Product details

This note forms part of a series with ''European Airline Industry: Lufthansa in 2003'' (303-137-1) and ''European Airline Industry: Ryanair in 2003'' (303-138-1) but can be used independently. The note describes the competitive context of the European airline industry in early 2003. That airline industry has chronic performance problems. After September 11, the global recession, and the 2nd Iraq War, the global airline industry is amidst the worst crisis in history. Yet, in the middle of the crisis, some airlines using the ''low cost carrier'' business model are experiencing profitable growth. The note describes the economics of the airline industry, with special attention to other participants in the airline supply chain that obtain acceptable returns. The competition among the different business models in the European airline industry (network carriers, low cost carriers, charters, etc) is also discussed. This case can be used to explore the following themes: (1) industry analysis, including examination of entry and rivalry, and vertical power in the supply chain; (2) competition within and between different business models with different relative advantages; (3) identification of sources of competitive advantage of the ''low cost carrier'' strategy; and (4) managing capacity in a chronically underperforming industry.