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Rivalry in the airline industry is quite fierce. Airlines compete across several fronts, including pricing, service quality, technological innovation, and route networks. While low-cost carriers exert pressure on traditional airlines through aggressive pricing, full-service carriers compete through service differentiation and loyalty programs. Additionally, external factors like fuel prices, economic conditions, and regulatory changes continuously shape competitive dynamics. Airlines must continuously innovate and optimize their operations to maintain or grow their market share in a highly competitive and fluctuating environment.

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The competitive rivalry in the U.S. airline industry is high due to:

Intense price competition, particularly from low-cost carriers, forces airlines to continuously adjust their pricing strategies. Airlines often lower prices or offer discounts to capture market share, reducing profit margins.

Airlines differentiate themselves through loyalty programs, in-flight services, and amenities. However, this does not entirely eliminate price-based competition, as many passengers focus primarily on cost when booking flights.

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Group Analysis Task

1. Your group has been assigned one of Porter’s Five Forces to analyze for the US airline industry

2. Create one post in your force’s designated section that includes:

A clear explanation of your assigned force

Specific examples from the US airline industry

Supporting evidence (charts, diagrams, or relevant images)

3. Your analysis should consider:

Key factors that influence your force

Impact level (high/medium/low) with justification

Current trends affecting your force

Remember to include visual elements to support your analysis!

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Threat of hidden costs that are largely associated with foreign production that it crucial to this industry- firms should consider:

high employee turnover

poor workmanship

poor product quality

low productivity

All of these are hidden factors that international airline companies should consider and the case of Boeing showcases how detrimental a lack of regard for these factors causes, as shown from the current scandals. These hidden costs increase competitive rivalries

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Airlines require significant investment in aircraft, technology, infrastructure, and maintenance.

Additionally, Airlines have high fixed costs, particularly related to aircraft acquisition, maintenance, and staff. Variable costs include fuel, which is highly volatile, and labour costs.

(High barrier to entry)

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Storng force - airline industry is always affected by the fluctuations of oil prices, they cannot control it by themselves

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The threat of new entrants is low:

As established airlines (e.g., American Airlines, Delta, United) have strong brand recognition and extensive route networks, which makes it challenging for new airlines to attract customers.

Larger airlines benefit from economies of scale, which allow them to spread costs (e.g., fuel, maintenance) across a larger fleet and passenger base, making it difficult for new entrants to compete on price.

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The threat of new entrants in the US airline industry would be low due to the high barriers to entry such as:

High Capital Requirements - To start an airlines you require substantial amount of capital in order to purchase or lease aircraft, hire personnel including high cost personnel such as pilots and establishing operations alongside all other licenses required.

Access to the already established Distribution Network - Securing a slot at a major airport can be difficult and expensive due to other incumbent airlines already having long-standing agreements.

Economies of Scale - The established carriers benefit from economies of scale which make their pricing more competitive and cheaper, resulting in new airlines struggling to match.

Overall the threat of new entrants is significantly low due to the high capital required.

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Bargaining power of suppliers is high due to:

There are only two major suppliers of commercial aircraft—Boeing and Airbus. This duopoly gives these companies significant power over airlines, especially in terms of pricing and availability of new aircraft.

Airline labor unions (e.g., pilots, flight attendants, ground staff) are powerful and often negotiate for higher wages, better benefits, and improved working conditions. Strikes or labor disputes can disrupt operations and affect profitability.

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Brand Loyalty Programs

-Loyalty programs such as Delta SkyMiles or United MileagePlus aim to reduce buyer power by rewarding repeat customers.

Price Sensitivity

-U.S. airline passengers especially leisure travelers are highly price conscious. Many rely on comparison platforms such as Kayak or Skyscanner to find the lowest fares, driving competition among airlines.

Collaborative Analysis: Bargaining Power of Buyers in the U.S. Airline Industry

Understanding the Force

Key Factors Influencing Buyer Power

Price Sensitivity

-U.S. airline passengers, especially leisure travelers, are highly price-conscious. Many rely on comparison platforms such as Kayak or Skyscanner to find the lowest fares, driving competition among airlines.

-Availability of Alternatives

Buyers can select from numerous airlines, routes, or alternative transportation modes like trains, buses, or cars. The low switching costs between airlines strengthen their bargaining position.

Access to Information

1. -The internet and mobile apps empower buyers with tools to compare fares, flight schedules, and service reviews. Online platforms like TripAdvisor and Google Reviews provide transparency, encouraging airlines to compete on price and quality.

