Porter Anlysis

Porter analysis

Airline Industry

Introduction

The airline industry is being negatively affected by the weak economy resulting in lower profits. The airline industry is expected to have a slight increase in their revenue this year then had originally been expected but in perspective only about half a percentage, which isn’t a lot. Remaining profitable at all is a huge feat since the economy has brought about high oil prices and a lot of economic uncertainty. The airline industry wasn’t always this tough and was once extremely profitable (“Fact sheet” n.d). There are many factors that need to be addressed to understand why the airline industry is the way it is and how it has become. The history of Canadian airlines is important to understand. To be able to look into the future it is critical to understand the past. During the great depression the conservative government thought about starting up an airline. This was not feasible because of the lack of available money but with Canada as one of the few industrialized countries that did not have a national airline this was sure to be one of the things to come in the near future. In 1936 Trans Canada air was brought to reality through a subsection of CRN that the government owned. After operations commenced Canadian Pacific proposed to the government that there should be a merger between the two. This was refused and trans Canada airlines was the only airline allowed access to provide transcontinental service in Canada. Post world war two the economy was booming leaving Canadians in the position to be able to meet the expenses of flying. This company is now known as air Canada one of the largest national airlines. In 1979 privatization was starting to come into the picture and Canada’s skies were available to everyone. This left air Canada in a bad position fighting for passengers and with high operational costs. They signed a bankruptcy agreement to avoid creditors (“Indepth: Air Canada History” 2004)....