EVA Air Competitors the Industry Is Highly

EVA Air

Competitors

The industry is highly dependent upon the United States' economy, as economic health and growth in this country and its businesses is largely responsible for supplying customers -- and especially more profitable customers, as business travelers pay higher prices than pleasure travelers/tourists -- making competition somewhat fiercer in the current economic environment. Larger competitors with more substantial reserves that are capable of offering more diverse flight opportunities on more diverse schedules are definitely better suited to continue growth or at least maintain profitability during this period. As a mid-sized high quality provider serving a broad enough array of destinations to remain attractive to commuters with diverse needs, however, EVA is actually in a position to differentiate itself from competition and become the airline of choice for the selected area.

Large operators often offer greater overall flexibility and certainly operate with higher reserves -- especially as larger airlines or their holding companies are publicly traded -- but they can only provide this type of service if they do not focus or specialize in a specific area. EVA's business model depends on precisely this type of specialization, making it a stronger competitor in the Chinese/Taiwanese regions than the giants of the airline industry. These competitors, however, will likely be able to beat EVA in many other markets, including flights between China/Taiwan and other international destinations, making it far more difficult for the company to attempt growth in these markets.

In addition to other major airline carriers, there are competitors for both passenger and freight business that would not traditionally be considered direct competitors, but are a growing threat to EVA's market share. High speed rail has seen high growth in the area, and is preferable to many passengers as well as more affordable, and low-cost airlines that provide only the bare minimum of services and quality are taking much of the passenger market. Again, these competitors might form a major threat to EVA, but they also signal the direction of differentiation and strong identification with a specific level and provision of service that it is possible for the company to achieve. Larger carriers will likely be forced to shift somewhat in the direction of the low-cost carriers that are proliferating as a means of remaining competitive, meaning that they will likely be following the major industry trend, thus giving EVA even further potential for product and service differentiation.

Competitive forces in the industry are in a state of transition, but significant barriers to entry, and a lack of supplier power and (until quite recently) of buyer power has reduced competitiveness to some degree. The increasing difficulty in obtaining capital, especially for private firms, and increasing buyer power as cheaper alternatives come to the market are going to increase competition in this industry, however. Rivalry has traditionally been fierce in the industry as well, with price and route matching common practices; again, this suggests that product and service differentiation represent the best way forward for EVA.

Customer Behavior and Segments

There are three primary customer segments identified for EVA's airline business, all with very distinctive behavior sets and demands for the business. These customer segments can be partially identified from examining the various competitors identified for EVA, and are also explicitly detailed to one degree or another in the case information provided. The private holding company that owns one hundred percent of EVA gives a clue as to one of its major customer segments; Evergreen Marin Corporation is a major marine shipper, and EVA also deals with freight transport to some degree. Though freight customers do not appear to make up anywhere near a majority or even large minority of EVA's business, these customers still make up significant portion of EVA's profit potential and have unique behaviors and demands. The other two segments of EVA's customers are the actual people that purchase tickets for passage, which consist of business and pleasure travelers.

Shipping and freight customers often have standing and routine orders set at fixed prices negotiated on a per-contract basis, i.e. A flight will regularly contain the same amount of freight fro the same company going from a consistent original point to a consistent destination. This behavior can help the company establish certain revenue expectations and set flight plans accordingly. At the same time, affordability in last-minute and flexible shipping times and sizes is also required by many freight customers, and EVA needs to ensure an effective and efficient means of identifying and selling saleable space for freight on its flights as a means of off-setting any reduced passenger income lost to lower-cost airlines.