The 2000s were a rough decade for airlines. Battered by unprecedented global turmoil, airlines that survived learned powerful lessons about cost containment, efficiency and the importance of financial strength. Airlines that thrive in the next decade, however, will have to do more to stay ahead of the competition. In particular, they will need to think strategically about two issues that have received little attention: substitution and commoditization.
With the prevalence of alternative modes of transportation, particularly high-speed rail, customers often have the choice of substituting air travel with less costly modes of travel that require less of a personal time sacrifice. And with commoditization, consumers often find few differences among the product offerings of different airlines — or are unwilling to pay for the differences they do perceive.
To create the opportunity to flourish in the realities of an increasingly competitive travel environment, airlines must accept the threat that both substitution and commoditization pose. The IBM Institute for Business Value Airline 2020 Study focuses on these two key challenges and provides a roadmap for how they will likely play out in the next ten years. To learn more download the IBM Institute for Business Value executive report, “Airlines 2020: Substitution and commoditization.”