To be competitive in the airline industry, companies need to be in control of cost control and management. Companies need to reduce their exposition to risk (fuel management) and control the efficiency of each type of plane they operate. As the industry requires high fixed costs, companies have to be as efficient as possible. They need to adopt very fast technological innovation to improve their fleet (adopt new planes to reduce the fuel consumption, and to improve fleet capabilities). From a management point of view, they need to implement revolutions such as online booking and yield management that are ways to improve margins and to be more profitable. Size and flexibility are other drivers of success; because the bigger you are the better you can bargain against suppliers (planes maker but also fuel or maintenance services). Flexibility, especially in times of crisis, makes Airline companies capable of answering as fast as possible, to huge changes in Airline industry (decreasing passenger frequency, increasing oil price).
One of the most important moves in the Airline industry was deregulation, whereby states opened their skies, and flag carriers consequently faced stronger rivalry. The states were not able to cover every flag carrier. Companies created business models based on alliances to cope with this threat. They were able to offer a bunch of new destinations while they shared marketing and booking system.
New opportunities arrived with the development of new markets, such as air freight or maintenance at airports. It was a way for companies such as Air France or KLM to create value and thus differentiate themselves from other divisions. The inefficient flag carriers then started facing problems because of the increasing competition, which became even stronger when the low cost/no frills business model emerged, which... [continues]
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