The Competitive Forces Influencing the Industry
The five competitive forces influencing the industry that Jet Blue Airways competes in must be identified and analyzed using the Porter's Five Forces model. Additionally, it aids in identifying the industry's advantages and disadvantages.
Competitive Rivalry (Potential Competitors): Low
Because of the fierce competition among the existing businesses, their earnings are low, which deters new rivals from entering the market. In addition to costly initial investments and fixed costs, such as leasing a fleet of dependable and secure aircraft or even negotiating fair landing fees and gate access, there are also hefty fuel and personnel costs (JetBlue Airways Corporation SWOT Analysis, 2012). There is also price competition in this airline industry. It is because some major airlines are offering low-price fares thus making it difficult for the new entrants to realize enough profits for covering the fixed cost and investment within the industry.
Buyer Power-Medium to High
The internet provides the customers with the power of searching the Airlines that offer low fares. There are real leisure travelers who are not price-sensitive, which makes most of them loyal to a particular Airline offering the best flight experience and service. Besides, the industry is having several airlines offering the same flight experience and service with low price (Gilligan & Wilson, 2013). As a result, these customers may either choose to travel by Jet Blue Airlines or any other airline depending on the services and flight experience they provide.
Supplier Power-High
Suppliers in this industry have a higher bargaining power. For instance, Airbus and Boeing are the only existing two supplier companies for the commercial passenger airlines new aircraft. As a result, it allows them in having the power of suppliers in the whole aviation industry (Skinnner, 2015). Additionally, all the airline workers in the industry are unionized, and this makes them in having the power of labor supply. Moreover, the OPEC countries are having the significant impact on the supplier power.
Threat of New Entrants-High
There is a high threat of new entrants in Regional Airlines, which brings innovation as well as new ways of doing things. As a result, this puts pressure on the JetBlue Airways Company through reducing costs, lowering pricing strategy, in addition to providing new propositions of value to its customers (JetBlue Airways Corporation SWOT Analysis, 2012). As a result, JetBlue Airways is always experiencing the challenge of managing all these issues as well as of building effective barriers for safeguarding its competitive edge in the Airlines industry.
Threat of Substitution-Medium
There is medium substitute risk in this industry and hence for the JetBlue Airlines Corporation. Customers are free in choosing other transportation modes including a bus, train, car, or even a boat to arrive at their various destinations. However, there is the switching cost to this as some transportation means can be more costly as compared to a plane ticket. Time is the main cost as planes are by so far the fastest available form of transportation. Moreover, airlines surpass any form of transportation when it comes to convenience, cost, and even service (Gilligan & Wilson, 2013). Therefore, customers do at sometimes choose some other transportation means for different reasons including cost, particularly if they are not traveling far distances and this raises the risk.
In summary, the industry that JetBlue Airways is operating in has a low potential competitor, medium to high buyer power, high supplier power, the high threat of new entrants, as well as medium threat of substitution.
References
Gilligan, C., & Wilson, R. S. (2013). Strategic Marketing Planning. Amsterdam: Routledge.
JetBlue Airways Corporation SWOT Analysis. (2012). JetBlue Airways Corporation SWOT Analysis, 1-8.
Skinnner, S. K. (2015). Revolution in the airline industry. Vital Speeches Of The Day, 57(12), 363.