Brand Loyalty Programs

Loyalty programs such as Delta SkyMiles or United MileagePlus aim to reduce buyer power by rewarding repeat customers. However, frequent flyer programs face dilution as competitors offer similar benefits, reducing their effectiveness in locking in customers.

Impact Level: High

The bargaining power of buyers in the U.S. airline industry is high due to:

-Price Sensitivity: Leisure travelers who form a large segment, focus on cost savings, forcing airlines to offer competitive pricing or promotional deals.

-Transparency: Digital tools give customers complete visibility into pricing, routes and service quality, empowering them to make informed decisions.

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The threats to entry for this industry is relatively low. This is due to the high capital requirements needed for the initial aircraft investment, staff costs, and maintenance facilities. There is also a barrier such as regularity constraints, where airlines have to meet strict regulations set by authorties. The airline model is entirely based on economies of scale, whereby current airlines have had years of testing to establish an economical model; new entrants wouldn’t have had to the time to create a model in this way meaning it would be hard to enter and compete in this market. Another barrier to entry is brand loyalty. Flying thousands of metres above the air and entrusting your life/families life with a pilot/aircraft requires significant caution. People are more likely to go with years worth of position reputation over a new aircraft with little carrying experience

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Oligopolistic market. Many regions have a small number of dominant players, leading to limited competition and often high entry barriers for new carriers. Dominant firms can collude and use price fixing techniques to push to new entrants out of the market. However, budget/ low-cost regional airlines have emerged to challenge this.

Such as easyJet and Ryanair.

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The threat of substitutes for the U.S. airline industry is moderate:

For shorter routes, consumers may opt for trains or long-distance buses. As alternatives to air travel, though these are generally slower options. Additionally, ride-sharing services like Uber or Lyft can be viable for short regional travel, but they’re not typically a direct substitute for long-haul flights.

With the growth of virtual meetings (e.g., Zoom, Microsoft Teams), business travel may decline, as companies look to reduce travel costs and environmental impacts. However, for long-distance or international business travel, air travel remains the most efficient mode of transportation.

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The threat of new entrants in the airline industry can have significant implications, for example in the 2010s, Allegiant Air targeted smaller cities and underserved airports, offering low-cost, non-stop flights to popular leisure destinations. This business model directly competed with larger carriers systems and regional airlines. This still occurred despite the high barrier nature of the market due to all the costs associated, such as operational costs and start up costs.

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The barriers to entry in the airline industry are very high. This is because operating costs are substantial, and the industry requires constant updates to comply with government regulations. Moreover, the presence of strong airlines with a large base of loyal customers further adds to the difficulty of entering the market. Actually, there is not a single airline founded in the 21st century that holds even a 2% market share. Therefore, the likelihood of new competitors entering the market is remarkably low.

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The threat of new entrants in the Airline industry is low as there are factors such as brand loyalty and economies of scale to take into consideration. Consumers are reluctant to switch airlines hence why new entrants will struggle in establishing themselves and gaining such consumer confidence. As well as, established firms within the airline industry has already gain economies of scales as they are able to buy in bulk and have specialist to manage specific areas within their firm like IT, resulting to them having lower production costs. A new entrant might not be able to survive in the long run within the industry as it’s dominated and has high barriers to entry. For example Boeings dominance in the aircraft industry made it hard for new entrants as they weren’t able to keep up with the high capital requirements

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The threat of substitutes in the airline industry is moderate to high, depending on the market segment and region. For long-haul international flights, there are few substitutes, but for short- to medium-haul travel, alternatives like high-speed rail, buses, and cars can be viable competitors. The rise of virtual communication platforms may also reduce the demand for certain business travel, while emerging transportation technologies like Hyperloop could reshape the future.

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The threat of new entrants evaluates how easily new competitors can enter an industry and challenge existing businesses.

Several factors such as high capital requirements or regulatory barriers influence the threat.

Establishing an airline requires large sums of money for staff, technology, maintenance, aircraft leasing, and purchasing. One Boeing 737, for example, costs more than $100 million.
Evidence of the high entry and operating expenses is shown by Frontier Airlines' 2008 bankruptcy filing, which was partially caused by a lack of corporate guidelines.

The Federal Aviation Administration (FAA) have strict regulations on the U.S. airline business. Safety regulations, certification procedures, and operational compliance are expensive and time-consuming. It frequently takes longer for newcomers to obtain certification and authorization. This limits their capacity to swiftly expand their activities.

