| On a brisk winter Thursday morning, December | | | | |
| 17th, 1903, for the first time ever, Wilbur | | | | How does cost cutting affect in-flight |
| and Orville flew the Wright Flyer, the | | | | services? An obvious outcome is the number of |
| world's first powered flight. It was a dream | | | | dwindling airlines providing amenities such |
| come true for the tenacious brothers. It was | | | | as in-flight meals and other standard |
| the beginning of consumer aviation history. | | | | services. Many of the airlines that used to |
| | | | offer fresh and healthy meals at no |
| It's been 100 years now, but after | | | | additional expense are now selling snacks and |
| deregulation of 1978, and industry | | | | meals on board. So, while flying Midwest |
| consolidation of the 1980s, we're facing some | | | | Airlines, we purchase deli-style breakfast, |
| major changes in the airline industry, most | | | | lunch and dinner selections on board. |
| importantly, the purchase of airline tickets | | | | |
| through travel agencies, the rise of low-cost | | | | There is one upside, individual entertainment |
| carriers and changes in the airline | | | | systems and data ports are becoming |
| hub-and-spoke route patterns. | | | | increasingly available to consumers. So, it's |
| | | | easier for us to stay connected while in the |
| Online travel sites and low-cost carriers | | | | clouds! |
| have definitely made flying affordable for | | | | |
| hordes of travelers, with far reaching impact | | | | Implications of the Hub-and-Spoke System |
| on our travel decision patterns. | | | | |
| | | | We know how important the hub (main airports) |
| Ahoy! Cost Cutting | | | | are. But, so much reliance on one airport can |
| | | | have significant implications for both |
| Okay, guess how many internet users we have | | | | consumers and airlines. For example, a severe |
| worldwide. Reports and surveys show that over | | | | weather disturbance may paralyze a large |
| 1 billion people are glued to the internet | | | | airline's entire operation. This might result |
| everyday! The advent of direct airline ticket | | | | in flight delays, and greater demand for |
| sales, on both individual airline and | | | | direct flights (versus layovers), especially |
| discount travel web sites have brought huge | | | | business class flyers with tight deadlines. |
| transformations in the marketing and selling | | | | Also, greater frequency of flights between |
| of air tickets. Whether it's American | | | | two hub markets might lead to increased |
| Airlines, or United Airlines, Lufthansa or | | | | airfares. Say, if we have a higher frequency |
| any other airline on earth, booking air | | | | of British Midland flights between London and |
| tickets is just a mouse click away! | | | | New York, chances are that British Midland |
| | | | airfares between the two hubs will see a |
| For instance, in 2002, over 39 million | | | | sharp rise. |
| Americans booked travel using travel web | | | | |
| sites. Did you know that this was a 25% | | | | Future Trends |
| increase from 2001?! Such exponential growth | | | | |
| of online bookings have resulted in | | | | In 2001, commercial airlines carried 450 |
| considerable cost savings for airlines. For | | | | million passengers. This is a whopping 250% |
| example, purchasing a Northwest Airlines | | | | increase since deregulation in 1978. |
| ticket through a travel agent costs $30. A | | | | According to predictions, over the next 20 |
| ticket sold online costs just about $10. | | | | years air travel will increase threefold. An |
| Hence, distribution and selling costs have | | | | interesting prediction is that about 70% of |
| been reduced by one-third to less than 10% of | | | | flights will be operated from just 25 |
| an airline's total costs. | | | | airports, many of which, such as New York and |
| | | | Heathrow, are already so congested they can't |
| What's the Benefit for Customers? | | | | accommodate more planes. Under these |
| | | | circumstances, the only solution lies in |
| It's an easy guess now that price reductions | | | | using larger carriers to accommodate more |
| in fares are the benefit of purchasing | | | | passengers. The doubled-deck, four-engine, |
| airline tickets online. Price transparency | | | | 555-capacity Airbus A380 has already been |
| demands that airlines acclimate to more | | | | tested and is scheduled to start operations |
| price-conscious consumers. After all, most of | | | | in late 2007. |
| us shop around and compare price options and | | | | |
| fares across different airlines. Added to | | | | Aviation is going through another historical |
| this, the cut-throat competition and | | | | change. Bigger airplanes to carry more |
| increasing knowledge about surrogate flights, | | | | passengers, cheaper flights and fewer |
| and airfares continue to drop. | | | | airports. 10-years from now, I wonder how |
| | | | we'll reflect on this time. |
| Cost Cutting and In-flight Services | | | | |