U.S. Airline Seats Are No Longer a Commodity

In a strategic change, carriers have sliced and diced the market so much that few are direct competitors anymore. This development has made it a more profitable (and docile) industry.

Dear readers,

Sadly, in the United States, we don't see many all-out brawls between airlines anymore. It's still a competitive business, and airlines do fight for share and for airport access, but my sense is this industry is more docile than two decades ago, when airlines feared that a competitive incursion could threaten their existence.

I have wondered why, and since we have reached the end of August, when much of the world is on vacation, I want to share my theory. I suspect the answer is more targeted market positioning. Over the past 15 years, U.S. airlines have stopped being a commodity business, where a seat on one airline is interchangeable with a seat on another. Instead, each airline targets its own demographics and regions, and as a result, the market is very segmented and every airline’s strategy is differentiated.

Well, except two.