The impact level is low, due to significant barriers, including high capital investment, regulatory constraints, economies of scale, and strong incumbent advantages.

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The threat of new entrants is low due to barriers of entry such as economies of scales, regulatory restrictions, capital requirements and brand loyalty. In the US airline industry, the barriers to entry are high, therefore the threat of new entrants are low. As for economies of scale, established airlines benefit from economies of scales in operations, purchasing and marketing. However new entrants would struggle to achieve similar cost efficiencies, making it difficult to compete on prices. Leading into high capital requirements, starting an airline requires substantial investment in aircraft, maintenance, fuel and staffing. For example, JetBlue managed to break into the market by offering differentiated services.

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The bargaining power of suppliers is high as there is a concentrated pool of suppliers. Since the industry is dominated by a few firms, suppliers have a leverage over airlines where they can determine the costs. Since there’s only a few suppliers it’s difficult for a firms to switch suppliers. For instance, Boeing dominates the supplier industry in which they have control over fuel prices which could affect airlines overall profitability. Overall, The bargaining power of suppliers can affect the quality and profitability of an airline's products, resulting to airlines having to raise prices.

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Low; specialist suppliers likely have the capacity to meet the specs of competing buyers. Especially for crucial elements that relate to safety, planes cannot substitute at a subpar standard or ignore their necessity.

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Airlines are expensive, well regulated, large scale operations, passengers are also likely to be loyal to brands where they already have frequent flyer points. The threat of new entrants is not high

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Airlines are dependent on oil prices and supply of aircraft from a limited number of manufacturers, bargaining power of suppliers is likely high.

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The threat of new entrants is low in the airline industry as there are high start up costs. They further have to compete with other airlines already in the market who have achieved economies of scale. This makes setting competitive prices for the new entrants difficult as they face higher costs.

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Bargaining power of suppliers would likely be higher than average; the certification needed to verify the safety of the components used in airlines is crucial and, more than that, expensive and difficult to get. The number of suppliers for something like plane wings is unlikely to be as high as, say, mugs. Rolls Royce is still one of the most active engine manufacturers in the space, and their primary business is luxury cars. This is all to say that suppliers are rare, and safe suppliers are even rarer. Firms have little power in these cases.

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Threat of new entrants low; resources necessary to enter far too high. Rolls Royce, a well established brand, is still only capable of manufacturing engines for planes.

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Threat of new entrants is low due to high capital requirements, regulatory restrictions, brand loyalty, ad limited access to airport slotes. That is because, starting an airline requires a large investmenet in aircraft, fuel, staffing, and maintenance. Additionally, Regulatory Hurdles from the FAA and limited gate access at major airports increase the difficulty, creating more entry barriers for new entrants in the US airline industry. Further, established and existing airlines retain their costumers through loyalty programmes and brand trsut. Though it is true that new LCC (low cost carries) have entered the market, they typically target nich routes and still require heavy financial backing. Beyond the occcasional success that relies on strong finances and niche routes targeted, the threat of new entrants remains low.

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Airline travel is often non essential and reliant on the tourism industry, buyers are unlikely to use airlines if they cannot afford it. Businesses are also more likely to use online meetings rather than flying to attend meetings. As the service is no essential, buyers have price and alternatives prices available (Skyscanner), buyers can fly with whichever airline they choose, it is likely that buyers have a high bargaining power.

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The ariline industry has a large number of substitute products, especially regarding budget airlines who fly short distances. Many consumers are likely to go for the cheapest option unless there is a noticeable difference in quality, or if there is an insentive to stay, such as a milage or loyalty programme. This is due to the lack of switch cost.

The threat is lower in long haul or luxury flights, where there are more factors to consider. However, customers who prioritise comfort or environmental impact are still volatile customers, as they will choose the airline that best suits their needs.

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As an industry, threat is fairly moderate. The US has no explicit intention to construct extensive railways, which would replace airlines, at least within the nation, to an extent. However, the US has a thriving car market.

Firm by firm, threat is high (functionally), as customers can easily choose a different firm.

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Airlines require a large amount of capital to purchase aircrafts, hire personnel. They also have to go through a long period of safety tests to ensure they are safe to fly, after which they must purchase route licenses which is again a large investment. Due to these factors and the high competitive nature of the market i believe the threat of new entrants is very low.

