Explain why airlines will experience a declining market for business travel in the future. Provide an example.
The business travel market has declined significantly in the past few years. This decline is expected to continue in the future. This decline in business travel will be caused by increasing fares. The continued use of modern technologies such as videoconferencing is also reducing the level of business travel (Shaw, 2011). For example, companies such as Hewlett Packard and Google Incorporation are relying on modern technologies to reduce their travel costs. The current economic downturn is also forcing many organizations to reduce their expenses. Some external shocks such as terrorism threats and economic instabilities are also affecting the industry (Graham, 2008). New global tensions will also affect the business travel industry.
Airline marketing executives believe that the future of FFP’s (frequent flyer programs) will be used more to provide a source of data for airlines so they can target individuals with attractive offers. Explain this theory and what effects it will have on air travel for both individual and business travelers. Provide examples where appropriate.
According to many airline marketing executives, the future of Frequent Flyer Programs (FFPs) will offer quality data to different airlines. Such airlines can use the information to target more individuals using attractive business offers. Airlines should use such programs to attract more passengers who travel frequently. This theory explains why many passengers will be traveling in the future (Graham, 2008). Business travelers are also identifying specific airlines that are offering the best FFPs. Many airlines are using such programs to attract and retain more passengers. For example, Air Canada, Lufthansa, and United Airlines partnered to form the Star Alliance. The alliance’s FFP has retained many loyal passengers who cannot use any other airline service.
Explain why enhanced competitive pressures from airline deregulation airport privatization coupled with increased demands for a more sustainable and quality conscious industry standard have brought new challenges for airports.
Many airports are currently facing numerous challenges because of the current rate of deregulation (Shaw, 2011). The level of competition has also doubled due to the increasing wave of airport privatization. The nature of aviation services has changed significantly. Some private airlines are providing super-quality services. Many customers are also in need of sustainable services. These competitive pressures are forcing many airports to identify new business partners (Shaw, 2011).
Worldwide ACI estimates that with the current pace of construction, airport capacity could accommodate 6 billion passengers by the year 2020. Describe the challenges faced by airports to meet this forecasted demand.
According to the Worldwide ACI, the current rate of construction means that the global aviation industry will accommodate over 6 billion passengers by 2020. Many airports are required to undertake new constructions to meet this demand. Such airports should also expand their facilities to accommodate these passengers. They are also expected to acquire new technologies to deliver quality services (Shaw, 2011). They should also improve their security measures due to international terrorism. They should also be ready to address the issue of competition. Such airports should also be ready to conserve the environment.
The Future of Airline Marketing
Modern technology is expected to affect the future of airline marketing. The continued use of electronic means of communication will affect the future of business class travel. This statement is agreeable because many multinational companies have introduced new tools to minimize their expenses. For example, videoconferencing is becoming a better option for many multinational companies. Many employees are also encouraged to manage their business travels using modern technologies (Shaw, 2011). This form of employee-empowerment has resulted in cost-effective decisions. Many employees are focusing on the best entrepreneurial practices. Modern technologies have resulted in new business travel habits.
This development will “significantly worsen airlines’ vulnerability to downsizing periods in the trade cycle” (Shaw, 2011, p. 324). Modern communication technologies are making it easier for many entrepreneurs to interact without any physical movement. Companies such as Coca Cola and Samsung are currently using modern technologies to minimize their business expenses.
Reference List
Graham, A. (2008). Managing Airports: An Interpersonal Perspective. London: Routledge.
Shaw, S. (2011). Airline Marketing and Management. London: Ashgate Publishing Company.