Government Impact on the Airline IndustryBefore discussing government intervention and its impact on the competition of an industry, we must first seek to understand the framework of the five forces. The theory, discussed in 1979 by Michael Porter, seeks to assess the attractiveness of an industry. Throughout this essay, I will explore theory and then connect government action and its well-documented effects on the airline industry. The strength or weakness of each competitive force in the model will determine the overall attractiveness of a market. The diagram below (adapted from M. Porter, Competitive Strategy CH.1) shows in simple form the five forces that can be considered determinants of an industry's profitability. There are two reasons why a company can perform well in an industry, namely 1) the sector is attractive to any company. 2) the company is better and outperforms its competitors. Porter's theory can therefore be used to discover markets that are attractive to businesses or, in those that do not break the five forces, so that a strategy for success can be developed. In general, the business will be more profitable if each of the forces is weak, that is, there is a low threat of entry of new firms, if buyers and suppliers have little power over the company, if there is a low threat of substitute products. and whether competitive rivalry is weak. The five forces of the airline industry can be easily dismantled, first and foremost the threat of new entrants. Over the last 10 years, there has been a massive influx of new low-cost airlines into Europe such as “Easyjet” or “Ryan Air”. As the low cost niche slowly fills, we see fewer and fewer entrants since the market has become more complete. saturated. The better the brand image of an airline, such as British Airways being a recognized name and the use of frequent flyer or airmiles programs, the less likely it is that a new entrant offering lower prices will be able to break through. the market. Then we have the power of suppliers and buyers in the industry. When it comes to aircraft suppliers, the two main ones are Airbus and Boeing. So it might seem like these few suppliers would have a lot of power over the airlines. contracts with major airlines. The bargaining power of customers in the