Most of the customers are price sensitive, and the consumers nowadays are very much aware of their rights, and they know that they have many choices when it comes to choosing an airline. And this also adds up to the fact that there is next to zero switching cost for customers if they do not like the price offered by the airline unless the customer is very much loyal to British Airways and very much satisfied with their services. It is also to be noted that in case of group travelers or people buying tickets through travel agents, they will look at multiple options to provide the best deal for traveling, which leaves the power to the travel agents, the i.e. consumer. Concluding, there is a high level of bargaining power of buyers...
Most of the customers are price sensitive, and the consumers nowadays are very much aware of their rights, and they know that they have many choices when it comes to choosing an airline. And this also adds up to the fact that there is next to zero switching cost for customers if they do not like the price offered by the airline unless the customer is very much loyal to British Airways and very much satisfied with their services. It is also to be noted that in case of group travelers or people buying tickets through travel agents, they will look at multiple options to provide the best deal for traveling, which leaves the power to the travel agents, the i.e. consumer. Concluding, there is a high level of bargaining power of buyers in case of British Airways.
When we determine the substitutes available to the customers as compared to British Airways, we can list train, car, bus, ship and all other modes of transport as their substitutes and all these can pose a threat to British Airways customer base but it is all dependent upon the fact that how customers see the value or what do they need. For instance, if the customers are just looking for low price, then they have a high chance of choosing some mode of transport other than an airline. But it is to be noted that those are not the target market for British Airways. On the other hand, if the customers are looking for convenience and time-saving means of travel, they have a high probability of choosing British Airlines, and that is exactly the target market for British Airways. So we can say that there is a moderate level of threat of substitutes for British Airways.
There are various barriers to entry in the airline industry including the huge investments required to be a part of the industry, the effort required to gain the desired market share due to huge number of already established airlines, very little product differentiation is present so it is difficult to build up your competitive edge, maintenance cost required, and the unavailability of distribution channels. These barriers and others add up to the fact that not everyone can enter this industry and even if they enter, it is not easy for them to gain the customer base. Concluding, there is the Low threat of new entrants for British Airways.
