bmi - bmibaby

Competition and Marketing
Airline Industry
Breunig Ulrich
™Cintuglu Caglar
™Yarar Deniz
Introduction
Airline Industry
Porter‘s Five Forces
BMI/BMIBaby
Strategies
™
31.10.2006
Airline Industry
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Introduction
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Introduction
Airline Industry
Porter‘s Five Forces
BMI/BMIBaby
Strategies
31.10.06
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State of the Airline Industry
Porter‘s „Five Forces“ model
Strategies of BMI and BMIBABY
Different Strategies for
Diversification
Airline Industry
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state of the airline industry
The international Air Transport Association
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The air transport industry and its economic impacts
Low cost airlines
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US domestic passanger traffic
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International passanger traffic
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Budget airlines
(no-frills or discount carrier / airline)
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South West was the first airline to operate a low cost
model, starting in Texas in the United States in 1971.
In Europe, after the liberalisation of air transport from
1993, Ryanair, easyJet and Virgin Express.
In 1998, British Airways set up a subsidiary, GO
(responding to a competitive threat), but was sold to
easyJet in 2002.
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Budget airlines
(no-frills or discount carrier / airline)
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a low - or lower - operating cost structure than their
competitors!
they do focus on cost reductions!
a single passenger class
a single type of airplane
a simple fare scheme
unreserved seating
flying to cheaper, less congested secondary airports and
flying early in the morning or late in the evening
short flights and fast turnaround times
emphasis on direct sales of tickets, especially over the
Internet
employees working in multiple roles
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Budget
airlines
(no-frills or discount carrier / airline)
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British Airways
easyJet
Ryanair
Bmi
bmibaby
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State of the Airline Industry
Introduction
Airline Industry
Porter‘s Five Forces
BMI/BMIBaby
Strategies
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www.britishairways.co.uk
www.flybmi.com
www.bmibaby.com
www.ryanair.com
www.easyjet.com
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Company capability profiles
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Introduction
Airline Industry
Porter‘s Five Forces
BMI/BMIBaby
Strategies
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Fare costs
Airport Tax costs (cheaper
Airports of cities)
Full service or No Frills
Distribution (Internet/Travel
Agencies)
Frequent Flyer
Programs
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Problems of Airline Industry
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Introduction
Airline Industry
Porter‘s Five Forces
BMI/BMIBaby
Strategies
Airline Industry is affected by
many outside factors:
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Oil
Terrorism
Consumer
confidence
Aircraft safety
…and others
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The Porter Model: Five Forces
Introduction
Airline Industry
Porter‘s Five Forces
BMI/BMIBaby
Strategies
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Airline Industry
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Five Forces:
1.) Threat of new Entrants
Introduction
Airline Industry
Porter‘s Five Forces
BMI/BMIBaby
Strategies
31.10.06
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Seems to be tough to break into
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Cost of borrowing (cheap
borrowing leads to saturation)
Brand identity & Frequent Flyer
Programs
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Five Forces:
2.) Bargaining Power of Suppliers
Introduction
Airline Industry
Porter‘s Five Forces
BMI/BMIBaby
Strategies
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Dominated by Airbus and Boeing
Unlikely they try to integrate vertically
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Five Forces:
3.) Bargaining Power of Customers
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Introduction
Airline Industry
Porter‘s Five Forces
BMI/BMIBaby
Strategies
31.10.06
Quite low
Differences between airplane seats?
Price/Time
-Cost comparison through Internet
etc.
www.checkfelix.at
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Five Forces:
4.) Threat of Substitutes
Introduction
Airline Industry
Porter‘s Five Forces
BMI/BMIBaby
Strategies
Time, Money, Personal Preference
Likelyhood of taking
Train
Car
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Five Forces:
5.) Competitive Rivalry
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Introduction
Airline Industry
Porter‘s Five Forces
BMI/BMIBaby
Strategies
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Airline Industry is fiercely
competitive
Growth is moderate
low returns
‹ buyers are receiving the benefits of
lower prices
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Airline Industry
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BMI - BMIBABY
Introduction
Airline Industry
Porter‘s Five Forces
BMI/BMIBaby
Strategies
BMI: 2nd largest Airline in the UK
BMIBABY: low-fares Airline
Both are owned by the same
company!
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Advantages:
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Introduction
Airline Industry
Porter‘s Five Forces
BMI/BMIBaby
Strategies
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BMI tries to cover all customers,
both business and low-cost
travellers
BMIBABY uses old Planes from
BMI for low prices
Major company has experience
with Airlines
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Disadvantages
Introduction
Airline Industry
Porter‘s Five Forces
BMI/BMIBaby
Strategies
Altough there is no rivalry, BMI might
have created a competitor which
costs them customers
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References
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-http://www.iata.org/
-http://www.atag.org/files/Soceconomic-121116A.pdf
-http://www.aea.be/
-Ryanair’s impact on airline market share from the London
area
airports: a time series analysis, D.E.Pitfield
-http://www.bized.co.uk (British Airways: Asset-led or Marketled? - Activity)
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Thank you for your attention!
Introduction
Airline Industry
Porter‘s Five Forces
BMI/BMIBaby
Strategies
31.10.06
Airline Industry
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