Monday, August 10, 2015

Airline Industry Key Success Factors

In the service industry, particularly the volatile, capital-intensive airline industry, success factors cover a wide spectrum--people, service product, route system, revenue/cost control and financial management.


People


High-caliber staff is critical in this service-oriented business. Training programs focusing on front-line communicative skills with customers and internal employee-management problem solving with customer-focused continuous-improvement objectives are essential ingredients.


Service Product/Promotions


The actual product--aircraft seating space, aircraft type, class of service offerings and booking ease--must be at least industry-competitive for success. Promotions, particularly those targeted to frequent high-revenue travelers, create loyalty and repeat business.


Route System


An airline's route system is perhaps the most consistent success factor. Where to fly and how often are factors that must be matched to customer demand, and at the same time, scheduled to maximize aircraft utilization.


Revenue/Cost Control


Maximizing revenue through competitive and innovative pricing schemes to attract and maintain a customer base is critical for success. Just as important is cost management, notably fuel procurement and price hedging during volatile periods.


Financial Management


Net-unit revenue is the measure of profitability, representing all revenues minus all costs divided by the total seats flown. Successful management of this key indicator enables airlines to tap investment for growth.

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