Porter’s Five Forces Analysis of Lufthansa

Deutsche Lufthansa is the world’s leading German flag carrier airline and aviation company. The company started its airline and aviation business in 1955. Today, we’ll discuss Porter’s five forces analysis of Lufthansa Airlines; bargaining power of suppliers and buyers; threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management.

Substitute and Competitors of Lufthansa

• Virgin Atlantic
• Qatar Airways
• United Airlines
• Turkish Airlines
• Malaysian Airlines
• Air France
• Singapore Airlines
• Etihad Airways

Porter’s five forces analysis of Lufthansa Airlines would analyze the bargaining power of suppliers and buyers; the threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management. Here’s Lufthansa Airlines Porter’s five forces analysis of airlines and aviation business as follows;

Porter’s Five Forces Analysis of Lufthansa Airlines

Let’s discuss Porter’s five forces analysis of Lufthansa Airlines as competitive forces in strategic management and they’re as follows;

Bargaining Power of Suppliers in Lufthansa Airlines

The bargaining of suppliers is Moderate and higher in Lufthansa Airlines as a competitive forces in strategic management. Some of the main factors impacting the bargaining power of suppliers in Lufthansa Airlines Porter’s five forces analysis of airlines and aviation are as follows;

I-Suppliers Availability

Ground staff, engineers, manufacturers, flight staff, and pilots are some of the main suppliers of Lufthansa. Companies invest a significant amount of capital resources in training programs and workshops to improve the skills of their pilots, engineers, and ground and boarding staff. Limited availability of tech engineers, manufacturers, and pilots would increase the bargaining power of suppliers.

II-High Switching Cost

Lufthansa is heavily relying on the airline manufacturing companies, engineering staff, tech staff, and pilots for the smooth running of various operations. In fact, the airline brand has invested a significant amount of capital resources in improving its professional expertise. It is highly risky for the company to switch to other low-cost suppliers because it would negatively impact the customer satisfaction level.

Bargaining Power of Buyers in Lufthansa Airlines

The bargaining of Buyers is Higher in the airlines and aviation business as competitive forces in strategic management. Some of the main factors impacting the bargaining power of suppliers in the airlines and aviation five forces analysis of Lufthansa Airlines are as follows;

I-Multiple Airlines Alternative

When choosing an airline for air travel, customers have multiple options from various airlines and aviation companies. They all offer a unique customer experience and a variety of services; customers could easily switch from one airline to another airline without incurring any additional cost. The easy availability of multiple airline alternatives would increase the bargaining power of buyers and customers.

II-Offers & Packages

In order to differentiate itself from its competitors, Lufthansa offers various types of discount offers, family packages, free gifts, and loyalty programs. It allows the company to attract the attention of new customers and retain the existing ones.

Threat of New Entrants in Lufthansa Airlines

The threat of new entrants is lower in airlines and aviation business as competitive forces in strategic management. Some of the main factors impacting the threat of new entrants in the airlines and aviation five forces analysis of Lufthansa Airlines are as follows;

I-High Capital Investment

Lufthansa has been operating its business in the aviation industry for the past over 70 years. The company has established a very large infrastructure of fleet size, destination routes, brand loyalty, engineering staff, and others. The large infrastructure requires heavy capital investment and a significant amount of resources and experience. However, these factors decrease the threat of new entrance rates.

II-Fixed Cost

The airline business is highly season; with high sales in the holiday season and a very low sale in the off-season. Lufthansa needs to invest a significant amount of fixed cost in the repair and maintenance of airlines, cabin crew, and other staff in the off-season. On the other hand, new airlines and aviation can’t afford to keep up with the fixed cost in the off-season and they end up selling their airlines to the competitors.

Threat of Substitutes to Lufthansa Airlines

The threat of substitute products and brands is higher in Lufthansa Airlines as competitive forces in strategic management. Some of the main factors impacting the threat of new substitutes in the Lufthansa five forces analysis of airlines and aviation are as follows;

I-Trains, Roads, & Ships

Europe has a well-developed infrastructure of roads, trains, and ships and it makes it easier for passengers and travelers to easily move and transport across Europe. The easy availability of alternative and substitute transport options at the lower would make increase the threat of substitution rate for Lufthansa.

Competitive Rivalry in Lufthansa Airlines

The competitive rivalry among airlines and aviation companies is very high as competitive forces in strategic management. Some of the main factors impacting competitive rivalry in the Lufthansa five forces analysis of airlines and aviation are as follows;

I-Tough Competition

Lufthansa is experiencing tough competition from aviation competitive brands like Virgin Atlantic, Qatar Airways, United Airlines, and Air France. They all have established a significantly large market share and a loyal database of customers. They offer almost the same destination and have more or less the same fleet size; their market presence is decreasing the sales, growth, and profitability of the German airline.

Conclusion: Lufthansa Airlines Porter’s Five Forces Analysis |5 Forces Analysis of Lufthansa Airlines

After an in-depth study of Porter’s five forces analysis of Lufthansa Airlines; we have realized that Lufthansa is the world’s leading airline. If you are learning about the Lufthansa Airlines 5 forces analysis of airlines and aviation; then you should keep in mind the abovementioned bargaining power of suppliers and buyers; threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management.