Identify the Driving and Hindering Forces That Changed the European Airline Industry in the Mid-1990s

1. Identify the driving and hindering forces that changed the European airline industry in the mid-1990s.

First of all, the main change in European airlines industry was caused by the significant rise in the number of airlines. However, the costs for distribution of the tickets were rising as well and airlines started to find the ways to reduce the costs by offering low-cost business model by reducing the number of intermediates between the companies and the customers.

People were satisfied with low prices as before they did not have any cheap alternatives to travel. People increased their number of travels around the world and because of that, the revenue of low cost tickets providers has been also increased. These companies sustainably positioned themselves in the market.

However, in the 1990s traditional airlines companies were not satisfied with the situation in the market as their sales were declining constantly, as the costs sensitivity started to rise they were forced to change the business model and provide customers with the lower priced tickets.

2. Compare the European airline industry at the beginning and at the end of 1990s. What changed? How did airlines companies react to these changes?

Low-cost companies start to compete with the established airlines in the market and took a big part of the market share. This reason encourages traditional airline companies to provide customers with the lower costs tickets as well and changed completely their business model.

Although, investors did not want the change to be happened because it could be risky for the established companies and for the market itself. However, the equilibrium had to be reached and established big companies decided to satisfy customers’ needs more properly and provide people with the low-cost tickets as well as with traditional tickets including some benefits