A nascent recovery in business traffic and fewer junk fares are fuelling mild-mannered optimism among US carriers. But what is it going to take to sustain profitability for the long-term, or even for near term?
Analysts are firing that question to airline chiefs a lot during the current earnings season.
“I think there are a couple of structural changes. One I think you’re seeing the industry further, not only unbundle its product, but discover its merchandising power, and the ability to sell goods and services and generate ancillary revenue that has a very significant margin.
The second structural change I think is the transformation of self-service in this industry Customers are demanding more and more and expecting more self-service….during the purchase process, post purchase at the airport after the flight itself.”
Smisek believes the promising technology will not only offer better customer service, but should also generate significant cost savings for airlines.
And what about Smisek’s counterpart at fellow Star Alliance partner United? Glenn Tilton echoes Smisek’s sentiments, but also takes the US government to task for taxation and outdated air traffic control system.
“…structural issues exist beyond the control of a single airline that will play a considerable role in enabling sustained profitability for this industry….numerous structural hurdles such as excessive taxation, inadequate air traffic infrastructure and outdated regulation must be addressed if we’re ultimately going to achieve this goal.”
It’s no wonder Smisek and Tilton have like minds – their carriers are embarking on an extensive domestic codeshare and forging transatlantic antitrust with Air Canada and Lufthansa…..Here’s Smisek celebrating Continental’s launch of flights from Houston to Frankfurt….