A SWOT Analysis for the “flag-carriers”

A deep insight into the aviation industry

Term Paper 2010 7 Pages

Business economics - Business Management, Corporate Governance


Table of Contents

1. The European Airline Industry - Current Overview

2. SWOT-Analysis
2.1 Internal analysis: Strengths and Weaknesses
2.1.1 Strengths
2.1.2 Weaknesses
2.2 External analysis: Opportunities and Threats
2.2.1 Opportunities
2.2.2 Threats

3. Core strategies
3.1 StrengthsandOpportunities
3.2 StrengthsandThreats
3.3 Weaknesses and Opportunities
3.4 Weaknesses andThreats

1. The European Airline Industry - Current Overview

Due to exogenous shocks like the 1973 oil crisis or the 2001 terrorist attacks as well as the 2003 Iraq war the worldwide Air Transport Industry faces its most severe crisis in its history. Many companies since then downsized their workforce and even European flag carriers like Swissair and the Belgian Sabena did not succeed to re-invent themselves, went bankrupt and so out of business. The business and social world is getting more and more mobile, individual and flexible - and so the people's lives are determined by a high desire for mobility and travelling.

Copenhagen on Thursday: Attending an opera at the Royal Danish theatre. Cologne on Friday. Watching a football match at the stadium. London at the weekend. The people in 2003 like to spend their time abroad and enjoy the world's most popular spots - even just for a couple of days. By pursuing a low-cost-strategy, budget airlines such as Ryanair and easyJet understood and met market needs the best and therefore should not be underestimated as rivals by the flag-carriers. Although they have been growing rapidly over the last years, it is not clear how big the market niche for the low-cost carriers would grow, how quickly this segment would reach saturation. The Low-Cost Carriers (LCC) are big new competitors for the flag-carriers and made a rethink of every marketing-strategy for all market-members a necessary condition for a possible reshape of the whole industry.

Not being capable of successfully competing against low-cost carriers in price, most attempts to succeed in point-to-point operations failed in general.

How can flag carriers survive in an industry, which has a rapid growth on the one hand1 - but has to suffer an enormous economic loss on the other hand? How can they respond to the structural and competitive challenge? At least they have to elaborate a clear understanding of the consumers' preferences regarding destinations, prices, products and services. For that reason, a sound SWOT-Analysis is inevitable.

2. SWOT-Analysis

The SWOT-Analysis of the flag carriers points out the strengths and weaknesses of flag carriers in general and also focuses on the market as a whole by elaborating opportunities and threats.

2.1 Internal analysis: Strengths and Weaknesses

2.1.1 Strengths

Low-Cost Carriers had shown that catering was an avoidable expense in short flights. They cut down services like catering, convenient seating or offered a manual check in. In short: They reduced the service level. This is probably the biggest difference between flag and discount carriers.

Flag carriers offer their consumers (as well as their personnel) high-quality service and convenience. But since the demand for air travel is divided into two segments (business and leisure travelers) only one of those segments tend to be a proper target group for the flag carriers: The Business Travelers. Because they are more willing to pay higher fares for premium quality in services and greater flexibility in travel conditions. Passengers of flag carriers in general do not have to set aside the convenience and "First-class-feeling" and it is quite obvious that those who want to fly first-class should fly with flag carriers.

Furthermore, flag carrier companies enjoy a high prestige throughout the world which contributes to their brand equity and is without a doubt a great asset. As one can assume the so called "Network Carriers" (a synonym for flag carriers) are known to have a great network. That condition and the fact that they have a well-established relationship among their partners. These relationships are a core advantage, for example in negotiations with airports about time slots. They are crucial for the Network Carrier's big bargaining power since slots in congested airports are very valuable, and the flag carriers still benefit from privileged access to those "time windows" for landing and departure.

In contrast to LCCs the Network Carriers do not just work within "point-to-point" networks. They have developed and established a hub-and-spoke network, which empowers them to provide a wide range of long-distance-connections (and even overseas), which LCCs do not have.

A main strength is a swell the after-sales program of established Network Carriers. The so-called Frequent Flyer Program (FFP) is a loyalty program that offers rewards to frequent passengers and bind the passengers to the Network Carrier Company.

2.1.2 Weaknesses

Although Network Carriers (NCs) offer a great variety of strengths, they have to admit some weaknesses as well. A major weakness obviously is the ticket-price. A vast number of passengers are very price sensitive and would even accept cutbacks in terms of convenience and service if they have to pay a lower price. Since the focus on convenience and comfort is a major strengths offlag carriers the high price is a weakness in comparison to low-cost airlines.


1 Traffic rose from roughly 250 million passengers in 1978 to approximately 600 million in 1996 (cf. Gimeno et al. 2004: 2).


ISBN (eBook)
File size
427 KB
Catalog Number
Institution / College
University of Lugano
SWOT Analyse Analysis Aviation Flugzeuge Flugzeughersteller Corporate Communication Marketing Strategy Corporate Identity Billig-Airline Airline Industry Airlines Billigbomber easyjet ryanair



Title: A SWOT Analysis for the “flag-carriers”