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Porters Analysis

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Porter's 5 Force Analysis
Rivalry (High)
Rivalry within the Canadian Airlines Industry is relatively high although WestJet and Air Canada are the two largest companies. This is due to various reasons which include difficulties in exiting the company,high levels of demand and price competition. The demand for the industry is huge and its a billion dollar market which airline companies want to control. The Airlines Industry is highly saturated on domestic and international levels which creates high rivarlries. Companies compete through prices, offering various products and customer service. Market Share is created in this market through price competition, so when major company decreases their price many competitors must price match in order to keep the rivalry strong. Also, exiting the industry is highly difficult due to sunk costs and losses during the liquidation process.
Buyer Power (High)
Buyer Power for this industry is high due to the large number of airlines in the industry. Most consumers are price sensitive which will force most competitors to adapt. This can be done through lowering prices and/or offering different products such as first class, paid in-flight cafe, limo services, etc., to maintain market share. Due to high price sensitivity and the buyers power to switch, many lower class airlines can avidly compete against larger airlines. Buyers can pick and choose which airlines to fly with and that is becoming easier with their ability to quickly compare prices, services and quality.
Supplier Power (High)
Supplier power is high because most airline companies need parts for their aircrafts and for this they must go into contracts with them which is usually a high fixed cost for the company. Also, the main supplies for the aircraft are fuel, airports and body parts for the aircraft. There are only a few companies that can supply these airline…...

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