Air Transport World

Let's not give the store away! Move to individual low-cost tariffs puts entire fare structure in jeopardy.(Marketing 1969)

The tempest raging in IATA in the wake of the recent Alitalia New York-Rome fare revolt may be the beginning of something big ... or it may be the beginning of the end, depending on whether you think marketing is an art or a science.

For example, when one reflects on the earnest seriousness with which texts such as Bierman's "Quantitative Analysis in Business Decisions" are offered, with all their emphasis on probability theory and the value of perfect information--and then reads the rationales given to support some of the fare proposals which are being served up these days--one really does start to wonder.

We are reminded, by way of further example, of the day some six months ago when we stood in the office of the Director of the CAB's Bureau of Economics and discussed holding a seminar on the elasticity of the North American market. In a way not quite envisioned at that time, the seminar is now being held, and with far greater attendance than anyone might have anticipated 180 day's earlier. (If anything, one point has been proven: You really can't force intellectual contemplation of the status quo ... and you can scarcely contain revolt against it.)

Then we think of the plight of the domestic airlines and their recently granted pica for fare increases, their sagging load factors and their seeming inability to come to real grips with rising operating costs, the cash-flow problems inherent in financing new equipment and other mounting pressures of inflation. And we find ourselves in great difficulty trying to reconcile what seems to be the beginning of a mass migration toward reduced international Fares on one hand and panic pressure toward domestic fare increases on the other. …

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