Airlines should prioritize growing passengers before growing capacity. Here's how.
In the airline business, one lesson seems to ring true time and time again: expect the unexpected.
JetBlue founder David Neeleman just announced that he intends to launch a new airline, reportedly to fly point-to-point service from secondary airports around the U.S. As this is precisely the type of airport that lost the most service in the past decade, there will be great interest in Moxy’s development and launch. But unless airports adapt their commercial processes to the current environment, the arrival of a new airline is unlikely, by itself, to change their fortunes.
Airlines evolved a decade ago out of necessity. As demand softened and fuel prices increased, airlines adapted their commercial processes to provide the greatest chance of profitability, regardless of the health of the economy or the price of fuel. In the realm of air service development (ASD), however, most airports are still employing data-centric approaches geared to the pre-2007 environment. We refer this to as “standard ASD,” an approach that is centrally focused on working with airlines to plan their networks. Today, as airlines seek superior financial returns to justify adding capacity, standard ASD (though essential to understanding airline capacity performance) may no longer be sufficient for many airports when it comes to airline capacity investment. ASD paints a commercial picture of the airport, but it may not provide airlines with the business proof they need to justify (or even consider) adding capacity.
What if we adopted an approach that combines industry data from standard ASD with the kind of consumer insights research that leading airlines themselves undertake—and used the combined research to generate integrated commercial strategies and tactical plans that airports can execute and control?
ASD 2.0 is that solution. Whereas standard ASD focuses on trying to grow airline capacity in order to generate more passengers, ASD 2.0 turns that approach on its head, focusing on generating more passengers first to create an environment in which airlines are more likely to add capacity.
What does ASD 2.0 have to do with Moxy? If airports want not only to attract service from Moxy, but also retain it, the principles of ASD 2.0 provide the best opportunity. Successful experiences of U.S. airports and ultra-low-cost carriers (ULCCs) lately provides a roadmap for airports to follow. For example, Long Island MacArthur Airport (ISP) suffered significant capacity and passenger losses from 2007 to 2016, employing standard ASD practices to combat these losses without success. Starting in October 2016, ISP leadership committed to following the principles of ASD 2.0.
18 months later, ISP was the fastest growing domestic service airport in the U.S. By focusing on giving airlines what they wanted (more passenger demand) ISP was able to get what it wanted: more air service. Like all airlines today, Moxy is almost certain to have more opportunities than aircraft. An ASD 2.0 approach is one key way airports can differentiate themselves and improve their chances.
Airports generally need to evolve their commercial practices to align with and support those used by airlines. Whatever the target—Moxy, a ULCC, a low-cost carrier (LCC), or a full-service carrier—the principles and practices of ASD 2.0 put airports in control of their destinies and give them the best chance to attract and retain service.