Competitive Rivalry within the industry
The industry can be categorized into dometic and international transportations. Domestically the rivalry is large under the fierce competition of JAL and All Nippon Airways (ANA). The destination coverage of them is high with transit flights to arrive the impopular cities, however. The intensive competition within the local transportation industry is also due to the threat from JR Shinkansen, the Japanese high-speed railway network. With the convergence of major cities and high speed of the network, Shinkansen became a chief competitor against the airlines.
In the international market, Cathay Pacific, Singapore Airlines and Emirates were expanding their fleets while seeking for opportunities through providing new non-stop routes. They compete not only safety flights but in various dimension, including service quality, comfort and diversity of direct destinations. Together with the low growth of aviation industry, the international rivalry intensified since many airlines expected to maintain profits, or at least, to survive.
Bargaining Power of Customers
There are two key factors in determining the downstream bargaining power. They are the differentiation of service and information exposure to the customers.
It is hard to distinguish the differences between flights, as their starts and destination are always the same under comparision. However, passengers can evaluate the services themselves in terms of firm reputation, safety record, comfortability and respective airfare. However, these variables cannot be measured objectively sometimes. Thus the airlines could not have an advantage in bargaining.
Due to the sufficient information flow in Internet, the customers can early access the information, especially price, directly or through the travel agents. They have totally adequate information available from most of the airlines to compare and therefore select the best-suited flights for themselves. Because of...