Some business sectors chronically lose money but are adored by customers — ride-hailing services, to take one example. Other sectors are highly profitable yet not so well-regarded; tobacco may come to mind. And then there are sectors that are barely profitable and intensely disliked by customers; airlines certainly are a candidate here.
How Airlines Can Cut Costs — Without Annoying Customers
Frequent flyer miles can incentivize passengers not to use some high-cost services.
June 14, 2021
Illustration by Mike Haddad
Summary.
As airline companies prepare for recovery, they have a unique asset to leverage — their loyalty programs. These programs are valuable both from a balance sheet perspective because they can be used as collateral for loan programs and from an income statement perspective. Airlines can use frequent flyer miles in an “a-la-carte options” approach to reduce those costs that are under their control without annoying customers. In fact, they can make customers equally well or better off.
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Accelerate your career with Harvard ManageMentor®. HBR Learning’s online leadership training helps you hone your skills with courses like Strategy Planning and Execution. Earn badges to share on LinkedIn and your resume. Access more than 40 courses trusted by Fortune 500 companies.
How to develop a winning strategy—and put it to work.