4.1 different airlines or other transportations. These

4.1 Threat of new entrants

The threat of new airlines in the industry is relatively low as there are many factors which is a huge barriers deterring the new entrants. Airline required a large capital investment and cost a massive operating expenses. Airline needs a strong and large customer base in order to be profitable. There are also many government regulations for the airline company to go through. Therefore, the threat of new entrants in the airline industry is low as barriers to entry are too high. (https://corporatefinanceinstitute.com/resources/knowledge/strategy/threat-of-new-entrants/)

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4.2 Threat of substitutes

For the domestic routes and short-haul routes, the threat of substitutes might be higher than the long-haul routes. Passengers could consider using bus, trains, or ships for the domestic routes and short-haul routes. However, those substitutes do not compete directly with airlines in terms of speed of travel. Airlines surpass all other forms of transportation when it comes to speed of travel, convenience, and sometimes service.

4.3 Bargaining power of buyers

Buyers have a high bargaining power over airlines because the cost and effort required to switch from one carrier to another is low. Technological innovation has allowed travelers to check and book through the third-party trip-booking websites such as Kayak.com, skyscanner.com, and travelloka. Using those websites, passengers are able to compare the fares across different airlines or other transportations. These websites offer a cheap price and great deals such as flight and hotel bundle package.

4.4 Bargaining power of suppliers

There are many suppliers of airlines. The main suppliers include fuel, aircraft and technology and skilled labor. All suppliers have tremendous bargaining power with the airline industry. The prices of fuel are subject to fluctuations based on economic and political reasons. The craft and technology suppliers are limited in number and aviation brands depend upon them to supply fuel efficient, fast and well-designed aircrafts.  Two leading names of aircraft manufacturers are Boeing and Airbus. Similarly, the labor force in the aviation industry mainly consists of well-paid high level professionals. Airlines focus on hiring as well as retaining the best talent. Overall, the bargaining power of the suppliers is high. There is a big investment in purchase, maintenance and running of aircrafts.

 

4.5 Intensity of rivalry

The competition within the airline industry is very intense due to the emergence of both Gulf carriers and Low-cost airlines. Thai Airways is losing its market share of long-haul to Europe routes to the Gulf Carriers (CAPA, 2015b). It is an intense competition as the Gulf Carriers has many advantages over Thai Airways particularly geographic advantage, competitive pricing, and financial advantage (CAPA, 2015b). Moreover, Thai Airways has been battered hard by the low-cost carrier competition in its domestic and short-haul routes (Kositchotethana, 2017). The relocation of Don Muang Airport in 2012 contributes to the increasing number of Low-cost carrier in Thailand as Don Muang has become the world’s largest low-cost carrier airport within three year (CAPA, 2015b).