Lufthansa Case StudyI. External Analysis: Several large-scale interconnected conditions have affected the airline industry in recent years in such a way that every carrier has had to respond to remain viable and competitive.a. Environmental Analysis: The international war on terrorism, with the resulting increase in the cost of oil, has created chaos in several ways (Lufthansa Annual Report, 2004). The increase in costs is the result of rising fuel prices. Customer check-in wait times and flight delays are the result of new regulations designed to ensure passenger and aircraft safety, including more rigorous baggage searches, expanded passenger screening and the like. This resulted in customers paying higher prices and a less pleasant flying experience. Furthermore, deregulation and liberalization have accompanied the globalization of the airline industry, so that companies have had to compete with each other in new markets, as well as gain entry into new territories. The rise of low-cost local and regional airlines has made the competitive environment difficult for large, previously state-subsidized, national airlines to maneuver. This has resulted in the need for strategic alliances between airlines to attempt to protect market share and profits (Friehe and Curti, n.d.).b. Opportunities and Threats: Rising fuel prices are likely to continue into the distant future, requiring reduced services to control costs or new technologies to address them. The threat of flexible, low-cost companies entering markets in a variety of locations, cutting into market share in numerous small areas, collectively threatens to damage larger markets... middle of paper... .essay for the near future.Works CitedFriehe, T. and Curti, H. (nd) Overvalued Remedies, Weak Competition: An Analysis of the Lufthansa/Austrian Airlines Alliances in the Air Traffic Market from Germany to Austria. Retrieved November 26, 2006, from www2.jura.uni-hamburg.de/le/Overrated%20Remedies%20and%20Weak%20Competition.pdf.Lufthansa Annual Report. (2004). Retrieved November 25, 2006, from http://www.lufthansa-financials.de/servlet/PB/menu/1016861_l2/index.html.Moody's Investors Service. Deutsche Lufthansa AG. Retrieved November 26, 2006, from www.lufthansa-financials.de/servlet/PB/show/1019581/Moodys%20Analysis%20LH%20092005.pdf.Standard and Poor. (2006) Research Update: Deutsche Lufthansa's Outlook Remains Stable as Business Outlook Improves. Retrieved November 25, 2006, from www.lufthansa-financials.de/servlet/PB/show/1019578/RatingStandardandPoors102006.pdf.