Bringing Quality Back to Commercial Air Travel
In 1988, ten years after deregulation of the aviation industry in the U.S., Gourdin's article titled "Bringing Quality Back to Commercial Air Travel" was published in the Transportation Journal. The article gives a good overview into the way that the aviation industry has developed following deregulation. The article focuses on quality issues, demonstrating the way in which interpretation and satisfaction of quality issues varies across the three main stakeholders; the carriers themselves, passengers, and the government (Gourdin, 1988). This is an interesting piece written by the author using their knowledge, therefore, when reviewing this article it should be noted that it is more of an opinion piece rather than a research article found in peer reviewed journals.
When examining the article, it maybe argued that although Gourdin obviously has a strong knowledge of the airline industry, and the way it operates, that a great deal of the information included is based on common sense and empirical knowledge. However, if the content was that straightforward, and the content was purely common sense, maybe argued that the problems facing airlines in terms of quality that are discussed in the article would not have arisen. It is also an issue that was highly relevant at the time, and as such may be seen as one that has a high level of interest to the readers, especially in the context of the publication, which is likely to increase its popularity (Barley, 2006).
The article starts with a review of the situation, and the way in which the environment has changed as a result of deregulation and competition. Gourdin tells the reader that during the years of regulation there was a system which was satisfactory to the three main stakeholders and due to the high level of regulation is operated with little friction, and a polarization of interests (Gourdin, 1988). In the regulated environment airlines provided the service, and economic regulation ensured that carriers could remain profitable, and consumer interests were protected from government advocacy (Gourdin, 1988). Deregulation changed this; the airlines have to compete with each other, and quickly found that the consumers were highly price sensitive, a move which resulted in a significant decline in fair is, as well as introduction of cost-cutting measures (Gourdin, 1988). This shift within the aviation industry following deregulation is presented as fact information. Undoubtedly, the author is drawing on their own knowledge and experience, and uses some examples to illustrate the points raised. For example, this is quoted as in 1986 it was found that 90% of the travelers were flying at face which averaged a 61% discount (Gourdin, 1988).
This section the paper has few references, and academic papers certainly benefit from strong referencing, but an examination of the contents indicates that it is highly aligned with economic theories. In a highly regulated market, where there are no forces of competition, there are few pressures for companies to act in a competitive manner. It is known that in industries where there no competitive forces, such as a monopoly, or an oligopoly where there is cooperation or collusion, firms will have no motivation to lower their prices; the firms become price setters, and the consumers are price takers (Bay, 2007). The effect of this is a lack of pressure on airlines to undertake actions, such as increasing efficiency from cutting costs, and undertaking innovation which is not necessary...
When the air travel industry was deregulated, this changed significantly. The lack of economic regulation meant companies had to find ways to attract customers and compete, and price was a significant determinant. In a competitive environment there are increasing pressures for prices to decrease as consumers shop around (Baye, 2007). Gourdon uses this pattern of behavior to show how there are changes in the industry, and the level of quality fell. As the passengers using the carriers demanded decreases in prices, and with airlines competing in a more aggressive manner, the airlines found they had to find ways to cut costs (Gourdin, 1988). The quality of service was impacted as company airlines sought to find different ways of cutting costs, including moving to "no-frills" services (Gourdin, 1988). It was this competitive environment which resulted in the former alignment between different stakeholders dissolving, and different interests emerging. Notably, the carriers and the airlines have different perspectives on quality, reflecting their own areas of interest, for the airlines a quality operation would result in profits, and saw their focus on costs, yields and routes. For passengers there are different primary concerns, these included the price of shares, and the level of service, including whether or not there were delays (Gourdin, 1988). This demonstrates the way in which the former stakeholder alignment fragments, with different stakeholders having different needs. Services provided to passengers cost money, and more customers would like high level of service, airlines would cut costs in order to some support their profits (Gourdin, 1988). Likewise, it is noted that most that non-passengers would like to have flights which are half empty, but for airlines with high overheads, it is far more profitable for aircraft to be operated at a high level of capacity (Gourdin, 1988). Airlines found ways of combining the needs of consumers who their own operating needs, such as discounting tickets on his popular flights in order to shift demand, but the overall drop in quality is noted as providing potential high level of dissatisfaction for customers, which can be problematic in a competitive environment, especially with the potential for international competition entering the arena.
