<div class="post">
<div class="body">
<div id="0315d979-943c-4cb0-a0d1-aaa64ee9ae26" class="postBody" contenteditable="true">
<p align="justify">Deutsche Lufthansa is a German Airline company based in Cologne. It is the subsidiary of Lufthansa Group, which owns including Austrian Airline, Brussels Airline, Swiss International Airline and Eurowings. The company was founded in 1953 and commenced its operation in 1955. It provides services in passenger, freight, and cargo airline services (Forbes, 2021). The company use Frankfurt and Munich as their primary and secondary bases, respectively. The airline operates flights to hundreds of European destinations and Asia, North America, Africa, Central and South America. It was the founding member of the star alliance. Porter&#8217;s five forces model is a valuable tool to identify threats and opportunities faced by Deutsche Lufthansa in the aviation industry.</p>
<h2>Competitive Rivalry in the Market</h2>
<p align="justify">The aviation industry is very competitive in Europe. There are two primary types of airlines Premium and Low-Cost Budget Airlines. Lufthansa is considered one of the largest airline in Europe. Ryanair, British Airways, Easy Jet and Air-France KLM are the biggest competitor of Lufthansa. The company own around 299 Aircraft and transported more than 145.1 million passengers in the year 2019 (Skycop, 2020). Ryanair takes the lead against Lufthansa by transporting 7 Million more passengers in the same period (Skycop, 2021). Revenue wise, Lufthansa Group generated $40 Billion over $30.5 Billion of Air-France KLM in 2019 (Statista, 2020). The competitive rivalry is high due to the presence of multinational companies in the region.</p>
<h2>Threat of Substitutes</h2>
<p align="justify">The aviation industry played a significant role in reducing travel time. It helped the world to become reachable. There were not any significant threats to aviation throughout the 20th century. The high-speed rails are beginning to challenge the aviation industry. The inception of modern train services in Western Europe has played the opposite role and is starting to take over a large portion of the low cost, short-haul flight market in this sector (Moreira, 2014). The high-speed train is covering ground on the aeroplane industry for short-haul flights. It saves time and money from the customer&#8217;s point of view. It started to pose a low-level threat to the aviation industry in Europe, such as Lufthansa.</p>
<h2>The Threat of New Entrants</h2>
<p align="justify">The capital required is the biggest impediment for the entrant, as the required money is high. The aviation industry is strictly regulated and. The main barriers to entry in any industry are capital requirements, product differentiation, regulatory requirements, and economies of scale (Grant, 2010). According to AIA, the regulatory cost and rising taxes have adverse financial effects. It increases airline costs, and higher taxes drive fare increases (which often do not succeed) and capacity reduction by carriers (AIA, 2021). The low-cost budget airlines are rising, but all of these are part of leading airline companies. Lufthansa has a sister company, Euro Wings which is a budget European airline. Considering the higher financial cost and the threat of new entrants is low.</p>
<h2>Bargaining Power of Buyers</h2>
<p align="justify"> Buyers exercise higher bargaining power if there are available options and that they can always find alternative suppliers, may play one company against another (Porter, 1979). The dawn of the 21st century has created a direct linkage between consumer and service provider in the aviation industry. Consumers can compare the available option in terms of quality, cost and experience. It has removed the hustle for them. The consumer looks for the best experience with cost-benefit. There are many options available in the market, which makes it easier for them to switch between companies. Airlines try to benefit the buyers with promotion and benefiting schemes. Which also provide the customer with an edge in getting a better deal. In the aviation industry, consumers hold higher bargaining power.</p>
<h2>Bargaining Power of Suppliers</h2>
<p align="justify">The major suppliers in the aviation industry are aeroplane manufacture and human resources provider. The supply chain in the aviation industry is concentrated. The buyer group is way more extensive than the supplier group. It creates an imbalance situation in the market. Boeing and Airbus are the world leader in the Airliner Manufacturing Industry (Statista, 2021). There is not a single company competing against them. The fewer supplier there are, the more power they have (Martin, 2019). The switching cost is higher, and the supplier is well integrated with the industry. They provide the parts for maintenance. It gives them the upper hand in the negotiations. In this industry, supplier owns moderate power in negotiating a better deal.</p>
<h2 align="left">References</h2>
<p>AIA. (2011). Consumer Regulation and Taxation of the U.S. Airline Industry Estimating the Burden for Airlines and the Local Impact. Available at: http://www.aviationinstitute.org/AAIReportNov11.pdf<br />
Forbes. (2021). Deutsche Lufthansa. Available at: https://www.forbes.com/companies/deutsche-lufthansa/?sh=2260e49c10b6<br />
Grant, R. M. (2010). Contemporary Strategy Analysis. 7th Edition.<br />
Martin., M (2019) How Porter&#8217;s Five Forces Can Help Small Businesses Analyze the Competition. Available at: https://www.businessnewsdaily.com/5446-porters-five-forces.html<br />
Moreira, M. (2014). An analytical model for the assessment of airline expansion strategies. Journal of Airline and Airport Management, 4(1), 48-77.<br />
Oregon State (2021) Analyzing the Organization’s Microenvironment. Available at: https://open.oregonstate.education/strategicmanagement/chapter/3-analyzing-the-organizations-microenvironment/<br />
Porter., E. M (1979) How Competitive Forces Shape Strategy. Available at: https://hbr.org/1979/03/how-competitive-forces-shape-strategy<br />
Skycop (2020). 10 Largest Airlines in Europe by Passenger Numbers. Available at: https://www.skycop.com/fun-facts/10-largest-airlines-in-europe-by-passenger-numbers/<br />
Statista. (2020). Leading airline groups in Europe in 2019, based on revenue (in billion U.S. dollars). Available at: https://www.statista.com/statistics/201067/europes-25-largest-airline-groups-based-on-revenue/<br />
Statista. (2021) Key figures of the four largest aircraft manufacturers worldwide in FY 2020 Available at: https://www.statista.com/statistics/269920/key-figures-of-the-four-largest-aircraft-manufacturers/</p>
</div>
</div>
</div>