It's about value received for the cost (not just the price). Airline costs, airline mergers and airline travel in generally have been in the news for the past several months. The industry is being hammered by rising fuel costs, and many companies have recently chosen to place charges on checked baggage or even get rid of in-flight snacks in coach, all in the name of reducing costs and improving profit margins.
But providing less service is not the only answer. Airlines could also find a way to provide more value for the price. Lack of service may be driving down revenue as travelers are beginning to either find alternative ways to travel, or alternatives to travel. This piece at airport-int.com would seem to indicate that flyer frustrations with the hassle and lack of service is a contributing factor to declining revenue. And as I've commented on another blog, simple honesty when dealing with the public at the point of interface could go a long way to reducing frustration. Add to that a pairing of authority with responsibility for front-line employees could reduce the problems that accompany planes stuck on runways for extended periods of time. (It's one thing to have responsibility - it's another thing to have the authority to do something about the problem for which you have responsibility.)
We often forget that competition can be done in a qualitative (value of product) way as well as quantitative (price). If the consumer gets more for the same price; it makes the product more attractive. And if quality improves enough, the consumer may be willing to pay more.
I understand that airlines put a lot of effort into providing high quality for the first-class experience, but the first-class passenger is subject to many of the same frustrations as coach-class when the flight is delayed or cancelled. And frankly, on most of the planes I've been on, the coach seats outnumber the first-class seats by a wide margin. The overall number of flights is falling because of reduced passenger demand across the board.
The alternative to applying marginal cost/benefit analysis and looking for ways to improve product quality is, I'm afraid, a return to the early days of the airline industry, when there were few flights (and few airlines) and only the rich flew. And I doubt you'll find enough rich people to fill a 777 flight from NY to LA on a daily basis.
I look forward to your comments.