According to the literature and the practical examples analyzed, airline operators have mainly ten effective competitive tools to shape the competitive strategies that they develop in deregulated markets (price, frequency and departure time, network structure, mergers & acquisitions and alliances, travel agency commissions, frequent flyer programs, computerized reservation systems, human resources, innovation and technology, and service quality). Use of these above mentioned tools as a competitive advantage varies according to the competitive strategy each airline operator implements and different competitive tools emerge in each different strategy. However, after all, all of these function as an important strategy component enabling airline operators to create a competitive advantage.
Price: As a result of deregulation, in today’s world, for an airline that has been liberalized in pricing decisions, price has now become one of the most important tools for survival and is even superior to others. Additionally, price is a significant demand determinant in airline transportation. Organisational Change
Price differentiation that is made by taking demand-based pricing method as the basis and considering the prices of competitors are important elements of competitiveness in deregulated airline markets. Thanks to price differentiation, an airline may maximize its yield with different prices in different market segments for the same service it offers. It may be said that price differentiation implemented with Yield Management Systems is a pricing strategy developed by traditional airline operators as a reaction to deregulation and against new operators making entry.
After deregulation in the USA and in the EU, the first strategy developed was the implementation of low prices and the undertaking of large volume activities. This strategy was especially implemented by airlines that had recently entered the market and which had adopted cost leadership strategies. In addition to this, high prices are an integral part of prestigious high quality service delivery addressing specific customer groups.
Flight Frequency and Departure Time: The frequency of flights and any slight changes to departure times would create a major impact on the purchasing behavior of passengers. When an airline starts taking advantage of flight frequency on a given route, the competitive value that this advantage brings is multiplied. This is because in airline transportation, the benefits of being at the desired location at the desired time are multiplied by frequent flights.
Frequency brings yet another competitive advantage with computerized reservation systems (CRS). Airlines that have more flights will have more visibility on CRS screens as well and that will give them a greater advantage compared to competitors in ticket reservations and sales. Additionally, high frequency to be offered by airlines which are in an alliance group would be a factor in weakening the position of a competing third airline. This opportunity would increase the flexibility of time-sensitive passengers and thus would make the cooperating parties’ services even more attractive.