Yes, We Want Airlines Profitable, But…
Virtually all the major airlines reported profits in the last quarter, a predicted outcome once the airlines got control of flight capacity. In economic terms, the airlines now own the supply side of the supply and demand curve. This is good in the sense that the carriers no longer fear reorganization and bankruptcy in the event of an economic downturn so with the feast or famine days behind them, the industry focus today is simply profitability.
This blog reported before about airlines acquiring personal data about passengers which, the airlines say, is to provide more personal experiences. Now they want to go a step further and use targeted marketing for airfares. The International Air Transport Association (IATA) has proposed a scheme, called New Distribution Capability, to allow airlines to customize travel plans for individuals. Not surprising, it has been endorsed by Airlines for America (A4A) which represents the largest U.S. carriers.
Again under the guise of offering helpful information to travelers, the airlines want the ability to offer specific data, say, flights and fares, only to a target audience. Of course, the natural fear is that the airlines will not continue to post all fares. For example, someone flying regularly from one city to another may be offered only higher fares because the airline knows this is a route you fly often.
An IATA spokesman pointed out that airlines would not be required to adopt this plan. While true, does anyone believe an airline won’t after receiving permission to do it? Moreover, some might argue this is another veiled attempt by the airlines to attract more direct business, as opposed to fliers who purchase tickets from travel agents or online agencies.
Is this a good business idea? Maybe, but it also requires some perspective. Much – if not most – of airline profits come from frequent travelers whose bucks and butts are making more money for nearly everyone in the airline industry. So why are airlines creating ideas like this, at the same time slashing elite and frequent flier benefits from those they call their most ‘loyal’ customers? Because they can.
Yes, we want airlines profitable, but…
