Why might airlines struggle with supplier power?

Airlines often struggle with supplier power primarily due to the nature of fuel supply in the aviation industry. Fuel prices can fluctuate significantly, and the supply of fuel is typically concentrated in the hands of a few major suppliers. This concentration means that airlines have limited options and less negotiating power when it comes to securing favorable prices for their fuel. Since fuel costs represent a substantial portion of an airline's operating expenses, the influence of a few suppliers can severely impact profitability and operational efficiency.

Having few major suppliers for fuel not only elevates costs but also results in instability in pricing, making it challenging for airlines to forecast budgets and manage expenses effectively. As a result, this creates a scenario where suppliers hold considerable power over airlines, leading to reduced flexibility in decision-making regarding operations and pricing strategies.