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The threat of new entrants in the United States airline industry is low due to significant barriers. High capital costs make entry expensive, with aircraft alone costing over $100 million. Regulatory hurdles require new entrants to meet FAA standards and obtain licenses, while brand loyalty and corporate contracts with established airlines like Delta, United, and American limit customer switching. Existing airlines also benefit from economies of scale which reduces operational costs, and limited airport slot access further restricts entry. With all of these things taken into account, it is very difficult for new airlines to compete, keeping the threat of new entrants low.

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The threat of new entrants is generally low due to following factors.

Establishing an airline requires substantial investment in aircrafts, maintenance facilities, technology and infrastructure. Along these, ongoing operational costs such as fuel, labour, and regulatory compliance are also significant.

Customers tend to trust well-known airlines with established reputations for safety and service.

Limited availability of airport slots and gates, particularly in major hubs, making it challenging for new entrants to secure prime locations. Also, securing partnerships with global alliances is different for newcomers.

Moreover, the airline industry is heavily regulated, with strict requirements for safety, licensing and routes

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The Rivalry among existing competitors is high, this is because:

• Companies within the US airline industry are likely to have customer brand loyalty —> this means that customers are likely to have repeat purchases with the same airline, especially for those who take flights often. This can be seen with most airlines who offer a ‘loyalty scheme’ whereby the more flights taken the more rewards/incentives gained. For example, British airways a UK based airline offers ‘travel points’ to frequent flyers. They have different tiers for each customer such as, bronze, silver, gold and platinum. This means that the more flights taken the higher rank you will be which entails better rewards. The rewards may vary between discounted goods as well as discounted services(flight prices). Therefore the airline can gain larger revenue, meaning that they are more likely to have higher cash flows leading to more security within the company.

• Additionally, there are frequent changes in demand for flights where most customers fly in holiday periods and special events such as Christmas and new years. As well as there is switching costs for airlines as the demands have impacts on the price of aircraft fuel which creates higher variable costs for the airline.

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The level of competition in competitive rivalry is estimated as high.

The high number of competitors

-There are 18 major airlines in US so it would be not easy to success in the as a new company.

Diversity of competitors

-There are many kinds of US airlines. In the perspective of passengers, lines they provide, and the price there are many different airlines already. It is estimated for new company to provide new trait in this red-ocean industry.

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The airline industry has high barriers to entry, making it difficult for new competitors to enter the market. For example,

High start-up costs: The industry requires significant capital investment for aircraft, airport slots, and other infrastructure.

Economies of scale: Economies of scale allow established airlines to produce at a lower cost, which can make it difficult for new entrants to compete on price, since they would be losing out on profit.

Brand loyalty: incumbent airlines likely have strong brand loyalty and extensive route networks, which can be very difficult for new entrants to compete with.

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The threat of new entrants is low due to high barriers to entry and the dominance of established airlines.

High Capital Requirements: Entering the airline industry requires significant investment in aircraft, infrastructure, technology, and compliance with regulatory standards. This creates a substantial barrier to entry.

Brand Loyalty and Switching Costs: Legacy carriers and low-cost airlines (e.g., Southwest) have established loyal customer bases through frequent flyer programs and competitive pricing. New entrants find it difficult to attract and retain customers.

However, there are some current trends that can increase the threat of new entrants, such as:

Technology Reducing Barriers: Digital platforms for booking and customer engagement are making it easier for startups to reach customers, albeit without the economies of scale of larger airlines.

Post-Pandemic Recovery: The financial strain on established players during COVID-19 has created potential opportunities for smaller entrants, though these entrants must still navigate the high-cost environment.

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threat of new entrants are low in the airline industry as it’s difficult for new airlines to enter the market. customers have a loyalty to their favourite airline meaning they will always go back to the same airline if they had a good experience. there is high capital requirements and strict regulations. This cost of entry is also very high due to having to follow all safety rules. This means that new companies may not want to take the risk and join this industry as it may not be successful and they would loose a lot of money too.

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Aircraft manufacturers, such as Boeing and Airbus, have limited competition, giving them significant pricing power. These factors give suppliers considerable leverage over airlines, meaning a high bargaining power of suppliers.

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Focusing on the threat of New Entrants based on Porter's Five Forces, it can be understood that for the US airline industry, the threat of new entrants is low; this is due to the market's high entry barriers, such as:

- High entry costs: these are caused mainly by the high prices of the required machinery and fuel and airport slots to establish flight routes.

- Extensive brand loyalty: In the airline industry, multiple airline brands have already built an extensive consumer base loyal to their services and brand image.

