ABSTRACT
As international regulation of air fares, of capacity and of in-flight service has been progressively relaxed or, in many markets, more or less abandoned altogether, the airline industry has become increasingly competitive. Such competition focuses on the products that different airlines offer their customers. As regulations diminish, 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 tool in the process of matching potential demand for air services with the actual supply of services which it offers in the markets 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. Second, as previously mentioned, product planning has a direct impact on operating costs (Chapter 6.5 and 6.7 above). It is important as a cost factor because it is an area of costs where airlines have considerable discretion.
