Discuss the competitive forces model with reference to what you know about the U.S. airline industry (Read the case below). What does the model tell you about the level of competition in this industry?

Case Facts: Competition in the U.S. Airline Industry

After significant deregulation of the airline industry that began in 1978, the intensity of the competition grew. The deregulations lowered barriers to entry and initiated intense price wars. Lower prices squeezed margins as airlines struggled to keep their costs down and fill seats. The labor situation differences between the new, no-frills airlines and the established airlines also contributed to the upheaval. Consumers began to view airline travel as a commodity rather than a luxury; online price comparison websites made it easier for consumers to find low-cost options. Rising fuel costs and the recessions of the early 2000s contributed to airlines struggles.

The result was a turbulent industry that included bankruptcies and numerous entries and exits of various airlines. By 2018, however, the industry could claim relative stability after mergers and effective cost-cutting measures by the larger airlines. Today, 70% of air travelers are seated on American, Delta, United, and Southwest aircraft. Demand has continued to grow, and airfares have stabilized, turning unprofitable operations into profitable ones