MEMORANDUM TO: Professor Guler FROM: [name deleted] 1 DATE: September 24, 2008 RE: Case Write-up: Delta Air Lines: The Low-Cost Carrier Threat Question 1: Overall, the poor nature of the airline industry results in low rates of return. The power of suppliers is high, as only two suppliers of aircrafts exist: Airbus and Boeing; employees are unionized; additionally, fuel constitutes a significant portion of costs, the price of which the airlines cannot control. All airlines provide the same basic service; thus, the power of buyers is high due to the sheer number of options. The threat of substitutes is moderate as the other modes of transportation, i.e. train, car, bus, etc., are not prefect substitutes. Lastly, rivalry is high among the competing airlines as expansion of one company eats into the market share of another. The highly competitive nature of the airline industry contributes to its low rates of return. Question 2:
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