Airline industry by nature is international in nature.

Standardisation of equipment, personal training

procedures and generally similar aircrafts makes air travel highly interchangeable. Moreover safety
standards being a state subject, passengers are assured of reasonable safe air travel world over,
whichever airlines they choose. This makes Airline business highly competitive and all the airlines
have to offer greater value over its rivals for survival. Low cost Air lines in India are presently
operating in the beginning of mature phase. There have been few bankruptcies and few take overs
in recent past like Deccan Airways and failure of King Fisher airlines. Commercial Airline industry is
characterized with long phases, with current Low cost model approaching some maturity. Change is
typically slow to arrive and is mostly lasts couple of years, especially technological advancements.
Because of safety reasons any new advancement are highly tested and passed after rigorous checks
and balances. Competitive advantages and innovations are mostly expected in processes and sales
innovations. Area of differentiation is also restricted considering Low Cost model of these airlines.

The word “positioning” was popularized by two advertising executives, Ries and Trout (2001) in their
book ‘Positioning: The Battle for Your Mind.’ According to Ries and Trout (2001:2), positioning starts
with the product, and positioning is not what a person/organisation does to a product, but, rather,
what a person/organisation does to the mind of the prospect. That is, an individual or an
organisation positions the productin the mind of the prospect. Positioning may focus an entire
company, a mix of products, a specific line of products, or a particular brand, although positioning is
often centred on the brand (Cravens & Piercy, 2013). It is a statement of what the product (brand)
means guided by the value requirements of the buyers in the target market; an act of designing the
company’s offering and image to occupy a distinctive place in the mind of the target market with a
goal of locating the brand in the minds of consumers to maximize the potential benefit of the
firm(Kotler & Keller, 2006).In strategy terms, competitive positioning implies creating brand
superiority in the minds of customers

Positioning strategy is more like business strategy, and the aim is to deliver superior value to
customers (Cravens & Piercy, 2013). Itconsists of all the moves and approaches a firm has taken and
is taking to attract buyers, withstand competitive pressures, and improve its market position (Porter,
1985, Cravens & Piercy, 2013).Companies all over the world try every conceivable approach to
outwit their rivals and win an edge in the marketplace. In this sense, there are as many positioning
strategies as there are companies trying to compete as it fit their situations and market environment
(Porter, 1980). Boyd, Walker, and Larreche (1998) proposed seven marketpositioning strategies
which are relevant to alarge number of situations, namely, Mono-segment positioning,
Multisegment positioning, Imitative positioning, Anticipatory positioning, Standby positioning,
Adaptive positioning, and Defensive positioning. MacMillan (1989) argues that the effective period
of offensive positioning depends on the industry’s competitive characteristics. As competitors
respond with counteroffensives, erosion of the effective period(for the competitive advantage
derived) will begin. Any competitive advantage a firm currently holds will eventually be eroded by
the actions of competent and resourceful competitors (McMillan, 1988). Operational excellence,
product leadership, and customer intimacy are specific ways by which positioning strategies can be
implemented to deliver superior value to the customers (Moderandi, 2013). Operational excellence
focuses on offering low cost price which can be achieved through improved technology for
manufacturing. Product leadership focuses on staying one step ahead of competitors in terms of
product innovation and quality. Customer intimacy focuses on delivering customized solution.
Myron and Truax (1996) assert that positioning can also be implemented by product attributes,
pricing and product use or application.

Positioning strategies in business are aimed at either achieving competitive advantage or defending
an already achieved advantage in the marketplace (Porter, 1985), which can be measured in terms
of highest-quality product, providing superior customer service, achieving lower costs than rivals,
having a more convenient geographic location, designing a product that performs better than
competing brands, making a more reliable and longer-lasting product, and providing buyers more
value for the money (a combination of good quality, good service, and acceptable price). Porter
(1985) asserts that through low cost, differentiation, and focus, firms can achieve strategic
competitive advantage (SCA). To be effective a competitive advantage must be: difficult to mimic
applicable to multiple situations, unique, sustainable, and superior to the competition (Porter,
1998); the outcomes of which include improved sales, market share, profit contribution, growth
rates and customer satisfaction.
Competitive Forces:

3.2.1.1 Rivalry among Sellers

Rivalry among sellers is moderate to strong . Airlines compete on price and services they also
compete on the frequency of flights , reliability of services , frequent flyer programs and other
amenities. In the recent years the airlines are concentrating more on returning to profitability than
expansion.

3.2.1.2 Potential New Entrants

The potential of new entrants is weak to moderate . It has barriers of entry due to the low traffic
levels and a lack of desirable gate access in airports. There are several other reasons which can cause
difficulties for new entrants :-

1. Capital-intensive

2. Labor-intensive

3. Energy-intensive

3.2.1.3 Substitute Products

The substitute Products are moderate in the airline industry. There are many substitutes that exist in
relation with the airine industry like bus services, rail services and also personal transportation. They
are considered more convenient for shorter distances due to the lower cost and is preferred only for
longer distances.

3.2.1.4 Supplier Bargaining Power

Supplier bargaining power is moderate to strong .Aircrafts are costly and pieces of equipment are
also costly for an airline company. There are only two suppliers that exist in the airline industry that
is Boeing and Airbus. Due to the limited suppliers they have greater power in setting prices. It is also
an fuel-intensive industry so there is also regular swings in fuel prices offered by fuel suppliers.

