Airlines can’t move past price

Tom Dougherty, CEO – Stealing Share

12 May 2009

If airline passengers choose only on price who is winning the battle for survival?

I pick on the airline industry all the time. I think it is because everything they hold as a core competency has gotten worse. The seats are smaller, the service is worse, the delays are more frequent, and the jets themselves seem more packed than ever.

To top it all off, the airlines are bleeding money. All except one, that is.

According to an article in the Baltimore Sun, AirTran, the low-cost carrier, is making money.

“The Florida-based airline recently posted its best-ever profit after heavy losses last year and is expanding service by 13 flights to Baltimore-Washington International Thurgood Marshall Airport, where it is the second-largest discount carrier. The airline, which turned a first-quarter profit, expects to remain profitable through the rest of the year.”

This does not surprise me much, not because AirTran is doing so many things right, but because the legacy carriers (like American, Delta, United, and US Airways) are doing so many things wrong.

Consider for just a moment that there are only two ways to grow the airline business and attract more airline passengers.

  1. Increase the number of people who fly or
  2. Steal market share from the competition.

We all understand that airlines can’t do much about the drop-off in passengers as a result of the drooping economy. So it is near impossible to accomplish the first means to grow their businesses. Logically, they have focused on grabbing market share from their competitors. The problem, however, is that everything they do as a business practice simply stinks. As a result all they have left to offer potential customers is lower fares. With that scenario, guess who wins? You bet, the low cost provider.

In a recent nationwide study done by Resultant Research, Stealing Share’s research company, 53% of Americans currently choose their airlines strictly on price.This does not bode well for the legacy carriers because they can’t compete on price.

Maybe they should try to improve the basics and make passengers feel like they are getting their money’s worth? With all the money they spend on advertising, one would hope for some real preference. They need something we want besides the side-by-side cost comparisons offered by Expedia or Travelocity.

See more posts in the following related categories: Airlines economy Northwest Airlines US Airways


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