Introduction
Aviation industry is one of the leading business industry in a worldwide manner. In this recent condition of globalization, the aviation industry is blooming day by day as the consumer that is the passengers are showing immense interest as the journey in an airbus gives luxurious feeling to the passengers. In addition, the journey by a flight also help the passengers to save their valuable time (Hannigan, Hamilton III, and Mudambi 2015). Porter’s five forces rule is one of the most useful tools for analysing the market of any industry. The Porter’s five forces tool is composed of five factors such as power of the supplier, power of the buyers, entry and exit barriers, threat of substitute companies, intensity of the competitive rivalry from the other companies of the country (Lohmann and Spasojevic 2018). The essay is based on the market analysis of the aviation industry of USA. For satisfying the purpose of this assignment, the PESTLE analysis of the US market will also be discussed in this essay. As a chosen aviation organization, Etihad airways is selected. In this essay, the SWOT analysis for this organization will also be discussed so that market’s strengths, weakness, threats and opportunities can be understood in a well manner. The chosen organization Etihad Airways, is based on United Arab Emirates (UAE) and it is the national carrier of Abu Dhabi region and since 2003 the company is exerting its commercial operations (Ulrichsen 2015). In recent time, Etihad Airways are offering daily flights to various cities of US nowadays. This essay will critically focus on the opportunities of Etihad Airways in the market of US.
Porter’s five forces
The porters five forces rule will critically analyse the aviation market industry of US. Although, the industry has grown in last ten years, various negative forces are affecting this industry in a worldwide manner in recent years. US is not different from this market trend. While analysing the first force of the Porter’s five forces that is power of the suppliers it can be said that the suppliers power in the aviation industry is one of the crucial factor for running the industry in a well manner. The main reason behind this reason is that, the aviation industry is based mainly on three things that are aircrafts, labour work force in the aviation sector and the most important thing is the fuel of the aircrafts. Supply of all these things are dependent on the external suppliers. For example it can be said that, the price of the fuel is subject to vary in the global oil market and other geopolitical issues again contribute to the alteration of price of the oil in the market. In addition to this, the labour power is also based on the power of the labour union. In various cases it is observed that, the bargaining power of those organization greatly affect the industry as they claim costly and unreasonable concessions from the host company for their labour work force. Other important factor of the industry is that the availability of the aircraft and in most of the cases, the airlines companies are taking aircraft on wet lease or on outright basis sale (Etihad Airways 2014) . Hence it can be said that, the companies are immensely dependent on either Boeing or on Airbus for their need. So it can be said that this dependency has make the supplier’s power so powerful in the aviation industry. Etihad Airways planned to fly by using locally produced sustainable fuel extracted from plants grown in salt water (Khaleej Times 2017). In such rising market price of conventional fuel in the world market, the use of sustainable fluid in commercial flights, can be a serious opportunity for Etihad Airways (Khaleez Times 2019). The next factor in the Porter’s five forces is the power of the buyers and this can another opportunity of Etihad Airways. Due to growing technology in the world, the scenario of ticket booking system of the airlines industry has also changed a lot. In recent times, the use of online ticket booking system make the process very easy and hustle free for the passengers. Apart from the price wars from the other companies, this online ticket booking system has positively impacted the industry. Although, due to the price wars, a few segments of the market is affected. However, due to this easy system in the booking system, the amount of generated revenue is increased greatly and this is the serious opportunity for the airlines companies. The next factor according to the Porter’s five forces is the entry and exit barrier of the aviation industry. It is quite evident that the in order to start business in this industry a huge amount of capital is needed and along with this if the airlines company decided to exit from the industry, they have to absorb a serious amount of loss. So it is easily understandable that, due to the high entry and exit barrier of the industry, everyone cannot easily enter into the industry without a high amount of capital. As Etihad is a well-established airlines company, it will be a little easy to take entry into the market of US. In addition this restricted into the aviation industry will help Etihad to improve their business in US (Etihad Airways 2017). The next factor of Porter’s five forces in case of the aviation industry is the threat of substitutes that is option of other transport system. In US, the consumers are not taking train or bus generally for travelling from one place to another. In US, the flying is the normal phenomenon among the people. Although a few amount of population percentage also uses their personal cars for travelling. It is observed that, in 2018 the 32% of travellers almost spend almost $5000 to $ 10000 in their overnight travel trips and the number of overnight trips was almost 7.4 trips on average in 2018 (US Department of Transportation 2019) This data indicated that, the changing buyer’s mentality is also one of the most important opportunity for the overall aviation industry and for Etihad as well. Lastly, the presence of rival company is the last factor in the porter’s five forces factor of the aviation industry. The airlines industry in the US is very competitive in nature due to presence of various rival companies in the industry such as Hawaiian Airlines, Allegiant Airlines, Alaska Airlines, Delta Airlines. Along with this, the entry of low cost carrier, high operating expenses may create threat to the overall industry as well as the business of Etihad Airways. However, the entrance into the low cost airlines facility may help the industry as well as the organization as well (Whyt and Lohmann 2016).
