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Choose one of Porter’s five forces.
Discuss the characteristics of the airline industry within this framework.
Does your selected market force result in higher or lower airline profits?
One of porter’s five forces that I choose is Entry. It can be very difficult to enter the airline
industry with barriers to entry ranging from government regulations to high costs and fierce
competition. New airline entering the airline industry intensifies competitions and diminish the
margins of current firms. Current airlines make it hard for new airlines to enter the industry due
to the increase of rivalry. To enter an existing airline market, new airlines face different type of
challenges related to finding the target markets, establishing, or having a reputation, high costs to
entry, heavy government regulations or restrictions, and other type of financial hurdles. To keep
their customers, other airlines create reward and/or loyalty programs that prevent customers from
going to new airlines. When new airlines join the market, the profits of existing airlines are
lowered as customers have more options and can choose the airlines with the lowest ticket costs
or switch to airlines with better incentives.