Airline Industry Analysis Essay Example | Topics and Well Written Essays - 750 words

Airline Industry Analysis - Essay Example However, the industry is highly depended on the existing business cycles, weather, and political stability. According to industry data, Delta’s Cargo business contributes 40 percent of total revenues while Delta US contributes 27 percent of revenues with the rest coming from Delta International travel (Wood, 2008). Although Southwest Airlines has the highest market in US domestic travel, Delta has the highest revenue passenger Mile (RPM) and has reported the considerable increase in US domestic market share over the last six years. The company has undertaken measures in cost cutting through investing in aircraft that are more fuel-efficient and undertaking investments in technology in order to improve the efficiency of crew systems (Braun & Latham, 2014, p 56).  Five forces analysis The five forces model is essential in understanding the attractiveness of the industry, the drivers of competitive edge and profitability in the industry. Michael Porter’s five forces mode l includes the threat of new entrants, the threat of substitutes, the bargaining power of buyers, the bargaining power of suppliers and degree of rivalry in the industry (Wood, 2008).  The threat of new entrants  Although the Airline Deregulation Act of 1978 saw the entry of small low-cost carriers in the US market, the threat of new entrants remains high due to the high capital required to establish operations, the relative economies of scale of the international carriers and stringent regulatory and licensing process (Wood, 2008).