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The”aviation”industry”in”North”America”and”Europe”was”under”severe”economic”
pressure.”In”spite”of”the”disruption”to”travel”associated”with”the”terrorist”attacks”of”
September”11,”2001,”passenger”traffic”and”passenger”revenue”continued”to”increase.”
However,”costs”outpaced”this”revenue”growth,”and”industry”profit”margins”continued”to”
suffer.”In”March,”2009,”the”International”Air”Transport”Association”(IATA)”issued”a”dire”
forecast”for”the”industry”(Appendix”2),”predicting”that”in”2009:
o Industry”net”losses”would”reach”US$4.7″billion;
o Airline”revenues”would”decline”by”12%,”or”US$63″billion
o Cargo”traffic”would”fall”by”13%,”passenger”traffic”by”7%,”and”airlines”would”cut”
capacity”by”6%.
The”major”sources”of”these”cost”pressures”were”global”recession,”competition”from”low!
cost”carriers”such”as”Southwest”Airlines”and”Ryanair;”high”fuel”prices”and”overcapacityiii.
Airlines”responded”by”cutting”costs”wherever”possible”and”by””unbundling””services”that”
had”previously”been”included”in”the”ticket”price.”Several”of”the”major”carriers”began”
charging”for”checked”baggage”in”2009.
In”a”2009″report,”J.D.”Power”&”Associates”found”that”customer”satisfaction”had”declined”
for”the”third”year”in”a”rowiv
.”The”major”causes”of”dissatisfaction”were”in!flight”services,”flight”
crew”and”costs”and”fees,”and”in”spite”of”improved”on!time”arrival”and”decreased”length”of”flight”
delays.”A”spokesperson”for”J.D.”Power”commented”as”follows:
“Despite”the”economic”stresses”that”airlines”are”under,”they”are”recognizing”the”value”of”
passengers'”time”and”trying”to”make”air”travel”more”expedient”and”efficient.”
Unfortunately,”any”improvements”in”customer”satisfaction”are”being”offset”by”passenger”
displeasure”with”cutbacks”on”in!flight”services,”increases”in”fees”and”issues”with”the”
helpfulness”and”courtesy”of”flight”crews.”
There”was”a”widespread”view”that”the”airline”industry”was”a”commoditized”business”in”
which”price,”rather”than”brand”values,”mattered”most.”One”report”on”the”industry”found”
that”75%”of”travelers”chose”an”airline”based”on”the”airports”it”served,”69%”based”on”
schedules”and”64%”based”on”pricev
.
In”spite”of”this”gloomy”picture,”there”were”some”successful”brands”in”the”industry.”
Singapore”Airlines”had”built”a”successful”brand”on”its”technological”leadership”and”
service,”expressed”in”its””Singapore”Girl””advertising”campaign”originating”in”1972vi”(e.g.”
! 3 !
see”http://www.youtube.com/watch?v=ykSBMqffuQ8).”Virgin”Airlines”had”also”
established”a”strong”reputation”with”travelers,”building”on”the”Virgin”brand’s”cross!
category”strength”and”the”charismatic”personal”profile”of”its”owner,”Richard”Bransonvii.The”aviation”industry”in”North”America”and”Europe”was”under”severe”economic”
pressure.”In”spite”of”the”disruption”to”travel”associated”with”the”terrorist”attacks”of”
September”11,”2001,”passenger”traffic”and”passenger”revenue”continued”to”increase.”
However,”costs”outpaced”this”revenue”growth,”and”industry”profit”margins”continued”to”
suffer.”In”March,”2009,”the”International”Air”Transport”Association”(IATA)”issued”a”dire”
forecast”for”the”industry”(Appendix”2),”predicting”that”in”2009:
o Industry”net”losses”would”reach”US$4.7″billion;
o Airline”revenues”would”decline”by”12%,”or”US$63″billion
o Cargo”traffic”would”fall”by”13%,”passenger”traffic”by”7%,”and”airlines”would”cut”
capacity”by”6%.
The”major”sources”of”these”cost”pressures”were”global”recession,”competition”from”low!
cost”carriers”such”as”Southwest”Airlines”and”Ryanair;”high”fuel”prices”and”overcapacityiii.
Airlines”responded”by”cutting”costs”wherever”possible”and”by””unbundling””services”that”
had”previously”been”included”in”the”ticket”price.”Several”of”the”major”carriers”began”
charging”for”checked”baggage”in”2009.
