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Innovate and simplify

Submitted by Paul Maurer on Monday, 01/31/2011 - 10:31

As business travelers helped fuel record annual profits last year at all major domestic carriers, save for American Airlines, one can’t help but wonder if business travel is in for better times. After all, 2010 was dubbed the “Year of the angry traveler” so conditions have to get better, right?

Unfortunately, the commercial airline industry doesn’t appear to be planning to make life any easier in 2011. On top of security hassles and more ancillary fees (if you’re interested, here are predictions for 11 new ones), most are planning to keep a close eye on capacity, restricting flight times and limiting alternatives for stranded travelers. In fact, there’s been particularly strong local resistance to Southwest‘s and Delta‘s short haul cuts, the ones most attractive for work related day trips.

Along with these trends, industry consolidation and rising gas prices practically guarantee that higher fares are ahead. When airlines say they’re raising prices, however, they’re generally talking about an average increase of $10-$20 each way. While news like this certainly can get corporate travel managers in a tizzy, they hardly send business travelers scrambling to comparison shop for $100,000 jet cards (an entry level product).

So how can business aviation vendors capitalize on these continuing trends? Innovate, sell against the cost of wasted time and simplify the travel buying process. These strategies appear to be working for companies like XOJet, whose fixed point-to-point charter pricing keyed 50% growth in 2010, and JetSuite with their all inclusive hourly rates for charter. Meanwhile, lower cost alternatives continue to attract greater numbers of fliers: ARGUS ‘ year over year results indicate the turbo-prop fractional group (a relatively lower cost business aviation alternative) led growth; while Embraer’s Phenom 100 light jet led the entire industry in unit sales in 2010.

With excess capacity persisting in the industry, business aviation seekers will find aggressive pricing. However, it will be the Innovative business aviation companies that will figure out how to leverage new strategies and current industry conditions to gain market share.

(Excerpted from the January, 2011, Igojet e-newsletter. To receive future e-newsletters directly to your Inbox, please click here and sign up)

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