?Airfare wars inevitable?
Full service carriers and low-cost airlines will coexist, but the traditional carriers will have to decide on the service and product offering they want to have.
“The mistake that most of the full service carriers make when dealing with no-frills airlines is that they try to kill them by offering lower fares,” feels Jan Carlzon, the man who turned SAS around and in the process gave the mantra: “We don’t fly planes, we fly people.”
The reason is that airlines which start from nothing can gain market share, but established carriers which cut prices lose share in a market where they are strong. Even in the US, the traditional airlines have not established themselves yet, perhaps with the exception of SouthWest.
In Asia, traditional airlines are trying to find new ways of developing the market and low-cost carriers are creating confusion in the market place as well as in the minds of traditional players. “A shakeout will happen and there will be one or two low cost carriers and some of the traditional carriers will survive,” feels Carlzon, who is in India to participate in two seminars on December 1 and December 3, based on his book -- Moments of Truth.
In a country like India, the challenge is to take on more and more competition and cut costs by 50%, said Carlzon.