It was December 17, 1903. Oliver and Wilbur Wright were about to make history by successfully launching a heavier than air, mechanically operated craft. This first tentative step into the limitless possibilities of commercial aviation is commemorated annually with the Pan American Aviation Day.
In 2017, commercial aviation is both a costly exercise and a lucrative money-spinner. As more and more people choose to fly, the usual concerns attributed to the aviation industry may find satisfactory solutions organically. Standards of safety are bound to improve; operational costs will not eat too heavily into profit margins, and competitive positioning will reward both the big and small carriers.
In a market as chock-a-block as the American aviation industry, what business factors will make the most competitive sense to both the big and small operators?
1) Digitalization
In a bid to be the most ‘connected’, many service providers have jumped aboard the AI and IoT bandwagon. The critical question remains: is the ensuing transformation in itself a costly, bank-breaking exercise?
Service providers must think more practically and not be forced into partaking in the ‘me too’ argument. Thinking in terms of what digital technologies offer, the core problems they solve, the opportunities they fuel and the costs they save, will help vendors invest better and offer their business to a more supportive audience. It’s time to position customer service above the optional frills across all levels in the American aviation industry.
2) Customization
In an era of Low Cost Carriers (LCC) and Ultra-Low-Cost Carriers (ULCC), the target demographic has been split into the opulent high-fliers and the value-based customers. However, the functional lines are blurred here with some full-service carriers (FSCs) like American Airlines and United Airlines offering services that mimic those offered by LCCs and ULCCs. The vice-versa of this holds true as well.
The future of American aviation is all about customization- FSCs offering both high end services as well as tweaked service models that copy those offered by LCCs and ULCCs. There is also an emerging trend wherein big brands are carving out LCC subsets that are targeted at cost-conscious fliers.
3) Competitive Positioning
For an airline executive, zeroing in on the most profitable competitive position by market is the key to building a potentially successful airline business. This requirement includes aspects such as the projected fleet size, operating model, business partnerships and a myriad of other factors. The executive must also decide the timelines involved and if the requirements can be amassed through strategic JVs, organic growth, funding, etc. The core idea is to employ a small drawing board and then grow outwards, on the back of shrewd competitive positioning.
4) Partnerships
Everyone, from airports, to tech giants like Google, to travel focused portals like Expedia, wants to partake in the lucrative business of ‘building experiences’ for the millions of tourists that are crisscrossing the planet every single day. Herein, high technology can refine payment models, make bookings and cancellations more seamless, help tourists find the ideal holiday spots and hotels, and help them connect to a whole range of tourist friendly services. On the line is the very lucrative recreational traveler’s budget, which has been projected to increase manifold in the next several years.
There is huge opportunity to form partnerships with entities that aren’t direct competitors and importantly, aren’t a natural part of the American aviation industry. The results could be greater exposure, and a chance to reach and influence an even larger target audience.
5) Customer Support
The recent string of public relations hiccups that FSCs like United Airlines have endured prove one undeniable fact: reputation matters. Sound customer support is key, and it needs to be gainfully projected on the ground, in the air, and over the internet. While it is true that customer support can be quite a challenge, making an effort in this area will win your business brand recognition, loyalty and on-par mention alongside the big industry players.
Expert insights are a click away- Commercial aviation is an ever-morphing discipline. Stay ahead of the pack, learn from current market trends and implement the best practices to profitably impact your bottomline. Access these expert market research reports concerning commercial aviation from Technavio. Sample reports can be downloaded for free.
