The but rather there is now a fragmented source

The Bargaining Power of Suppliers:

          The fourth of the five competitive
forces is the bargaining power of suppliers (=the organization that provide
inputs to the industry, such as materials, services and labor, which made
individuals, organizations such as labor unions, or companies that supply
contract labor) (Jones & Hill, p52). In the case of Aegean & OA the
bargaining power of suppliers is low. For the following reasons: First, the
product that suppliers sell has enough substitutes –there are a lot of catering
services to choose, a lot of fuel providers and a lot of IT services companies;
there is no concentration of suppliers but rather there is now a fragmented
source of supply of airline service suppliers. Secondly, the profitability of
suppliers is significantly affected by the purchases that airline does and thus
the airline industry is important customer to its suppliers – Airbus, Boeing.
Thirdly, Olympic Air would not experience significant switching costs if it
moved to the product of a different supplier. Fourthly, the brand name of the
suppliers is not so powerful which means there are enough suppliers to be reached.
Fifth, suppliers cannot threaten to enter OA’s industry and use their inputs to
produce airline products that could compete directly with the established
company. Finally, Aegean & OA could threaten to enter in the supplier’s
industry as its possession of provision their own Airline Handling and
Engineering and Catering could support them to do without some of its suppliers
(Johnson & Scholes, p92). Therefore, there are not powerful suppliers to
squeeze profits out of an industry by raising input prices or raise the costs
of the company in the airline industry and thus they are not constitute a
threat (Jones & Hill,p52).

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The Threat of Substitutes: LOW

           The final force in Porter’s model is
the threat of substitute products (= the products of different businesses or
industries that satisfy similar customer needs – an increase in the price of
airline ticket will increase the demand for a railway ticket). The key points
to be referred are: First that the close substitutes of airline products such like
railway, shipping, car do not possess a threat of obsolesce of the airline
product and does not provides a higher perceived benefit or value. Secondly, it
is not easy for buyers to switch to substitutes as the cost in time would be
high. Thirdly, the extend that the risk of substitution can be reduced is high;
by building in switching costs or perhaps through added producer’s  service benefits meeting buyer’s needs ( like
the travelair club visa, on time services). The low power of close substitutes
is not a threat as it cannot limit the prices that company in the industry can
charge for their products and thus cannot decrease profitability (Johnson &
Scholes, p93).