Emerging Market: Low Cost Carriers Save Airlines
Since the economic recession, the air transportation industry has suffered significant losses as customers pinch every penny in an effort to cushion themselves from economic uncertainty. Not good news for the capital-intensive market of the airline industry, as their massive fiscal investments put their capital gains in a precarious situation. Traditional airline markets were simply not making enough profit to satisfy their unparalleled overhead.
However, airlines seem to have pinpointed an appropriate angle to woo back their necessary customers: cheap flights. Often considered an easily expendable luxury expense, the high price of air transportation is the leading factor in customer determent, and by simply lowering the price model many airline companies have seen a resurgence of capital gains.
A report entitled, “Airlines: The Global Outlook,” issued this week from Global Industry Analysts (GIA) reported the exciting boom of emerging markets in revitalizing the ailing airline industry after years of capital recession.
So instead of fighting consumer trends, the industry has made great strides to side with what their customers want. And in a troubled economic landscape, what consumers really want, (nay what they need,) is to simply save money, even if it costs them luxury. Enter the recent boom of low cost carriers.
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Ultimately, the success of the airline industry depends on meeting consumer trends.
Banking on the efficiency of new aircrafts, low cost companies like JetBlue have cut unnecessary frills like no-waiting lines and complimentary drinks from their business model, offering customers a bare bones option to traveling.
Ultimately customers world-wide appreciate the shift in air tran's business model, as the convenience of the airline industry finally meets convenient pricing. If the new model can sustain customers' interests, than the industry at large is bound to see enormous capital improvement.