In”a”2009″report,”J.D.”Power”&”Associates”found”that”customer”satisfaction”had”declined”
for”the”third”year”in”a”rowiv
.”The”major”causes”of”dissatisfaction”were”in!flight”services,”flight”
crew”and”costs”and”fees,”and”in”spite”of”improved”on!time”arrival”and”decreased”length”of”flight”
delays.”A”spokesperson”for”J.D.”Power”commented”as”follows:
“Despite”the”economic”stresses”that”airlines”are”under,”they”are”recognizing”the”value”of”
passengers'”time”and”trying”to”make”air”travel”more”expedient”and”efficient.”
Unfortunately,”any”improvements”in”customer”satisfaction”are”being”offset”by”passenger”
displeasure”with”cutbacks”on”in!flight”services,”increases”in”fees”and”issues”with”the”
helpfulness”and”courtesy”of”flight”crews.”
There”was”a”widespread”view”that”the”airline”industry”was”a”commoditized”business”in”
which”price,”rather”than”brand”values,”mattered”most.”One”report”on”the”industry”found”
that”75%”of”travelers”chose”an”airline”based”on”the”airports”it”served,”69%”based”on”
schedules”and”64%”based”on”pricev
.
In”spite”of”this”gloomy”picture,”there”were”some”successful”brands”in”the”industry.”
Singapore”Airlines”had”built”a”successful”brand”on”its”technological”leadership”and”
service,”expressed”in”its””Singapore”Girl””advertising”campaign”originating”in”1972vi”(e.g.”
! 3 !
see”http://www.youtube.com/watch?v=ykSBMqffuQ8).”Virgin”Airlines”had”also”
established”a”strong”reputation”with”travelers,”building”on”the”Virgin”brand’s”cross!
category”strength”and”the”charismatic”personal”profile”of”its”owner,”Richard”Bransonvii.The”aviation”industry”in”North”America”and”Europe”was”under”severe”economic”
pressure.”In”spite”of”the”disruption”to”travel”associated”with”the”terrorist”attacks”of”
September”11,”2001,”passenger”traffic”and”passenger”revenue”continued”to”increase.”
However,”costs”outpaced”this”revenue”growth,”and”industry”profit”margins”continued”to”
suffer.”In”March,”2009,”the”International”Air”Transport”Association”(IATA)”issued”a”dire”
forecast”for”the”industry”(Appendix”2),”predicting”that”in”2009:
o Industry”net”losses”would”reach”US$4.7″billion;
o Airline”revenues”would”decline”by”12%,”or”US$63″billion
o Cargo”traffic”would”fall”by”13%,”passenger”traffic”by”7%,”and”airlines”would”cut”
capacity”by”6%.
The”major”sources”of”these”cost”pressures”were”global”recession,”competition”from”low!
cost”carriers”such”as”Southwest”Airlines”and”Ryanair;”high”fuel”prices”and”overcapacityiii.
Airlines”responded”by”cutting”costs”wherever”possible”and”by””unbundling””services”that”
had”previously”been”included”in”the”ticket”price.”Several”of”the”major”carriers”began”
charging”for”checked”baggage”in”2009.
In”a”2009″report,”J.D.”Power”&”Associates”found”that”customer”satisfaction”had”declined”
for”the”third”year”in”a”rowiv
.”The”major”causes”of”dissatisfaction”were”in!flight”services,”flight”
crew”and”costs”and”fees,”and”in”spite”of”improved”on!time”arrival”and”decreased”length”of”flight”
delays.”A”spokesperson”for”J.D.”Power”commented”as”follows:
“Despite”the”economic”stresses”that”airlines”are”under,”they”are”recognizing”the”value”of”
passengers'”time”and”trying”to”make”air”travel”more”expedient”and”efficient.”
Unfortunately,”any”improvements”in”customer”satisfaction”are”being”offset”by”passenger”
displeasure”with”cutbacks”on”in!flight”services,”increases”in”fees”and”issues”with”the”
helpfulness”and”courtesy”of”flight”crews.”
There”was”a”widespread”view”that”the”airline”industry”was”a”commoditized”business”in”
which”price,”rather”than”brand”values,”mattered”most.”One”report”on”the”industry”found”
that”75%”of”travelers”chose”an”airline”based”on”the”airports”it”served,”69%”based”on”
schedules”and”64%”based”on”pricev
.
In”spite”of”this”gloomy”picture,”there”were”some”successful”brands”in”the”industry.”
Singapore”Airlines”had”built”a”successful”brand”on”its”technological”leadership”and”
service,”expressed”in”its””Singapore”Girl””advertising”campaign”originating”in”1972vi”(e.g.”
! 3 !
see”http://www.youtube.com/watch?v=ykSBMqffuQ8).”Virgin”Airlines”had”also”
established”a”strong”reputation”with”travelers,”building”on”the”Virgin”brand’s”cross!
category”strength”and”the”charismatic”personal”profile”of”its”owner,”Richard”Bransonvii.

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