The idea of different stakeholders proceeding quality in different contexts is justified in terms of the arguments put forward. The idea is put forward by Gourdin can be found repeated in many subsequent articles, including research articles, dealing with quality in air travel (Clemes, Gan, Kao, & Choong, 2008).
The article was written in a logical fashion; after establishing what the problem is, and the cause, the author goes on to offer some advice regarding changes which are needed in the industry. The solution is seen as a "three-way partnership" between the passengers, the airlines and government regulation. It is argued that passengers should adopt expectations which are realistic; they cannot have bargain basement prices at the same time as premium level services. For airlines it is argued they must emphasize the aspects of the service which they are able to control, such as crew training, baggage handling and reservations. A particular are is the degree to which airlines are able to meet customer demands and expectations, especially with reference to honesty, which is noted as frequently falling short of consumer expectations (Gourdin, 1988). This issue was subsequently explored by Gourdin and Kloppenborg (1991), where many of the 1988 findings were supported, and the most important service aspects of airline travel found to be convenient checking is, convenient departures and easy-to-use reservation systems. It is also argued that although competitive forces may be beneficial, and economic regulation may not be advisable, this does not mean that governments do not have a role to play in shaping industries (Gourdin, 1988).
At the time of these articles the aviation industry was very different, travel agents of most the tickets, and paperless ticketing was unheard of. Today the industry has changed significantly, but it maybe argued many the quality issues remain the same. However, examining subsequent research on quality within the aviation industry demonstrates that other factors have arisen and changed details, if not the underlying concept. For example, Tsaur, Chang, & Yen, (2002) undertaking research following the 9/11 terrorist attacks found that the most important element of service quality from the customers perspective had shifted, and was now safety and security. However, issues such…
They have, on average, a thirty-five to forty percent increase in the number of scheduled departures and hub-and-spoke operations have made an increased number of destinations available to them. Airlines have cut frills during our current economic downturn, but the success of no-frills, low-cost airlines such as Southwest Airlines which do not offer many traditional amenities indicates that a substantial proportion of passengers are more swayed by price than
Marketing Strategies Changed Since Deregulation The objective of this study is to describe how marketing strategies have changed since deregulation. It is reported that over the past 25-year that the transportation system in the United States has undergone dramatic changes in both "size and form as it carried ever-increasing numbers of passengers and volumes of freight, both domestically and internationally." ( ) The demand for transportation services has been due to
Deregulation under the Trump Administration and Its Impact on the Non-Profit Sector Introduction President Trump touted deregulation as one of the issues he would push for during his campaign leading up to the 2016 election. Once placed in the White House, he held true to his push for deregulation and that policy has had some impact on the non-profit sector in the US. This paper will show how that impact has benefited
Deregulation The Glass-Steagall Act of 1933 was the first major attempt at regulating the financial industry. The Act was passed by President Roosevelt with the objective of restoring public confidence in the banking system. Glass-Steagall sought to, among other things "prevent the undue diversion of funds into speculative operations," in response to the market crashes that had sparked the Great Depression (Maues, 2013). The reason for this was simple -- speculation
Airline Deregulation Impact on Commercial Airline Industry as a Result of Deregulation The airline industry in the United States began functioning almost as soon as the Wright brothers made their first flight at the Killdevil Hills in North Carolina. In 1903, mail began to be carried by airplanes over short routes, so the United States government created an agency to help regulate how this was accomplished to make it safe for carriers.
Regulation and Deregulation Prior to the 19th century, most people would have voiced their support for the "concept of laissez-faire, a doctrine opposing government interference in the economy, except in" the maintenance of law and order (U.S. Department of State, 2014). The turn of the 19th century, however, saw attitudes begin to change, and labor movements as well as small entrepreneurs asking the government to intervene, following the apparent failure of