Random Thoughts Up in the Air

Abstract

Airlines are notoriously troubled with their finances, and many of them have been trying to save money on in-flight catering in an effort to keep up profitability, although catering service makes up just about 4% of total cost. The horrid catering service onboard made me rethink my belief that differentiation is a superior strategy compared to a low-cost strategy. The full-service airlines are supposed to have more cards to play, to differentiate the offers, and to exploit willingness to pay of different segments. Culinary experience could have constituted an instrumental differentiator from their peers and low-cost carriers. But now the big airlines are acting in concert to cut down spending on in-flight meals to keep the bottom line in the black zone. I believe that they are short-sighted and are turning the wrong stone.