Airline industry functions in most competitive and seasonal ambience. Every airlines have approved operating manual regarding business manoeuvre that must be applied to adjust supply to demand during slump times when travel is on low side. More of an art than science successful airlines are adept in choosing the right business manoeuvre.
Statistics for the year of 2019, the last one before pandemic struck, indicates few pertinent points. US Airlines had on average 85% seats filled in a typical flight. This is slightly edged over the global percentage of 83. But budget airlines did well in filling seats. For example Ryanair recorded close upon 96%. Come post pandemic the chance of getting high quartile figure in terms of seats filled is not feasible. Hence adjusting supply to demand as business manoeuvre is recommend strongly for full service airlines.
Predicting exact demand schedule is not within the scope by even prestigious airlines like Emirates and Lufthansa. Computer aided programmes can do wee bit. But many airlines depend on the raw power of marketing and the image that was built over the period of time as a reliable and convenient one to fly with. The underlying philosophy is to get the most seats filled as an airline takes over for a single destination journey.
Plainly speaking, regulating supply is sine quo non in times of low demand or during the initial period of post pandemic traffic. Possibly demand is expected to fluctuate in terms of time, destination and the type of travel.
1. Time: Indeed time is in essence. Provably, travellers would prefer to travel during the times pandemic is slowing down and the duration of such slowdown lasts. Recently, Thailand which relaxed air travel regulations for vaccinated tourists had to roll back the reforms and introduced additional quarantine measures. Arising from this incident airlines must be ready to change flight schedules taking into count of the latest situation prevailing in and around destinations
2. Destination: It is doubly important as recent experience suggests that lockdowns could be announced with least notice. Major travel destinations such as Dubai, Hong Kong, Singapore & Bangkok in the Asian region must be under constant scrutiny of airlines as much of business and pleasure tours are oriented towards these destinations
3. Class configuration: Most airlines have a common three tiered system of first class, business and economy. At times of slumping demand, economy class travellers would be willing to travel more as they can manage the risk. Business class ranks next in terms of demand because business travellers have no option other than using an available flight to reach their desired destinations.
Evidently, first class travellers are few and far between. In this scenario, airlines must be able to adjust seats allocated to each class in order to optimize occupation of seats across the three classes. This must be done carefully without compromising upon the in-service quality earmarked for each class. Moreover, the prestige of the airline must be preserved at any cost!
Cheers!
Muthu Ashraff Rajulu
Business Strategist
Mobile: + 94 777 265677
E-mail: cosmicgems@gmail.com
Blog: Business Strategist
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