- Regulations: The airline industry is bound by strict regulations to guarantee customer safety. Meeting these regulations requires a lot of investment and time.

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The threat of new entrants in the U.S. airline industry is low due to significant barriers.

High capital requirements, strict regulations, and the advantages held by established players through economies of scale make entry challenging. Also, Limited access to airport gates and slots further restricts newcomers. While some low-cost carriers like JetBlue have succeeded, these obstacles ensure that new competition remains limited.

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In my opinion, the threat of substitute products to the US airline industry is low. Some others may say that the rail industry is a threat, but this is not the case. Rail takes much longer and faces even more limitations than airlines. Though rail is not as reliant on fossil fuel energy sources, the travel time takes even longer, security and public transit risks still apply, and the infrastructure in the US does not favor rail as infrastructure in Europe does. Hence, I would predict little to no loss due to rail being a substitute. Ride-share options are also too expensive. A one-hour ride-share would cost about the same as a 1 hour + flight which can easily take you further.

The only real threat I see to this industry is the rise of electric cars. The highway infrastructure in the US is mature and connects more of the US than airports do. With the rise of electric cars and transport vehicles on the ground combined with the vast and supportive highway system people and companies alike may find more reliability and comfort on the road than relying on airlines. However, the technology and range of these vehicles still have time to develop, and though the prices are lower with these kinds of travel and the control over your travel/ transport is greater, the time to travel is also a factor that can't be diminished.

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The threat of new entrants in the US airline industry is low due to high entry barriers, high brand loyalty, and capital requirements / costs associated with entering the airline industry.

Joining the airline industry requires extensive investment in capital including technology and infrastructure, followed by high variable costs such as labour and fuel.

In addition to the entry barriers being high due to costs, it is difficult for new entrants to enter the airline industry as a result of a high concentration of brands in the market. These brands all have their own customers, who will not be likely to switch from their usual airline providers.

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The threat of new entrants is low

the airline industry requires significant investment to establish a business in, there are very high upfront costs like aircraft, pilots, other staff etc

it will be hard for new entrants to compete with more established airlines which already have brand image, they already have loyal customer base

high barriers to entry as there are multiple rules and regulations which must be adhered to before able to start business

may not be able to competitively price their service, as a new business wont be able to benefit from economies of scale as much as the larger well established airlines

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It is unlikely that new airlines would enter the UK market because:

1. Expensive to Start: The initial outlay for an airline's infrastructure, personnel, and aircraft must be substantial. For instance, British Airways has decades of experience and a huge fleet, which makes it difficult for upstart airlines to compete financially.

2. Strict Regulations: In the UK, new airlines must adhere to strict safety and licensing regulations enforced by the Civil Aviation Authority (CAA), which can be expensive and time-costly.

3. Robust Rivals: With cheap operating expenses and devoted clientele, well-known airlines like EasyJet and Ryanair control the UK market. Ryanair's emphasis on ultra-low tickets, for example, gives it a significant competitive advantage and leaves little opportunity for new competitors to thrive.

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Rivalry is increasing in the airline industry especially due to deregulation since the 1970s which has led to new entrants into the market. This then comes with the LCC’s who are able to lowball the major airlines. Although not validating or attracting higher end individuals looking for a luxury travel experience, their strategy is allowing them to somewhat survive in the market and compete with major players, leading to price wars and incentives being set out by airlines such as loyalty programmes. This is benefiting consumers rather than the airlines who look to achieve sustainable profit growth which seems to be an impossible task over the past few decades.

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There is a huge barrier to entry in the airline industry.

Extremely high capital requirements makes it only possible to certain individuals.

This includes all factor: fuel, the machinery itself, licenses to operate in certain airports etc.

E.g. Boeing 737 MAX, which may be the most commonly used aircraft in todays time - costs up to $120m per unit - making fleet acquisitions incredibly difficult for start ups.

Other factors such as EoS also come into play - new entrants will typically face higher costs per passenger until they reach significant market share.

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Threat of substitution refers to companies being concerned that substitute products or services from competitors may replace their own.

The threat of substitution in the U.S. airline industry is moderate as airplane companies can be considered oligopolistic - relatively large companies produce similar airline services causing significant barriers to entry for other enterprises competing.

While there are other alternatives to travel across countries such as driving or taking a train, ie EuroStar, airlines are the most efficient and convenient option for long distance travel. Making threat of substitution to the industry minimal.

