Industry Presentations 2001 Strategy & International Business

1. Industry Presentations 2001Strategy & International Business The European Airline Industry 9th November 2001

2. AEA Members Strategy and International Business Group E Industry Presentation

3. Industry Trends General Industry trends before September 11th terror attacks • Consolidation • Declining profit margins • Failed Mergers • International Alliances - e.g. Star Alliance Strategy and International Business Group E Industry Presentation

4. Factors Affecting Competition • New Entrants - No Frills Airlines e.g. Easy Jet • Advertising • Market Segmentation • Competitors Focus • Increasing Consumer Power Strategy and International Business Group E Industry Presentation

5. Assessing the current market conditions P.E.S.T. Analysis(Political, Economic, Social, Technological.) Strategy and International Business Group E Industry Presentation

6. Political Factors • Ownership rules and bilateral agreements • Monopoly legislation • Liberalisation • Financial aid • European Air Safety Authority • Allocation of landing slots Strategy and International Business Group E Industry Presentation

7. Economic Factors • Rising Oil prices • Cyclical nature of Industry • Global economic downturn • Industry characterised by falling profits and increased competition. • Distinct market segments becoming more evident Strategy and International Business Group E Industry Presentation

8. Social Factors • Psychological factors - fear of flying after 11th September Attacks • Global recession has negatively impacted Tourism Strategy and International Business Group E Industry Presentation

9. Technological Factors • Increased security measures - Criminal database cross-checks - Cockpit security tightened - Sky Marshalls introduced • Iris scans to speed up turn around time for passengers in terminals. • Aircraft now capable of faster flight with greater numbers of passengers Strategy and International Business Group E Industry Presentation

10. Bowman’s Strategy Clock Strategic Positioning Strategy and International Business Group E Industry Presentation

11. The Competitive Environment Porter’s Five Forces Model • Threat of new entrants • Bargaining power of the firm’s suppliers • Bargaining power of the firm’s customers • Threat of substitute products • Intensity of rivalry among competing firms Strategy and International Business Group E Industry Presentation

12. ‘The September 11th attacks have accelerated the recession that was looming on the European airline sector’ AEA report Effects of Terrorism • Immediate Revenue loss - Cancellation of flights to and from the US • Higher fuel costs • Fear to fly • Share price impact - Gulf War Comparison Strategy and International Business Group E Industry Presentation

13. Immediate Impact on Industry Share Prices - Falls could accelerate trends of consolidation that characterise the industry. Share Price Impact Strategy and International Business Group E Industry Presentation

14. Historic movements in Industry prices - New York attacks could have a similar, if not more pronounced effect on passenger figures than the Gulf War. Impact on Sector Performance Strategy and International Business Group E Industry Presentation

15. Recession within the Industry seems inevitable. As competition increases, airlines will be forced to further reduce margins in order to compete, or choose a strategy that will allow them higher margins ( focussed differentiation.) Prospects for the Future • Accelerated cost cutting • Consolidation - Merging of European flag carriers to reflect US market structure • Greater degree of market segmentation. - Expansion of ‘no frills’ niche Strategy and International Business Group E Industry Presentation

16. GROUP E • Peter Redston • Susanne Wegl • Alice Brader • Gemma Mann • Kirsty Duncan • Sarah Morgan • George Brown Strategy and International Business Group E Industry Presentation