Boeing fourth quarter of the year, the deliveries

Boeing and Airbus
respectively have been the two major suppliers of aircrafts to the airlines
over the world. For the past few years, we have seen a huge increase in the
production which resulted in delivering aircrafts at an above-average pace
without defaulting a single time, even though the commercial aviation industry
was slowing down in terms of production due to effects of the overall global
economic conditions. The total deliveries in 2009 were close to 1000, with a
record 979 aircrafts delivered by the two aircraft majors. Other than a two and
a half month strike at Boeing in 2008, which delayed production in the fourth
quarter of the year, the deliveries have been increasing steadily in the
current decade.1

One of the way that would affect both fuel and aircrafts
is forward integration; in this case, it is low. The reason for this is that
aircraft manufactures, neither fuel providers nor technical support companies
will purchase an airline and staff it with flight attendants, commercial
pilots, and a maintenance crew and operate flights across the world requiring a
major network of resources, which most companies do not have or are not
prepared for. However, the strong position fuel suppliers and aircraft
manufacturers hold in the industry need to be taken into account when operating
an airline.2

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Labour comes
third in our inputs, it is subject to the power of the unions who often bargain and get
unreasonable and costly concessions, which are granted rights or a privilege
from the airlines, plus, another point to keep in mind is that strikes affect
the industry greatly.

provide resources to the business. For example, consider opening a restaurant.
Owner will look at suppliers of food noting their reliability, quality, pricing
and whether they can offer credit terms whenever asked. A single supplier might
stand out but multiple suppliers will compete for business and therefore will
offer better service on a reasonable price, whereas a single supplier can have
an advantage and hold business on hostage. He will also look at real estate
resources. For the airline industry, there is technical support and IT
services as well as the catering services, which is a challenge to keep. Going
back to our restaurant example, there is a switching cost if he will try to move the business from one
location to another. 3

One example
on how the strikes have a great effect, German airline Lufthansa declared
(2015) that it lost at least 10 million euros ($10.8 million) a day from the longest
strike in its 60-year history as cabin crew confirmed a fourth day of strikes.4

union strike examples include, Eastern Airline Workers’ Strike (1989, U.S.) and
Alaska Airlines flight attendant strike CHAOS (1993).5

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