The threat of new entrants
This aspect of the Five Forces refers to the extent to which new competition can be accommodated within the industry. In relation to the long-haul passenger airline business (which currently dominates Singapore Airline’s market activity), the threat of new entrants is weak. Long haul air travel is a fairly saturated industry with just one or two national carriers representing each economy, most of which receive some backing (pecuniary or otherwise) from the nation’s government (Fu and Oum, 2014). This means that traffic growth generally comes from the growth of a national carrier, rather than the entry to the market of new rivals. Evidence of the saturation of the long haul airline passenger industry can be seen in the congestion of the skies and airports, particularly large regional hubs (Wirtz and Johnston, 2003; Heracleous et al, 2006), and there is impetus from regulatory and governing bodies as well as passengers to reduce current congestion levels. In any case, there are huge capital outlays and long lead times to recoup investment in the airline industry, which explains the high failure rates of many nascent airlines. Despite the weak threat of new entrants to the full, long-haul airline passenger sector, the short-haul sector has witnessed the entry of several new entrants in recent years. Good examples in the Southeast Asian markets in which Singapore Airlines operate are Air Asia and Jet Star (Stockport, 2012).