.7 million people, and caters for around 1.5 billion passengers a year. (Hanlon, 1999)

The U.S. airline industry is classified by government and is based on the amount of revenue that is generated from operations. This type of industry is categorized in 4 different sections: major, regional, national, and cargo carriers. ‘According to the FAA (Federal Aviation...