The bargaining power of suppliers
This aspect of the Five Forces refers to the extent to which suppliers can
negotiate with businesses over materials and equipment. Porter (1985) argued that
where suppliers have strong bargaining power, the relative position of businesses is
relatively weak. Unusually for a transportation industry, suppliers to the airline
industry are in a relatively strong bargaining position. Fleets to the industry are
supplied by what is effectively a duopoly – Boeing and Airbus –, while an oligopoly
exists in the supply of engines (General Electric, Pratt and Whitney, and Rolls Royce).
With so few suppliers in operation, manufacturers are able to unilaterally establish
prices and set delivery times (Olienyk, and Carbaugh, 2011).