How airlines have been effected by the economic recession and how they adapted

Introduction In the current environment of economic recession with highly volatile market conditions, the businesses across globe are adopting innovative measures to compete. The recessive trend in the economy has adversely impacted their business performance. The airlines across the globe have especially become highly competitive and are increasingly evolving creative inputs to survive. Most of the airlines are not only adopting cost effective strategy but also trying to create differentiation which would make it attractive to the customers. In the contemporary environment of cutthroat business, the company must adapt dynamic strategies within the broader paradigm of ethical consideration which would meet the shrinking pocket of the customer. At the same time, the strategic plans must also ensure comfortable margin of profit for the companies. Hence, airlines are being creative in the following ways:
Pricing and surcharges
Dynamic pricing as per the demands of the customers have become the most common strategy of the airlines. Low fare strategy and giving fringe benefits with higher fare has become popular as it attracts not only those customers who work within the defined budgets but also the premium class who an afford extra. Interesting some airlines have also started offering different classes like business class, executive, economic and premium economic depending on the legroom and extra facilities like free drink, enclosed cabin, etc.
Special offers and benefits
Customers are being offered innovative packages and arrangement within flights. While some airlines like Virgin offer personal space by allotting front row for business class, others like British Airways is giving its premium economy class more privacy, space and comfort in a secluded cabin. Kay (1995) says that business relationships are linkages that promote organizational growth. Airlines are evolving new ways of earning and seasonal tickets for defined tourist places are being offered at flexible prices. Thus, airlines are also forging alliances with leisure market, corporate world etc. to boost their revenue.
Food and drink
In the current times, food and drinks that were taken for granted on long routes have now become charged items. The local airlines and some international airlines have started charging for the food and drinks from the customers. The airlines compensate the financial loss on low fare by charging exorbitantly on eatables on flight.
Space allocation
Space allocation or leg room has become a scarce item. The airlines have increasingly been charging customers for extra legroom and for preferred seat like window or aisle seat as per customer’s preference. The various travel classes are designed to meet the financial need of the customers.
Bag and baggage
The luggage and bags of the customers are now being charged extra. While the overall allowed weight has decreased, the bag and laptops are being charged extra by customers if they want to carry those items to the cabin.
Conclusion
Airlines are competing in their services so as to offer something extra for all budgets. It can thus, be concluded that in the current environment, airlines need to use dynamic strategies to adapt to the changes. Innovation has become major elements of their success.
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Reference
Kay John. Foundation of corporate Success. London: Oxford University Press, 1995.