EUROPEAN AIRLINE INDUSTRY Harvard Case Solution & Analysis

Eurpean Airline Industry Case Solution

INTRODUCTION:

The purpose of this case study is to analyze and study the business structure and strategies of the European airline industry. The analysis of the industry includes a comprehensive appraisal of the effects of the regulatory and the deregulation policy of the governments of the region on the airline industry and the market. The analysis of the subject includes the Pestel analysis through which the political, economic, social, environmental and the legal aspects of the industry and the markets where these airline organizations operate will be analyzed and studied.

This analysis will assist the experts and professionals to understand the environment and segments of the markets and their complications that these airline organizations have to manage while operating in the markets. The Porter analysis of the European airline industry will assist to understand the industry issues and challenges for the various airliners in the region that they have to tackle while being successful and maintaining their market share or even increasing it. On the other hand,the value chain and the competitive advantage analysis of the industry will assist to realize the value chain issues and benefits along with the successful competitive strategies that some of the organizations are practicing in the market.

OVERVIEW:

The case study of the European airline industry highlights the business strategies and working nature of the industry of Europe in various areas, the regulated one and the deregulated, one and the affects that it had on the financials and revenues of the industry. The most critical illustration can be judged through the prism of the consumers and the travelers who traveled by air.

The regulation era of the industry reflects the negative performances of the industry in the whole of Europe due to constant long term losses that the companies and the governments had to suffer as almost all of the dominant organizations were privately owned and government controlled entities. The challenges were also critical in terms of unionized structure of the employees of the industry.

The airline market of the region was dominated and contested upon by two segments of entities that operated in the market the flag carriers (which were government owned) and the charter companies that operated in the region. The flag carriers of respective governments of the regions had the dominant market share of the industry as it was roughly above 70% of the market and the market share of the chartered companies was below 30% roughly.

This also reduced the bargaining power of the customers as the price tariffs and destination contracts were regulated by the governments of the country and the prices of the tickets were relatively higher and above the purchasing power of a significant segment of the population of the region who were constantly looking for the cheaper alternatives of travelling. The primary reason of the increased prices of fares of the airline tickets was the rising wage rate of labor of these companies which they were able to influence due to unionized structure of the organizations and due to steep maintenance costs of the fleets and the debts of these flag carriers that operated with monopoly in the region.

INDUSTRY ANALYSIS:

The industry analysis of the airline industry of the European market will assist to understand the specifics of the environment and the industry itself and thus, it will assist in understanding the complexities, positives, negatives, issues and challenges of the industry.As a result, it will lead to a better understanding for the management of the organizations to take up feasible strategies and policies to sustain and grow the business in the present circumstances of the industry....................

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