Using Airlines

	Using Airlines Buyers’ bargaining power in oil industry is low as there is no price sensitivity and the concentration is very high. Buyers are industrial players and have low power because upstream suppliers can control supply and consequently prices.
In Airlines the concentration, the volume of the single buyer, switching costs and the backward integration are low while substitutability is high. Buyers are more price sensitive, except for business travelers who are price-intensive.

Suppliers’ bargaining power in oil sector is low, as these industries used vertical integration to control the process, there is no threat of forward integration (as in Airlines) and the concentration is low (there are many plant suppliers and engineers).
In Airlines it is high, as the concentration of aircraft producers is moderate, the power of services is low and the power of jet fuel producers is high.

To face the threat of entry industry can keep costs low and consumer loyalty high and encourage the Government to limit foreign business activity.
In oil companies this threat is very low, as there are very high barriers to entry (high capital cost, economies of scale, environmental regulation) and product differentiation is low, as the main factor is oil.
In Airlines the threat of entry is higher than in the oil industry. In fact, even if there are barriers to entry (economies of scale and initial capital investment are high), product differentiation is higher as it depends on different destinations.

Today, the threat of substitutes in the oil sector is low because of nuclear power, hydroelectric, solar and wind energy.
Airlines have more substitutes, particularly trains, so the threat is high (except for longer distances where it’s lower).

The threat of rivalry in the oil industry is low: the concentration is very high so it’s easy to face rivalry. The diversity of competitors and product differentiation is low.
In Airlines this threat is high, since the concentration is low and the diversity of competitors is high.

In conclusion the oil industry has high profitability while Airlines have low profitability.
Airlines have to recognize the need for radical change to survive and to prosper.
They can improve their profitability by optimizing yield, load factor and unit cost.
They can share services with other airlines by establishing alliances and partnerships, link their networks to expand access to their customers, improve product differentiation using other flier schemes, and become more flexible in their pricing.

Using Airlines 6.9 of 10 on the basis of 1096 Review.