What factor are causing change in the airline industry? 1.

Fuel Price Improving their efficiency of fuel use and also by improving labour productivity. World depent on fuel use and als by impacting the decisions of the countries and this topic. The airline should minify the loss through management strengthening, cost lowering and efficiency improving, but not simply raise the price. Increase in fuel proces affect the airlines in two ways; The cost of fuel has an obvious and direct impact on the cost of operation Fuel cost increases have repeatedly triggered economic recession. Change in cruise speed, use of flight stimulator, increasing load factor and the introduction of newer are all recent success stories. 2. Shrinkage Of High-End Demand For Air Travel Travelers have always chosen an airline primarily based on prices, there is growing evidence that business travelers have become significantly more price sensitive. 3. Emergence of a new cadre of low cost carries Flying on a low-cost carrier generally used to mean infrequent service on aging airplanes across a limited across a limited network. Low-cost carriers now offer convenient schedule, state of the art aircraft, and amennities that meet or exceed those offered by the full service airlines. Take a hard look at their business strategies and reduce costs whrever possible and third. The increase transparency of alternative airlines offerrings and less expensive itineraries made possible by internet and other technologies. 4. Internet Carries everywhere have embraced online ticket sales as a means of reducing distribution costs. Low-cost carries were often in a better position to take the greatest advantage of internet distribution channel because they were unburdened by the legacy of existing distribution system and technologies.

Strategies to build competitive advantage and initiative adopted to restore consumer confident and bring back the company into profit. 1. 2. 3. 4. 5. 6. 7. Quality and innovation maintaining taiwans leading brand Professional service that puts the customer first Maximizing operational synergies and reinforcing team competitiveness Taking care of talent and training Caring for taiwan and fulfilling the responsibilities of corporate citizen Never-ending pursuit of safety Energy conversation, carbon reduction, and environmental greening

Porters 5 Forces Analysis Threat of New Entrants. The more new airlines that enter the market, the more saturated it becomes for everyone. Brand name recognition and frequent flier point also play a role in the airline industry. An airline with a strong brand name and incentives can often lure a customer even if its prices are higher. Power of Suppliers. The bargaining power of main suppliers in this industry is high because there are only two major airplane producers, Boieng and Airbus. Hence, they are overcharge. And since aircraft form each company uses different types of part and uses different system, the switching cost is high. Power of Buyer The bargaining power of buyer is high. There are many compititors in the industry, Low Cost Carriers and Full Service Airlines, thus, the price and promotion are very sensitive. With the internet, customer are quite well informed about the quality, price, and the cost of seller. Eventhough the market is growing, the emerging market is downward of the pyramid where buyers are price sensitive and it costs them a significant fraction of their purchases. Availability of Subsititutes The threat might be a little higher than international carrries. Should consider time, money, personal preferences and convenience in the air travel industry. Subtitutes that mostly effect short haul flight are all type of transportation that are low priced and have high safety.

 Competitive Rivalry Rivalry in this industry is strong because the product of this industry are weakly differentiated. There are also a lot of competitors with limited pool of customers, thus, very competitive market. Moreover, customer switching brand cost is low.

Swot Analysis Strength High safety record A very warm hospitality Rich of history Rich of reputation Opportunity Increasing income in China as a result of growth in GDP Increasing a leisure times for Chinese people World factory will raise potential demand in business travel Internet distribution may reduce operational cost Weakness Poor quality perception Higher fares levels Cannot provide seamless service Threat New competitors come from abroad and domestic Increasing expenses for oil supply

Strength Strong promotional effort Strong and wide range of alliances around the world Codesharing agreement with reputable airlines on security knowledge Weakness Complicated fare structure Experienced pilots who had worked with renowned international airlines simple fleet with young age good e-service system Strong human resources policies recruit and train all employess for Hogh operational cost and its grows faster than revenue.thus, top class service reducing in profit. Opportunity Better cross-strait relation between Taiwan and mainland China increases. Better internet service and techonology, hence increase in commnuications.

Threat Energy cost Terrorist attact on plane turned many customer away from travelling by air P.E.S.T Factors

1. Political Unaccepted people republic of china Growing government and membership of the International Civil Aviation Organisation was revoked o Collapse of the South Vietnam government o Cross-strait relation between China and Taiwan valid government. Thus, resulting in the limited expansion opportuinities for CAL due to their diplomatic ties with PRC 2. Economy o o o o o 3. Sosial o Safety and ethical concern Oil crisis Growing economy between Taiwan and America Financial crises 1997-98 Global economy downturn Terrorist attacks o o

4. Technology o o o Aviation technology Communication technology Transportation technology

Executive summary China airlines Ltd. (CAL) is a taiwan-based airlines. It founded in 1959. In the early years, it undertook mostly military contract work. It was then declared as the official airline of taiwan in 1968. Early on, CAL had a lot of problem including poor safety in 1990s which severely discredited the image, faulty pilot recruitment policies, lax maintanance systems, high cost operational structure, inefficient corporate culture, and strained political relations between China and Taiwan which prohibited the airline from launching flight to route in China. On top of that, the economic crisis caused the company huge loss. However CAL put remakable effort to revive their business to profitability. This report provide analysis, evaluation and recommendation for China Airlines.