Start-up Airlines Could Mean Cheaper Flights

by Jessica Sommerfield · 0 comments

Reading the news, one topic that immediately appears to have potential impact on consumers who travel frequently is the recent  increase in new airline businesses. This would seem to indicate that the industry as a whole is doing well, and that’s certainly true. Many major airlines are finally posting profits after a chain of bankruptcies and mergers in recent years. The financial upswing of established airlines has provided incentive for eager entrepreneurs to get in on some of the potential profit. Obviously, more airlines in business means more competition, which is always a healthy development for an industry that tends to be monopolized. Here are a few of the direct benefits you might see if you’re a frequent flyer.

Better Service from Major Airlines
According to the American Customer Service Satisfaction Index (ACSI), airlines still ranked embarrassingly low this year, with a score of 69 out of 100 possible points. That places them just above cable providers, the IRS, and social media services! The airline industry’s financial woes have no doubt affected the level of service they offer, while the relatively small number of airlines (especially after the mergers) leaves little incentive for improvements in customer service, efficiency, and the amenities that travels expect when they pay as much as they do. In the United States, four major airlines currently provide over 80% of the nation’s flights.  With fledgling airlines launching themselves into this challenging market, larger airlines may feel the heat of competition, particularly in areas where multiple airlines provide comparable flights and service.

Cheaper Flights
One of the recent startups, People Express based in Newark, is offering flights as cheap as $56 for one-way travel to a handful of U.S. cities! Those who travel know this is a very competitive price, but does discount pricing from area start-ups mean discounts across the board? Not necessarily, but it might. One of the problems is that established airlines have already saturated a majority of the best or most popular routes and city bases. If new airlines aren’t able to get into these areas, they won’t be able to force much competition in pricing. On the other hand, if travelers begin to choose their departure and destination points based on the affordability of airfare, bigger airlines may experience a migration of customers that will affect their bottom line and spur more competitive pricing and package deals.

Service in New (Or Abandoned) Locations
Flights from Newark haven’t been offered since the AirTran route was discontinued after the Southwest Airlines merger in 2012. The launch of People Express, as a simple example, will provide flights in an area that isn’t saturated by other airlines. This benefits consumers who have had to spend more on transportation (and potentially airfare) to fly in or out of other locations in the last few years. This company’s business model is to cater to this market, and if other start-ups are smart, they will follow. Even if new airlines can’t compete with their giant counterparts, they can generate new customer bases in areas that need their services, and both will benefit.

Starting up a new airline isn’t easy, however. The combination of enormous expenses (including fuel), the lengthy process of earning certifications, catering to government regulations rigorous inspections, and the difficulty in generating the capital needed just to start are just a few of the obstacles. If the preliminary success of many new airlines in the U.S.  and around the world is any indication, even these issues aren’t enough to stop entrepreneurs willing to make the effort, and travelers should begin to reap the benefits.

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