One Boeing, Two major determinants in terms of aircrafts

One major shift will be
the use of certain natural resources such as; algae, flax, coconut husks or
even using cooking-oil to produce airplane fuel, often called “Bio Fuel”, this
is a huge advantage because the airplanes engines will not have to be replaced,
changed or even renewed because of the newly produced fuel.1
One example would be Airbus; they also say the technology, in which it and the
Bavarian government are investing more than 10 million euros ($11 million)
between them.2

Secondly, aircrafts are
considered one of the most important and highest expense in the
airline industry. The main suppliers within the
airline industry are the manufacturers of aircrafts like Airbus and Boeing, Two major
determinants in terms of aircrafts and their manufacturers are sale or lease
basis, which means that it mostly depends on the companies and whether they
want to have the aircrafts as assets on their balance sheet or would prefer a
higher ROA by applying the lease basis. Moreover, at the current stage,
aircrafts for long distance travel cannot be substituted by any other product,
which strengthens the bargaining power of the suppliers even more.3 Boeing and Airbus respectively have been the two major
suppliers of aircrafts to the airlines over the world.4
The strong position fuel suppliers
and aircraft manufacturers hold in the industry need to be taken into account
when operating an airline.5

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Labour comes third in our inputs, it is subject to the power of the unions who often
bargain and get unreasonable and costly concessions, which are granted rights
or a privilege from the airlines, plus, another point to keep in mind is that strikes
affect the industry greatly.

One example on how the
strikes have a great effect, German airline Lufthansa declared (2015) that it
lost at least 10 million euros ($10.8 million) a day from the longest strike in
its 60-year history as cabin crew confirmed a fourth day of strikes.6
Another is the general union strike example of Eastern Airline Workers’ Strike
(1989, U.S.) and Alaska Airlines flight attendant strike CHAOS (1993).7

To summarize, all
suppliers have tremendous bargaining power with the airline industry. There are
few fuel providers and no reliable alternative to fuel. There are very few
pilots in the job market and planes cannot be flown without pilots. Mechanics
for airplanes are in short supply and planes cannot be flown without being
serviced. Flight attendants provide services that cannot replaced easily and
customer satisfaction without flight attendant would be detrimental.

We recommend companies
in the industry to take into consideration the limited product suppliers,
keeping in mind that customers behavior is highly affected by price, which can
pose a tough competition. Certain analyses have proved to be important in the
long-term survival of the companies such as; SWOT analysis, Pest, peer group
analysis among others, this includes the three mentioned points in