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Media Discovers that Airlines Succeed Because of Smart Operations, Not Low Fares

The NY Times added to the growing pile of articles noting how airlines have actually seen some success over the past couple of years because they have held the line on capacity growth, something they have tried to do in the past without success.

As the article notes, one reason for this is because with little available capital in the market, no new entrants have come in to offer $69 flights across the country.  Of course, that is good news for airlines.

While that’s true, the airlines for the first time since deregulation seem to have come to the conclusion that what is good for the industry, is good for each carrier individually.  That is, by taking seats out of the market and keeping fares higher, they will make more money (for themselves and the industry) than by whacking the crap out of each other with $59 flights to Ft Lauderdale.

The shift seems to be that smart operational decisions are trumping cutthroat competition and, dare I say, marketing has become less important than the far-less-sexy capacity decisions.  The OTR has been saying forever that this is a manufacturing type business, where the focus needs to be on matching capacity with demand.  Every manufacturer in the universe puts all of their focus on that one idea; for whatever reason, airlines didn’t pay all that much attention to it for years.

That’s all changed for the better.  A healthy industry is good for everyone, even if you have to pay a bit extra for a flight now and again (though the unbundling of fares has made it possible to pay as little as you’ve always paid for the base fare as long as you bring a sandwich with you).


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