Smart Airlines Research Paper Example | Topics and Well Written Essays - 4750 words

Smart Airlines - Research Paper Example In the course of determining the state of the economy, it is critical to adopt and incorporate Porter’s five forces analysis. It is essential to note that the power of suppliers in the airline industry is immense, courtesy of external environment’s influence that affects the three inputs: fuel, labor, and aircraft, thus the high power of suppliers. For instance, the cost of aviation fuel tends to fluctuate in relation to the global market for the oil because of the geopolitical and other factors. Secondly, it is essential to note that the power of buyers in the airline industry is moderate to high. This relates to the proliferation of the online ticketing approach, as well as distribution systems. Flyers no longer have to be at the mercy of the intermediaries or agents and airlines to the satisfaction of the ticketing needs. In addition, the entry of low-cost carriers has been of great benefit to the fliers or consumers. Similarly, buyers enjoy massive protection in relation to the tight regulation on the demand side of the airline industry. These factors make airline industry to cede power to the consumers, thus the moderate to high threat of power of buyers. The industry requires significant or huge capital investment to facilitate entering or exiting of the sector. From this perspective, the industry boasts of high entry and exit barriers. From this perspective, the industry tends to experience low threats of new entrants because of the high costs. The airline industry in the United States is extremely competitive.