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Question A Contents 10 Introductionpage 3 20 Attractiveness of the budget airline sectorpage 3-4 21 The Far Environmentpage 3 22 The Near Environmentpage3-4 30 Is the budget airline industry attractivePage 4-5 40 Appendix 1- BCG Strategic Environments matrixpage 6 50 Appendix 2- Five Forces or Sixpage 6 Introduction The national flag carriers who together accounted for the majority of passenger traffic traditionally controlled the European airline sector These national carriers were protected by regulation allowing them to monopolise the industry However over the past decade the industry has seen some drastic changes European aviation has moved from a highly regulated industry therefore having little or no competition to a highly competitive single market allowing any corporation with an air operators certificate to demand slots at any destination The historical dominance of the protected national flag carriers is now being eroded by more efficient low-cost airlines in the sector Attractiveness of the budget airline sector The Far Environment In December of 1992 a tremendous political change occurred as the European Union passed legislation deregulating the airline industry Similar to the deregulation of the American industry a decade earlier the new directive opened up the airline industry to competition There are many environmental influences affecting the budget airline sector One of the major attractions in the United Kingdom is the strong sociological trend towards UK citizens travelling to holiday destinations in Europe This trend of growth is estimated to continue and analysts have predicted the European low-cost market could grow by as much as 300 by 2004 With a large centralised population London stands out as one of the dominant markets for operations Other sociological trends are pushing towards customer flexibility Traditional flag carriers have taken advantage
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