3.2.1.5 Buyer Bargaining Power

Buyer bargaining power is weak. There are many individuals and organizations for buyers of airline
tickets so as a cohesive group very little power is exerted by the buyers.

estic market share for U.S. airlines at 16.9%, trailing Southwest at 18.3% and
American at 18.4%. Delta's sheer size and status as a longtime leader in the airline
industry has helped ensure its continued success. The company's market
capitalization is around $39 billion.

Industry Competition
The level of competition in the airline industry is high. The big airlines essentially fly
to the same places out of the same airports for about the same prices. The
amenities, or lack of amenities, they offer are similar, and the seats in coach are just
as cramped no matter which airline you choose. t but also JetBlue and Spirit.
Because the air travel experience for a customer is remarkably similar no matter
which airline he takes, airlines are constantly threatened by the prospect of losing
passengers to competitors. Delta is no exception. If a customer is planning to book a
flight from Houston to Phoenix on Delta but a third-party price aggregator, such as
Priceline, reveals a better deal from United, the customer can make the switch with a
simple click of the mouse. Delta manages these competitive threats with extensive
marketing campaigns that focus on brand awareness and the company's
longstanding reputation.

Bargaining Power of Buyers

Buyers have immense bargaining power over airlines because the cost and effort
required to switch from one carrier to another is minimal. The emergence and raging
popularity of third-party trip-booking websites, and smartphone apps, exacerbates
this issue for the airlines. Most travelers do not contact an airline, such as Delta,
directly to book a flight. They access sites or apps that compare rates across all
carriers, enter their trip itineraries and then choose the least expensive deal that
accommodates their schedules. Delta can respond to this market force by
conducting market research and offering more direct flights at low prices to the
destinations fliers search for most frequently on third-party platforms. Additionally,
the company should strengthen relationships with credit card companies and strive
to offer the best reward programs; customers are loath to switch carriers when they
have accumulated what they view as "free" miles with a particular airline.

Threat of New Entrants to the Marketplace

Potential new entrants to the marketplace represent a minimal threat to Delta. The
barriers to entry in the airline industry are remarkably high. The operating costs are
massive, and the government regulations a company must navigate are numerous
and exceedingly complex. There is not a single airline founded during the 21st
century that has even 2% market share. JetBlue, founded in 1998, represents the
newest airline to make a dent in the industry, and its market share is still less than
one-third of Delta's.

Bargaining Power of Suppliers

The list of airline suppliers is actually quite long. The list of airlines for suppliers to
sell to, however, is short. This asymmetry places the bargaining power directly in the
hands of the airlines. Bargaining power is particularly strong for Delta, given its
position as the world's largest airline by total passengers. Put simply, Delta's
suppliers have a strong incentive to keep the relationship on good terms. Delta can
likely find a replacement supplier without problem if the relationship goes bad. The
supplier, by contrast, is unlikely to find another buyer capable of replacing the sales
volume represented by Delta.
Threat of Substitutes
A substitute, as defined by the Five Forces model, is not a product or service that
competes directly with the company's offerings but acts as a substitute for it. Thus, a
United flight from New York to Los Angeles is not considered a substitute for a Delta
flight with the same start and end points. Examples of substitutes are making the trip
by train, car or bus. Unless a trip is very short, such as traveling from Los Angeles to
Las Vegas, no methods of travel rate as viable substitutes for air travel. New York to
Los Angeles is a 6.5-hour flight. The trip takes 41 hours by car or bus, and a train
cannot get you there much faster. Until a new technology comes along that
supplants air travel as the fastest and most convenient way to travel long distances,
Delta faces little threat from substitute methods of travel.

Read more: Analyzing Porter's Five Forces on Delta Airlines (DAL) |

Investopedia https://www.investopedia.com/articles/markets/012816/analyzing-
porters-five-forces-delta-airlines-dal.asp#ixzz58Lhlh111
Follow us: Investopedia on Facebook

Supplier Power

The power of suppliers in the airline industry is immense because of the fact that the three inputs that
airlines have in terms of fuel, aircraft, and labor are all affected by the external environment. the
power of the suppliers in terms of the three inputs needed for them is categorized as high according
to the Porter’s Five Forces framework

Buyer Power

With the proliferation of online ticketing and distribution systems, fliers no longer have to be
at the mercy of the agents and the intermediaries as well the airlines themselves for their
ticketing needs. Apart from, the entry of low cost carriers and the resultant price wars has greatly
benefited the fliers

Entry and Exit Barriers

The airline industry needs huge capital investment to enter and even when airlines have to exit
the sector, they need to write down and absorb many losses. This means that the entry and exit
barriers are high for the airline industry.

Threat of Substitutes

The substitute Products are moderate in the airline industry. There are many substitutes that
exist in relation with the airine industry like bus services, rail services and also personal
transportation. They are considered more convenient for shorter distances due to the lower
cost and is preferred only for longer distances.
Level of competitive rivalry

The level of competitive rivalry in the airlines industry is high. Apart from the
increased number of airlines brands, the entry of low cost carriers has intensified the
competition. Regulations are also a reason that competition has kept growing
intense. Most airlines have reduced prices and upped the level of customer service
to remain competitive.

Role of complimentators