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A “Competitive Atmosphere” in the Air Travel Industry
With an ever increasing competitive atmosphere in the air travel industry, a number of airline companies, particularly those who focus on sales of budget flights, are making prices even cheaper then ever. As affordability grows ever more important when travelling by air.
This spirit of competition means that many airliners are creating ever more elaborate packages, all in deals, or perks, to give them that cutting edge to their air travellers needs.
Even without the increase of perks or packages to appeal to customers, airline analysts have noted that there has been a decrease across the board when it comes to standard fares, regardless of if they were premier or budget orientated airliners.
It seems that majority of people are finally not having to use their wholly depleted savings accounts and are using their current accounts instead. This is perhaps down to how the ‘recession’ is slowly moving to a distant memory and people are regaining their confidence in spending again.
A foreign airline analyst concurred with the local analyst that affordability of air travel was a big issue then (before budget flights were available) but not any more.
The analyst went on to say that areas like Asia and Australia (perhaps because so many people people are ditching the “English” way of life, for a much more laid back one) are becoming dynamic and popular destination points for business or pleasure, and the airlines were responding to the strong demand for flights to those areas.
“The cheaper flights have also helped to accelerate economic growth,” said the foreign analyst.
A shift in attitude for how customers and fares are handled is also perking sales. Instead of the business model, where the attempt is to get customers to pay more for travel to a ‘fill every plane’ plan, making sure that the maximum seats are filled up for every flight.
Occupancy rates are a major concern for airliners, particularly budget ones, and they must make sure that their occupancy rate remains in the 85% to 90% region each flight, to remain profitable.
“It’s a volume game. Ensuring bums on seats helps make sure the airlines’ cash flows are healthy and sustainable. As a result of this strategy, more people can fly at a cheaper cost,” he added.
In fact, such an emphasis is place on occupancy that its not unheard of for budget airlines to offer various low one-way fares or even free flights to specific destinations during the slower less active times of the year. Its also fairly difficult to predict, as these airlines would have to calculated the numbers beforehand on how many seats are unoccupied for their flights in any given year, before they start to give away free or discounted flights.
“There is negligible cost or loss in giving discounted or free flights and it’s good for promotion and branding. The airline would not benefit by having vacant seats on flights anyway, and the person getting a free flight would likely book a return-ticket via the same airline,” he said.
Futhermore, the analyst went on to say in addition of incentives the budgeting airlines are thinking of smaller additional revenue streams such as charging for onboard products and other services like food and drinks on its flights.
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Good News for the Travel Industry
Although not headline worthy news, there have been minor but numerous positive stories that the travel industry, including all those effected like airlines and hotel business, is making a come back.
Many feel that the free falling decline on consumer vacation and international travel has now eased, a relief to many working in the field. International travel is looking up, as well as airlines recently reporting healthy quarterly profits, and finally, a upturn in business class bookings.
After two recessional years that left many invested in the travel industry concerned for their future, the hotels are finally seeing their rooms occupied again, and that they are slowly, but consistently reaching their pre-recession levels. This could be because people have avoided taking holidays whilst the recession has been hitting them hard, and that they might have opted for the (better for your current account) “stay-cation”. Which is something that I seem to have opted for (not out of choice) for about 4 years now.
Airfares prices are returning to what they were, showing that airliners are no longer slashing prices to tempt consumers back.
“With travellers on the road again, air suppliers have gained ground in pricing power, and the end of hotel rate drops is likely near,” said Christa Degnan Manning, a research director with American Express Business Travel.
While this is uplifting news for the owners and shareholders in the industry, it may work against travellers. Stricter travel policies and corporate mergers are creating less competition, as well as global alliances allowing carriers to meld routes and operations.
“With volume returning, airline alliances and mergers increasing, and increased competition for the airplane seats available, companies need to be more aggressive this year to find the best fares,” Ms. Manning said. “This also means travellers need to change behaviour and be aware of preferred supplier discounts.” -
High-res →
Most of the time I dream of travel and indeed the benefits that travel bring.
Australian firm Wicked Campers is bringing something completely new to the market (well at least over the last couple of years) and that is: Campervans availiable to hire that come with a load of fairly tasteful graffiti paint all over.
Not your bog standard van rental, I must say!
They appear to be cropping up at all the music festivals that have been and gone, and if you see one feel free to send a picture in to Thinking of the Beach I would love that!
