Brief analysis of the global airline industry - Essay Example

Airline travel continues to be one of the most popular ways to travel. Airlines continue to function as freight carriers and passenger carriers with some functioning as both. The aviation industry will need to watch for economic recovery in other sectors of the economy and will need to take advantage of that recovery to rebound itself. In the European Union, airlines that fly internationally have been affected by American aviation's lowering of ticket prices to draw more customers back to flying.

In 2001 the European Union began discussions with the United States to establish a trans-Atlantic pricing agreement. The American government provided bailouts to U.S. based carriers and the European Union agreed to allow European governments to grant funds to their airlines as well thus evening the playing field a bit (World Airline News, 1). A gradual return to previous levels of travel and tourism will help the industry rebound. A major influence in the airlines and other business in Europe is the growth of the European Union.

Open borders offer the opportunity to add more routes to an existing airline. Ryanair is positioned in the industry to add those routes at low costs that consumers expect. The European Union is in the business of enlargement and flexible integration (Camppanella, 7). The new venture of Ryanair and Aer Lingus will need to focus on industry trends and exploit opportunities within the industry as they become available. . It needs to answer questions like "what are my competitors doing", "is there rivalry amongst firms", and "how will my suppliers react to the acquisition".

Michael Porter's Five Forces Model (Porter, 1980) provides a good framework for answering such questions. Porter developed this framework for the structural analysis of industry attractiveness (Porter, 1980). Porter's framework offers a "model to help identify relevant variables and questions that must be answered to tailor conclusions to a particular industry or businesses"(Porter, 1980). The five forces are: the threat of entry, bargaining power of suppliers, bargaining power of buyers, development of substitute products or services, and rivalry among competitors (Porter, 1980).

Another direction the airline might take is to conduct a PESTEL Analysis. PESTEL stands for Political, Economic, Social, Technical, Environment, and Legislative. This type of analysis provides a look at the external pressures an organisation might encounter. Ryanair could benefit by this type of analysis. For example, the company would need to take a look at the political implications that would affect the business such as: can the airlines be nationalized PESTAL analysis helps decision makers make a guided examination of factor's they may overlook using one of the other analysis models.

The company may not have thought to examine the economic impact of headquartering its business in Dublin but I'm sure that environmentalist would have requested and environmental impact statement. Ryanair would benefit from knowing how local legislators view the airline and if the acquisition would be violating any local laws. Ryanair would need to examine their tax liabilities incurred by basing itself in Dublin. Tax labilities may have increased because Ryanair will be operating as a larger