World Travel Guide:Airlines: why it always has to come down to price
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Imagine what would be pretty much a perfect world, at least for airline CEOs. You’re running a reasonable profit - let’s say 10 percent, enough to keep the shareholders off their backs. And, they’re growing annually at a low double-digit rate, as well. Again, the shareholders are seeing an upside, so there’s no pressure on the airline’s management. Since the numbers being posted are healthy, the need for cutthroat competition evaporates, and passengers make their choices by destination and service, the latter playing a minor role, because in this perfect world, service is pretty much consistent (and high) from one airline to the next.
Blissful, right? Well, it’s just about impossible.
What shatters this fantasy, in which Santa’s the pilot and the tooth fairy is pushing the drink cart, is the concept of price. The travel market - like any market - doesn’t carve itself up neatly into the best possible outcomes for all involved. Some people make fantastic decisions, while others behave like morons. The leaders of each company think they can find an edge. Even in the perfect world described above, the mere possibility of an advantage can send the whole system into mayhem, but we’ll get to that in a moment.
Tags: air travel, airline, airline industry, airline sector, AirlineIndustry, AirlineSector, AirTravel, amenities, business class, business travel, BusinessClass, BusinessTravel, coach, coach class syndrome, CoachClassSyndrome, collusion, first class, FirstClass, legroom, leisure travel, LeisureTravel, profit, profit margins, profitability, ProfitMargins, profits, regulation, regulations