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Industry Presentations 2001 Strategy & International Business. The European Airline Industry 9th November 2001. AEA Members. Industry Trends. General Industry trends before September 11th terror attacks. Consolidation Declining profit margins Failed Mergers

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industry presentations 2001 strategy international business

Industry Presentations 2001Strategy & International Business

The European Airline Industry

9th November 2001

aea members
AEA Members

Strategy and International Business

Group E Industry Presentation

industry trends
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

factors affecting competition
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

p e s t analysis political economic social technological

Assessing the current market conditions

P.E.S.T. Analysis(Political, Economic, Social, Technological.)

Strategy and International Business

Group E Industry Presentation

political factors
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

economic factors
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

social factors
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

technological factors
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

strategic positioning

Bowman’s Strategy Clock

Strategic Positioning

Strategy and International Business

Group E Industry Presentation

the competitive environment
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

effects of terrorism

‘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

share price impact

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

impact on sector performance

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

prospects for the future

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

group e
GROUP E
  • Peter Redston
  • Susanne Wegl
  • Alice Brader
  • Gemma Mann
  • Kirsty Duncan
  • Sarah Morgan
  • George Brown

Strategy and International Business

Group E Industry Presentation