Low cost airlines

Essay text:

2006) Better now because people have more disposable income, and that is why airlines constantly invest in new routes Conclusion The economic analysis of European market suggests The market is growing in most parts of Europe Will be profitable in future too Competition expected to rise in some years Country Choice List of possible countries for investment in Eastern Europe Criteria for final selection Number of Airports Number of low cost airlines operating in the country Criteria for final selection* Conclusion… From the five countries compared, all have some advantages: Ukraine – Highest population and good potential for demand Romania – Attractive for investors (FDI) Slovakia – Highest GDP Bulgaria – *Strategic location & tourism destination AGENDA Basic information about the sector Characteristics of the sector on the global level Analysis of the European market ANALYSIS OF NATIONAL MARKETS Answers to Investors questions Porter’s 5 Forces Analysis Rivalry among Competing sellers Highly competitive industries generally earn low returns because the cost of competition is high Threat of New Entrants Costs to access bank loans and credit to lease or buy aircrafts are substantial Strong brand name and incentives can usually be enough to lure a customer (even if their prices are higher) Barriers to entry are there for new entrants due to regulations Stage of low cost airline market: Growth Availability of Substitutes Likely substitutes Fast Trains: directly Drive through car (less likely) For low cost airlines the threat might be a little higher than international carriers Considering distances might be short time Personal preference and convenience offered by other avenues Power of Suppliers Mainly dominated by Boeing and Airbus Can be called a Duopoly Costs associated with change in supplier are high Aircrafts make much of production costs Likelihood of a supplier integrating vertically isn't very likely Suppliers wont start to offer flight service on top of building airplanes Power of Buyers Tickets bought individually by customers Pricing information available easily on internet through websites Conclusion Conclusion The Porter’s 5 forces analysis leads to conclusion that the sector can be entered as of now Market is growing Rivalry is moderate Threat of new entrants is moderate Strategic Group Maps Conclusion Market is not established enough to form strategic groups Started in 2004 Only 3 companies Ryanair, Wizzair, Central Wings treat operations in Poland as important Some companies seem to treat Poland as potential market and others are not interested in expanding Key Success Factors AGENDA Basic information about the sector Characteristics of the sector on the global level Analysis of the European market Analysis of National Markets ANSWERS TO INVESTORS QUESTIONS Foreign Investment in Poland Preliminary data – Value of the FDI inflow to new EU member states in CEE (billion USD) Answers to Investors’ Questions Profitability % polish market ? Estimation for growth rate? Types of fdi? By market entry otpions? Answers to Investors Questions 1...