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the threat of substitute products in the US airline

Airline industry faces a lot of threats from substitute services this challenges their market share. One main substitute is high-speed trains, if planes get cancelled they could use trains. And this may be a cheaper option for some customers so they would take this even if takes a little longer than a plane would. And this is also beneficial for those who don’t like planes they can still travel without having to enter a plane.

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Price-sensitive consumers with numerous options, especially for leisure travel, have significant bargaining power. The ability to easily compare prices and services online further empowers buyers and reduces airline pricing power. Additionally, the rise of low-cost carriers has intensified competition, giving consumers more choices and driving down prices.

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Threat of substitutes are prominent in the industry, for example, alternatives like train travel, car travel, video conferencing, and other modes of transportation can substitute for short-haul flights, especially when considering factors like travel time, cost, and convenience. However, for long-haul travel, air travel remains the dominant mode of transport due to its speed and efficiency.

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Highly competitive in this tight-knit industry with limited options and high costs.

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In relation to the airline industry, it requires high amount of investment and technological expertise and therefore threat of new entrants is low but the business nature itself is very high.

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The threat of new entrants in the airline industry is generally low due to the significant barriers of entry. As there are many factors, one of them is that since there are so many legal requirements in the airline industry, it is a very costly and lengthy process to securing permits, licenses, etc.

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As evident by the small number of key players in the airline martketplace worldwide, the threat of new entrants is very low. Indeed you need a significant amount of capital to enter the industry, ranging from technology, infrastructure, workforce and a large supply of oil. Building a strong brand name and loyalty with customers is also challenging given the already established switching costs imbedded in companies like Delta and United. This ranges from miles and deals with hotels, car rental companies and credit cards. In addition, transaction costs of building partnerships with governments and the airports (distribution channels) are expensive and time consuming.

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•The airline industry will require a significantly high initial investment due to different reasons such as purchase of aircraft’s and salaries of pilots and other crew members along with other maintenance costs

• As a new airline business it will also be difficult to compete with existing airline companies in order to build a brand image and attract customers as people are usually have loyalty towards the existing airlines and choose to travel with them

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Competitive Rivalry is at high risk, due to different airlines offering different features. It can be difficult to stand out with unique perspectives to stand a chance against other competitors. Especially entering newly, when airlines have already gained loyal customers.

It is hard to enter a saturated market if you do not have innovative ideas.

You have to look at the resources you have and the cost of research and developing.

You have to decide, whether you enter the luxury airline market, offering a quality service, if you enter the cheap standard airline market, where cheap flights are your USP or if you merge inbetween the two having quality, with a cheap cost.

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The airline industry has a low barrier to entry as it requires a large amount of capital to buy or lease aircraft, build infrastructure, and obtain the appropriate permissions. Aspiring entrants face further challenges due to strict governmental permits pertaining to safety, environmental requirements, and air traffic rights. It is quite challenging to deal with brand loyalty as a new business.

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The bargaining power of suppliers is high in the airline industry because there are not many suppliers for aircraft’s and oil needed for the planes so the suppliers have more bargaining power

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The bargaining power of suppliers in the US airline industry is high. This is due to the limited number of suppliers for critical inputs such as aircraft, fuel, and maintenance services. Aircraft production is dominated by Boeing and Airbus, meaning airlines have little room to negotiate prices or delivery timelines. Fuel is another key input, with prices subject to global oil market fluctuations, giving suppliers significant control. Airlines also rely on specialized maintenance, repair, and overhaul (MRO) services, which limits their ability to switch providers without high costs or operational delays. Unlike airlines, suppliers face minimal competition, which strengthens their power. Current trends such as supply chain disruptions and rising fuel costs have further increased supplier influence, making the bargaining power of suppliers in this industry high.

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In the airline industry the threat of substitutes is high because for short-haul flights there are multiple other ways of transportation like trains and cars

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Short distance travel: In short distance travel consumersmay prefer to use high speed trains, coaches or cars as these alternativee mag be cheaper.

Some consumers may prefer not to travel using aeroplane due to its high carbon footprint.

Long diatance travel: It could be argued that for long distance travel it is more efficient to use a plane rather than any other mode of transport. This is because this is fastest and arguably the most efficient way to travel long distances. Also trains and coaches cannot cross oceans which limits how far a consumer can travel using such modes of transportation.

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Price wars can form as a result of high threats to the us airline industry. This is because if there are a high amount of substitutes in an industry, firms want to lower their prices to have the most customers.