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Porter's 5 Forces Analysis used to analyse the global commercial jet aircraft market, wherein the major players are Boeing and Airbus
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Visiting Boeing & Airbus - Analysis of the Global Commercial Jet Aircraft Market
Jayant Rana
• High barriers to entry
• Capital intensive industry
• Building aircrafts is extremely complex
• Profits start to realize after a long time
• Government limitations on technology
transfer also pose as a barrierLOW
Threat of New Entrants
Bargaining Power of Suppliers
• Dependent on a large number of suppliers
• Only two major players in the industry
i.e. Boeing and Airbus
• Less likelihood of a supplier to integrate
vertically
MODERATE
• Can be rated as Moderate
• Boeing & Airbus hold nearly the entire
market – limiting buyer’s choices
• Aftermarket Support increases
switching costs, further decreasing the
buyer’s powerMODERATE
Bargaining Power of Buyers
• No alternatives for long distance journeys
• Aircrafts - Primary means of transport over
long distance
• Future requirements for aircrafts &
demand very high
• Effects of economic slowdown
• Cost cutting measures of corporate sector LOW
Threat of Substitutes
• Bidding for a limited number of high
value contracts
• Competitive pressure built up by the
buyers (airline industry)
oCut throat pricing
oLowering passenger revenues
oEfficient & cheaper maintenance
HIGHCompetitive Rivalry
• In Regional Jet Category from countries like
China, Russia and Japan.
• In Long Range Commercial Jets, threat is
posed by AVIC (Aviation Industry
Corporation) & COMAC (Commercial Aircraft
Industry of China).
Competition in Future
• Demand is set to increase in the Commercial
Jet segment as well as Regional Jet segment.
• Industry forecast are from 25000 to 29000
aircrafts, where a major chunk of this i.e.
75% will be of Commercial Jets, in next 20
years.
• Asian Airlines are expected to triple their
fleet to represent 31% of World’s
Commercial Aircraft.
Demand Predictions
• “Big Ticket” size orders will give some power to the
buyers, but because of only two producers, both
Boeing & Airbus will hold the major power over
buyers.
• In Regional Jet category, buyers will hold more power
due the entry of players like the Sukhoi Superjet 100
from Russia, the Mitsubishi Regional Jet (MRJ) from
Japan, and the ARJ21 from AVIC in China.
Buyer Power
THANK YOU