Monday, June 20, 2016

Airlines Facing Trouble Due to Terrorism

Airlines Facing Trouble Due to Terrorism

Airline travel changed a great deal after 9-11. Massive changes were made to both internal and external security apparatus and infrastructure. Over the years, people complained, but they began to feel safe. While some airlines continued to struggle, many did well, enjoying an increase in overall customers and key market segments, particularly leisure travelers.

Now that may be changing. Some are blaming rising oil prices, and others are saying they overestimated market demand, leading to a glut that simply requires a market correction. They insist this isn’t a downturn, it’s logistical belt-tightening that shouldn’t hurt profits.

Cause of Decreasing Profits

But these logistical explanations don’t fully balance the accounts. Airlines also need to face the reality that several PR factors are slowing down air traffic, and travel in general. Global unrest and an apparent rise in militant Islam have hurt travel to certain regions, and the spreading threat of the Zika virus have hurt travel to several other places.

Price-competitive airlines seem to be weathering this storm fairly well, as budget airline Spirit saw an increase in stock price. Virgin America went up too, after being bought by Alaska Air. But most of the other carriers are struggling, particularly in Europe and Asia.

Airlines React to Decrease in Passengers

To slow this trend and bring airline passengers back, airlines across the globe are reducing fares, which travelers who have to fly love. But even lower than normal rates won’t bring in all the leisure travelers. Many simply don’t want to put up with the hassle and cost of flying, especially as conveniences are fewer, and comfort is only afforded to premium passengers. Sure, it will get you across the country faster, but until the airlines can do something about their low customer satisfaction rating and work to entice passengers to fly friendlier skies, they will continue to struggle.

And this is something some carriers don’t seem to realize, or at least they don’t seem to want to face this reality. Blame is being tossed around, but precious few carriers are saying it’s on them. Nobody is really talking too much about making air travel easier, more comfortable or more convenient for flyers. Sure, they can’t control the TSA experience, but airlines can make the actual travel a better experience. When they admit this and figure out how to deliver service while remaining profitable, they will take an important step toward flying into the blue while operating in the black.

David Firester is founder of TRAC Intelligence.

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