State of the Airlines

Thursday, January 13, 2005

OPINION: Yield Management Hurt the Airlines?

John Gapper, my hero of the moment, hits it dead on with his opinion piece in the Financial Times. I've said before that the airlines were headed into the toilet long before 9/11. I've said that the major airlines were caught flat footed when their high fare business travellers quit flying or defected to low fare alternatives. I think Mr. Gapper has one reason why. Airlines, especially those in the US, spent a tremendous amount of time and money developing yield management programs that allowed them to monetarily exploit travellers at every turn. Any business flyer who has bought a last minute (which apparently is anything less than 7 days for an airline) ticket has felt this pain. So the very thing that was designed to maximize profits for the airlines ended up driving away the apple of their eye...the business traveller. They were practically driven into the arms of their low fare competitors. Ironic when you think about it.