THE PORTER'S FIVE FORCES MODELMichael E. Porter in his book ''Competitive Strategy Techniques for Analyzing Industries and Competitors'', developed a model of five competitive forces based On the insight that A business strategy should meet the opportunities and threats present in the external organizational environment, the five forces identified by Porter are: Power of suppliers Power of buyers Threats of new competitors Threat of substitutes Industry rivalry Forces determine the industry of competitors and therefore the profitability and attractiveness of the sector. Let us now take a look at the impact of each of these forces on the Indian aviation industry. 1) Threat of new competitors: It is currently very easy to enter the aviation sector in India as there are very few barriers to entry. The government is also promoting local players in the sector. Several low-cost airlines, both domestic and foreign, are entering Indian skies with the foreign direct investment limit being increased from 40% to 49%. We need to check whether or not there are substantial costs to access bank loans and credit. If the loan is cheap, then the likelihood of more airliners entering the industry is higher. The more new airlines enter the market, the more saturated it becomes for everyone. Branding and frequent flyer point also play a role in the airline industry. An airline with a strong brand and incentives can usually be enough to attract a customer (even if prices are higher). Since loans are cheap due to falling interest rates and the airline market is not yet saturated, an entry into the market is quite feasible. Large expenditures on advertising and incentives such as frequent flyer points, etc. would need to be implemented aggressively.2) B...... half the paper ...... n services are generally less expensive than air and They only have select stations/stops. Charter planes are generally much more expensive than commercial airlines. Taxis are extremely expensive for long distances and are bound by speed limits and road layout. Low-cost carriers mainly aim to compete with the AC segment of Indian Railways. So the advantage in terms of time, money, personal preference and convenience can be considered as a threat of substitutes. 5) Competitive Rivalry: Competition among major players is extremely intense in many aspects. Switching costs are generally low, although companies have attempted to increase switching costs with the use of "frequent flyer" programs. Highly competitive industries generally earn low returns because the cost of competition is high. This can spell disaster when times get tough for the economy.