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One of the Biggest Challenges Facing Airline Marketing and Operations Management Is Matching Capacity with Demand.

Essay by   •  February 22, 2019  •  Research Paper  •  575 Words (3 Pages)  •  840 Views

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One of the biggest challenges facing airline marketing and operations management is matching capacity with demand.

Why is this so difficult?

The globalization of the worldwide economy, combined with airline deregulation and trade expansion, has caused a rapid growth in air travel. This rapid growth has not been paralleled by a similar expansion in the national airspace infrastructure, resulting in congestion, delays and widespread frustration. The problem is quickly reaching gridlock proportions and the pressure for solutions is increasing. The airline industry has not only brought the rapid growth but also competition in the domestic market which is further complicated. Matching capacity with the demand is the one of the complex and challenging tasks that today’s airline faces. All airliners are working intensely to match the capacity with the existing demand.

Difficulties that airline marketing and operations management faces during matching capacity with demand

1. Forecasting the Demand: - Forecasting the demand is the starting point in airline planning which is subjected to the uncertainty and error. A common error is a failure to identity the differentiation between the underlaying demand and the past traffic growth that was simulated by reducing the cost of the cost of the tickets.

2. Derived Demand: - Demand of the air travel is derived from the purpose of travel, in other words passengers do not fly for the enjoyment of flight but because they need to be in another location for some reason, either for business or for the leisure. some markets attract mostly business passengers, whereas others are dominated by leisure travelers. The airline must tailor its product and pricing to meet the desire requirements of its passengers efficiently.

3. Variation in Demand: - This challenge is daunting, because demand in each market varies substantially by hour of the day, day of the week, and season, and with the business or economic cycle.

4. Directional Demand: - This is easiest to visualize with special events such as big sporting attractions. Prior to the event, demand will be high into the host city and strong leaving the city after the event. The result is that with enough capacity for the high demand, flights in the opposite direction will be wanting. Directional demand, however, is evident in some markets for reasons other than special events.

5. Unpredictable Demands: - Natural disasters, Political upheavals, especially war and economic crises, all of which are unpredictable. The impact of natural disasters from hurricanes, tsunamis, and volcanoes is usually regional rather than worldwide. Traffic falls because of a lack of demand, as well as the reduction in supply as airlines reduce flights. The effects of war vary from regional to worldwide.

With all this various complex demand



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