Examine the Rivarly among existing competitors and the threat of Essay

Examine the Rivarly among existing competitors and the threat of substitute product in low cost airline industry in Europe - Essay Example Therefore, there should be checks and balances put in place to control the competitiveness among industries of low cost airline in Europe (Airlines Industry Profile: Europe, 2014, p. 4). This paper examines the rivalry among the competitors and the effect this has on the profit potential. Moreover, it also unravels the threats of substitute of a product in low cost airline industry in Europe. As asserted by Cameron and Quinn (2011, p. 2), airline industry has changed largely due to deregulation act of airline that occurred in America. These effects of deregulation act that occurred in America extended to the entire world. The results of liberalization of airline industry resulted in the emergence of low cost airline. The act helped in abandoning the status quo of restrictive pricing model that inhibited the growth of airline industry. Deregulation act helped in removing the state control over airline routes and it promoted the entrance of other airlines into the market (Airlines Industry Profile: Europe, 2014, p. 9). Therefore, the act exposed the airline industry to competitive market forces that have resulted to rivalry among different firms. Nonetheless, the passenger’s fares decreased in a number of market because of the growth of competition in the industry. The competition came because of new entrance of airline of low cost into the market (Airlines Industry Profile: United Kingdom 2014, p.8). The strategy of low cost airline have been so appealing especially to traditional airlines and this led to Southwest airline being the pioneer to introduce low fares airline for short routes. In Europe, deregulation act helped in emergence of the first European low cost airline after which, rivalry competition have dominated the market due to high number of low cost airlines. Low cost airlines have lower cost compared to the cost of their competitors. The