October 19, 2016

Competition in the Air

Passenger planes by design are vehicles that need to stay in the air.  Air transportation is an industry that can cover the costs of flight and operation as long as the planes are aboard and full of passengers. It means a significant loss of income if a plane stays on the ground due to a malfunction, maintenance or refurbishment. Therefore, while the plane is on the ground everything needs to be settled according to the security rules very quickly. Plane should begin its flight as soon as possible.

Of course, the job is not done just by sending the plane on its flight as soon as possible. Load factor of the plane is another leg that the air transportation stands on. What it means by load factor is that all of the seats and baggage are full of passengers and luggage, which means lots of customers.

There are mandatory procedures need to be done due to safety concerns. Every airline needs to adhere to these rules. Therefore, we can say that the base prices are set. It is impossible to offer a ticket price below this base price. If it were to occur, it is inevitable that the company will lose money and put its future in jeopardy.

In today’s free competition environment, ticket prices are forcing the airlines to this border. Fuel is the biggest cost item for an airline. Relatively cheap oil prices are saving the day for now. Airlines should be prepared in case of the prices increasing again, which history is filled with such examples.

At this point, plane manufacturers step in and offer different solutions. Their first goal is obviously offering a new plane and/or engine model that have lower fuel consumption. This way the increase in the oil prices can be balanced. It is also another solution to remake the plane with lighter materials which allows carrying more passengers and luggage. This solution is an attractive alternative for the airlines that organized the whole crew and facility hardware according to their existing planes even though the plane is an older model. Due to being a newly produced model, it is a plus that the plane needs shorter and lesser maintenance. Thus, goals of the plane producers are set by themselves.

The airlines that cannot afford the investment costs for a new plane are looking for improvements which will lighten their planes, consume less fuel, require less maintenance and able to carry more passengers/luggage. The quickest and easy solution of course is to forgo the comfort and reduce the distance between seats. If the airline has a worry of losing passengers due to the narrow seat distance, they can achieve their goals by reducing the hardware of lavatory, closet or kitchen. Also they can change their existing seats with seats built by lighter materials in order to reduce some weight. They can abandon providing business class, flight entertainment or complimentary food and drinks. By reducing the baggage allowance of their passengers, they can increase the air-cargo service capacity with the previously reduced weight.

Even though we are summarizing quickly and simply, it is not that easy to take these steps. All of these processes are performed together with daily operations but other difficulties arise as the planes will be required to stay on the ground. The main struggle of the airlines shifts into overcoming all of these organizations.

In conclusion, the only purpose of the competition in the air is to keep the passengers pleased with ticket prices and service quality while surviving for the future of their own shareholders and employees.