While focusing on the PESTLE analysis of the aviation industry it can be said that several political, economic, social, technological, legal and environmental factors of the market are affecting the industry. The political factors in the aviation industry is very crucial as it is directly associated with the wellbeing of the industry and political factor may include any changes in the existing policy, changes in the government’s decision. However, US government is supporting the airlines industry and as a result it can be said that such support from the end of the government can promote the industry in US. The local airports are operated by the local government and this will the help the industry to flourish. The economic factor is another area of opportunity for the Etihad Airways in US as due to the lower cost air carriages the number of travellers are increased in a huge manner so, it can be said that this, enhancement in the number of passengers will positively impact in the growth of the aviation industry (Zahari and Romli 2018; Dresner et al. 2015). Along With this, it is reported that, the aviation industry contributes almost 5% of the total GDP. It is estimated that, almost $1.3 million is contributed by this industry to the overall economy of the country. Therefore it can be observed that, in 2015 the American Airlines are the highest gainer in their business and other airlines companies are not far behind at all. In the 2015 economic year, the American Airlines have earned almost $789m million and overall aviation industry is contributing $168,874 million as operating revenue in the same financial year (US Department of Transportation 2019). Hence, it can be said that, the economic revenue generated from this industry is indicating the growth of the country. The social culture of taking flight as transportation system in most of the cases has also promoting the aviation industry. Hence, this changing social behaviour of the consumers of the country is another area of opportunity for the aviation industry in the market of US. Therefore, the restriction in the cross border investment in the aviation industry of US, has hampers the optimizations of the business models of the airlines companies of the company. Technological factor are also another one of the key area of opportunity of the aviation industry of the industry (Lohman and Spasojevic 2018). As the advancement of the technology allows the aviation industry to give more modern facilities to its consumers and modern ticketing system and easy cancellation policy also promotes customers experience in a positive way. This improved customers behaviour also passively affect the economic factor of the aviation industry. For taking advantage from the legal factors of the market should maintain all the legal aspects of the country. Environmental factor is not such area of concern for this industry. However, airlines companies should maintain all the laws and regulations regarding environmental pollution as this industry is also one of the contributors of environmental pollution (Lohmann and Spasojevic 2018).
SWOT Analysis
The SWOT analysis of Etihad Airways will help the organization to understand its strengths, weakness, opportunities and threats which may be faced by the company. In the aviation industry Etihad is one of the successful airlines company and in each every year the company is enhancing the amount of revenue generation. In 2017, the company earned US$ 6.1 billion which was US$1.9% of previous year’s annual revenue. This economic stability is one of the strengths of the organization. In addition to this, it is observed that, due to the betterment of the delivered service, the company has saved almost 7.3% of unit costs and it will help in generation of revenue of the company. Presence of a huge number of competitors in the US aviation industry, can be counted as one of the weakness of the company. Since Etihad is quite new in this industry, so the company’s promotion is mainly dependent on the sponsorship. Lack of attractive advertising strategy of the company can also be another weakness. As a part of the opportunities, it can be said that, the use of sustainable oil in the commercial flight will help the company to save their costs by reducing the costs of fuel buying. In addition to this, a high class brand image is another opportunity of the organization. According to new policy of the company, there will be no ban on the large electronic devices in the flights to US from Abu Dhabi (Ben 2018). This decision will attract more passengers specifically business class passengers to the company. The breaking of Partnership with the American Airlines in US may create serious threat in their business in US and in addition they also ceased their route to Dallas, San Francisco, New York. This may be counted as serious threat for the company in generating revenue from US (Kasssem 2017).
Business strategy
As a part of their marketing mix plan of Etihad, the company mainly focused on the pricing of their service and they created reasonable pricing policy for all kind of customers. For the premium passengers they offer high-end services and on the other hand it has adopted semi premium and economic pricing policy. They also offers promotional offers in festive seasons to give low price flight for the customers and focuses on online promotion for enhancing brand image of the company.
Conclusion
Hence it can be concluded that, the by using this low pricing policy, various types of segments in the class of the flight for all type of people, implementing new strategies in their promotional plan have made the company to differentiate itself from its other competitor in the market segment. Hence, from the above PESTLE and SWOT analysis of the company it can be said that Etihad Airways has many opportunities to get success in the aviation industry of US.
References
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