• Submitted By: ta0zi
  • Date Submitted: 02/13/2009 9:16 PM
  • Category: Science
  • Words: 870
  • Page: 4
  • Views: 1

Barriers to entry
▪ Flight rights
▪ Slot rights
▪ Economy factors
▪ Environment factors (war, terrorism and established alliances.)
▪ Distribution channels
▪ Government rules and regulation
▪ Market structure
▪ Competition
▪ High fixed cost
▪ High capital outlay
▪ Ownership restrictions
▪ Protectionism
▪ Low new entrance threat
▪ Economy of scales
▪ Market purchasing behaviors
▪ Licensing
▪ Labors issue

Entry Barrier

Various factors have been contributing to the limited access to enter into the airline industry such as airport barriers to entry. As the more competitors enter the industry, slots become constraint and airports have to resort to exclusive-use gate leases at different hub airports. The slots right, gate constraints and gate utilizations have effect on the yields. Moreover the limitation of the airport gates availability, especially on the popular hub and routes, would deter new player to enter the industry.

Economy factors influences businesses. Bullish economy tends to result in the rapid growth of affluent customers. Consequently there is a shift in the purchasing behaviors. Customers would have higher disposable income and they would increase their spending appetite. Customers would look into travelling around the regions or even switch to airplane as the alternative transportation in view of savings more time on travelling. During the bullish economy growth, corporations would look into expanding their business beyond the shores. As time is limited, they would take the flights rather than other mode of transportations which take longer hours. Unfortunately when economy growth fallen, customers or corporation alike would tighten their purse resulting in lower spending. It will affect the business of the airlines tremendously as the financing cost for airline industry is high. Looking into the current economy situation, many airlines across the globe have...

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