Published Articles
Airline Innovation: How FSCs Challenge LCCs with New Products
Air travel is a commodity. For most travelers, price is king, and fare competition is fierce. Over the years, the vicious circle of price wars has left a trail of airline casualties. Surprisingly, many other industries manage to thrive in a commoditized environment, and airlines can learn from them.
Commoditization occurs when the market perceives products to be substitutable. When products are substitutable, customers will naturally purchase the cheapest, and businesses will fight to lower their costs. It is common for economic textbooks to use the evolution of the American airline market after deregulation to introduce commoditization.
Anti Open Skies Campaign, What Happened to It?
President Donald Trump.
Got your attention?
For the past eight months a reality TV star, businessman, celebrity, whatever other word you want to use, has been leading the race for the presidential nomination of one of the two major parties in the United States. There is a lot to be alarmed and surprised about. But as I thought about this post, while watching another in an endless series of interviews, debates, town hall meetings with the candidates, I started thinking about…Open Skies. Seriously.
Open Skies: An Update
In April 2015, I wrote about the fight brewing in the U.S. between the three major international air carriers (American, Delta and United) and the three Gulf carriers (Qatar, Emirates and Etihad).
My thesis was that this was part of a strategy to get better treatment from the U.S. government in a variety of areas, and to attain a favorable outcome during consideration in the US Congress of legislation to reauthorize the Federal Aviation Administration (the legislation includes many of the taxes and fees airlines and their passengers must pay). While there were some wild statements from both sides, I believed this was a more limited strategy. And if you read, for example, the speech given by Airlines for America CEO Nick Calio at the International Aviation Club in Washington last Fall, there is much evidence for that.
Open Skies: Invite to Complain or Compete!
Gulf carriers, such as Emirates Airline, Etihad Airways, and Qatar Airways, have expanded enormously and have established an intense global competitive network. These carriers’ future growth prospects depend on their ability to gain access to markets in Europe and America. Existing bilateral air agreements and the US incumbent carriers lobby hamper the Gulf carriers' expansion plans through restricting market access
Open Skies: What U.S. Airlines Really Want
In 1992, Jeff Shane (currently General Counsel at the International Air Transport Association and then a senior official in the United States Department of Transportation) negotiated the first “open skies” agreement with The Netherlands. As odd as it may seem now, the reaction to this development (after people asked “what is open skies?”) was largely negative.