UNIVERSITY OF HOUSTON – VICTORIASCHOOL OF BUSINESS ADMINISTRATIONECON 6351 ECONOMICS FOR MANAGERS INDUSTRY ANALYSIS PAPER:Airlines IndustryTable of Contents Executive Summary 1 I. Introduction 2 II. Market Structure 4 III. Industry Demand 5 IV. Cost Structure 6 V. Analysis of Competitive Forces (Porter’s Five Forces) 9 a) The Threat of Entry by New Competitors 9 b) The Intensity of Rivalry among Existing Competitors 10 c) Pressure from Substitute Products 11 d) The Bargaining Power of Buyers 11 e) The Bargaining Power of Suppliers 12 VI. Conclusion 12 VII. References 14 VIII. Appendices 16

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Executive Summary

Due to the necessity of the services the Airline industry provide, its relevance has increased tremendously over the years, this relevance has induced higher demand and higher expectations in the industry. Thus, entering this industry comes with a big price, the cost associated with airline industry are enormous and with the current fuel and labor cost many airlines are facing their biggest challenge yet, as they all scramble to stay afloat, the pressure to meet passengers demand has never being higher due to the steepness of their demand curve. Airline deregulation was enacted by the government to help ease some of these issues that may arise in this industry, the government saw the need to regulate airline industry prices while still maintaining their services to passengers due to the continuous increase in demand of airline product with no many other options in some cases no other options for passengers. After conducting an evaluation of the airline industry analysis it can be said that most airlines have a driving-force analysis to be successful in their field as with any other industry expectations, although the de-regulation has force many out of business in some cases, causing some to file for bankruptcy or having