Thursday, November 13, 2008

Low fare airline congress

The airline industry has been in a state of turmoil…well, for a really long time. It has been a while since my last post. Sorry. I had a doctoral dissertation to defend and have started a new job. A lot has happened in the meantime and I’ll see if there are a few comments that can help the readers.

Managed to attend the Low Cost Carrier Congress in London a few weeks ago. Very interesting. I heard Herb Keller of Southwest-fame speak, which was inspirational. His dedication to the LCC business model and its societal benefits is infectious, plus he has a great sense of humor. There were the usual guests, such as Ryanair, easyJet, JetBlue, AirAsia, etc.

JetBlue had an interesting note about their EBay scheme. When airlines sell their inventory on the Internet they often get a lower yield, or ticket price, than if they sell in via a GDS. A simple explanation is that Internet users are often leisure travelers and they are price sensitive. Well, JetBlue decided to sell some seats via the auction site EBay. The ticket prices started at rock-bottom and were bid up by passengers. Not surprisingly, the exercise brought it lower fares for their seats than usual; about 50% on average. However, the event gave the airline great publicity, nearly $200 million worth in advertising exposure, according to one source. That’s great. One comment by another LCC I read said that JetBlue’s decision was not helping the industry and that their company was trying to bring the price up rather than down. Here is someone who clearly doesn’t understand the positive effects that such an event can have. Be careful you don’t get stuck in the traditional, old-fashioned way of doing things. Somebody more innovative will come up from nowhere, and while you sneer at them, they’ll be getting more and more successful. Sounds like the classic tale of the full-service industry versus the low-cost industry.

No comments: