Amsterdam Schiphol Airport Aviation Management

Question: Do a report on Amsterdam schiphol airport and do the following . 1) Apply porters five forces model to armsterdam airport. 2) Analyse the possible strategic choices the airport has. 3) Explain what choices the company adopted and why. 4) Discuss the competitive advantage the company has. Answer: Introduction Amsterdam Airport Schiphol is the international airport of Netherlands. The airport started its operations in 1916 and was used as a local airbase for the military. With regular expansion and growth over the years, Schiphol is the fifth busiest airport in Europe and the twenty-second busiest airport in the world. A range of airlines operates from this airport. The aim of this report is to strategically analyse the external factors that affect Schiphol. The competitive advantages of the airport are analysed. Various possible strategic choices are determined. One strategic choice is recommended based on the results of external analyses (Amsterdamairport.info 2016). Porters Five Forces Model Bargaining Power of Suppliers The main suppliers of Schiphol are labours, baggage handlers and fuel suppliers. Labours pose a great power at the airport as they are union workers. There is a pool of large suppliers for providing fuel. Due to production cuts by Organization of the Petroleum Exporting Countries and strong economic growth has constantly increased fuel prices, also resulting in fuel efficiency. Vanderlande is the baggage handler at the airport and is responsible for making its services better every day with high power. These factors make the bargaining power of the suppliers at Amsterdam Airport Schiphol is considered moderate (Vanderlande.com 2016). Bargaining Power of Buyers The buyers of Schiphol are the passengers travelling in flights. The passengers are categorized as time-sensitive and non-time sensitive based on the competition. The individual buyers do not have any bargaining power. However, corporate passengers have bargaining power. The buyers have a high bargaining power due to prevailing competitive prices in the airline industry. The passengers choose to travel via low cost airline. If the prices of the airlines are kept high, passengers have a large pool of flights to select from (Bilotkach and Polk 2013). Threat of New Entrants An airport requires a large amount of investment, ground space and major infrastructural facilities. Besides large investments, strict regulations make it hard for the new entrants to enter the industry. An airport also requires a large number of employees and partners managing and handling the operations at the site. Therefore, the threat of new entrants is low (Bilotkach and Polk 2013). Intensity of Rivalries Schiphol faces intense competition from other busy airports in the world that are ranked higher such as Charles de Gaulle Airport, Istanbul Ataturk Airport and Frankfurt Airport. Intense competition is faced as these airports are busier than Schiphol. Other competitors are the airports in Netherlands such as Rotterdam The Hague Airport, Eindhoven Airport and various others. But these are not as big and busy as Schiphol. Therefore, the intensity is moderate (Rogers 2012). Threat of Substitutes When talking about substitutes, the products or services from other industries are considered. The substitutes could be other services such as Eurolines, a bus service for short travel (Eurolines.com 2016). Rail services can be used as a substitute mode of transportation. These substitutes are bound by defined routes and time constraints. Air travel is the quickest mode of transportation for huge distances. Therefore, the threat of substitutes in the airline industry is very low (Bilotkach and Polk 2013). SWOT Analysis An internal analysis is made for the Amsterdam Airport Schiphol: Strengths The airport is a modern and well-equipped airport. It is the main international airport in Netherlands with local community engagement. It has a high brand recognition and reputation consisting of terminals for both aviation and non-aviation activities. The innovative strength, central location and easy accessibility are key strengths (Annualreportschiphol.com 2016). Weaknesses Amsterdam is a small domestic market having a complex system of rules ad agreements for using airspace and runways. The airport depends on a large number of customers and has relatively old infrastructure in relation to other rivalries (Annualreportschiphol.com 2016). Opportunities The strongest opportunity lies in making it a Single European Sky. For increasing the footfalls, the traffic and transport may emerge. International train connections to and from the airport can be made directly (Annualreportschiphol.com 2016). Threats The existing threats are competition from other rivalries. The quality perception of customers due to large scale renovation projects are a threat. The air quality concerns and other commutations pose threat to Schiphol (Annualreportschiphol.com 2016). Possible strategic choices Expansion of Airport There are various opportunities for expanding the number of terminals at Schiphol. Currently, there are six terminals, and a seventh one could be constructed for greater market opportunities (Hill and Jones 2013). Integration Schiphol could involve in backward integration where airport operators seek control of suppliers. On the other hand, it could consider horizontal integration with other organizations in the same industry (Hill and Jones 2013). Increase in Tourism The resources at the airport could be used for capturing a greater market share by increasing the number of existing customers. Tourism growth strategy at Netherlands can be framed for increasing the rate of tourists from across the world (GoÃÅ'ˆssling, Hall and Scott 2015). Strategy Adopted by Amsterdam Airport Schiphol The strategy adopted by Schiphol Airport for increasing sustainability is expansion. The management chose to build and renew a new Pier A and terminal. The strategy is chosen for increasing the continuity of high quality services at the airport. The designs for the new terminal are being designed and assessed. Not only the terminal is expanded, the airport also creates new parking so that sufficient facilities. As a result of overall renovation, the existing facilities are relocated and new services are added at the airport (Schiphol.nl 2016). Conclusion The overall aim of this report is to assess the range of strategic options available at the Schiphol Airport. The macro-environment is analysed using competitive advantage and five forces model. The bargaining power of the suppliers at Amsterdam Airport Schiphol is considered moderate. The buyers have a high bargaining power due to prevailing competitive prices in the airline industry. The intensity of rivalries is moderate. The threat of substitutes in the airline industry is very low. Schiphol has various competitive advantages such as central location, duty-free indoor shopping and the greatest airline hub in Europe. The Schiphol Airport has chosen expansion of terminals to increase the continuity of high quality services at the airport. References Amsterdamairport.info, 2016.Amsterdam Airport. [online] Available at: https://www.amsterdamairport.info/ [Accessed 27 Feb. 2016]. Annualreportschiphol.com, 2016. SWOT analysis | Annual Report 2014 | Schiphol. [online] Available at: https://www.annualreportschiphol.com/strategy/changing-business-environment/swot-analysis [Accessed 1 Mar. 2016]. Bilotkach, V. and Polk, A., 2013. Market Power of Airports: A Case Study for Amsterdam Airport Schiphol.Competition and Regulation in Network Industries, [online] 14(4). Available at: https://www.crninet.com/pdf_file/ITS/CRNI_14_04_0320.pdf [Accessed 28 Feb. 2016]. 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[online] Available at: https://www.schiphol.nl/Travellers/Shop/AboutShoppingAtSchiphol/dutyfreevat2.htm [Accessed 28 Feb. 2016]. Vanderlande.com, 2016.Amsterdam Airport Schiphol - Vanderlande. [online] Available at: https://www.vanderlande.com/references/amsterdam-airport-schiphol [Accessed 27 Feb. 2016].