ABSTRACT

As international regulation of air fares, of capacity and of in-flight service has been increasingly relaxed or, in some markets, abandoned altogether, the airline industry has become progressively more competitive. That competition focuses on the products that different airlines offer to their customers. As regulations diminish, then the opportunities for product differentiation widen and airlines have a much greater range of choices open to them. Product planning is deciding what product features to offer in each market segment in which an airline is hoping to sell its services or products. For each airline, product planning is crucial in two respects. First, it provides the key link in matching potential demand for air services with the actual supply of services which it offers in the market it serves. Each airline controls its own supply of services but can influence the demand only through its product planning. Much, therefore, depends on product planning. Secondly, as previously mentioned, product planning has a direct impact on operating costs (sections 6.4-6.6 above).