[Peter Davies] proposes a “hotel management style, where airlines have maintain their brand but the whole back office is managed by management company.” The hotel management company would be invisible to passengers. The airline’s customers would experience the local airline brand, not a chain identity. But the national carriers would benefit from the same cost advantages of their larger competitors.
Interesting take indeed. Having worked along the hospitality business in the 2000s, I can see how this could work, though I'm not sure how some countries would agree to easily "let go" of their national carrier—if it falls into the "small flagships" Davies describes.
What is certain is that those mid-size carriers are being squeezed between low cost carriers and bigger flagship that can yield a better costs per seat. Not to mention, as Davies mentions, the Gulf carriers who are eating everyone's lunch.
The price point is another point of friction in Davies' argument though:
Davis recognizes this would might mean smaller carriers have to charge a higher fare than low-cost carriers flying point-to-point to those popular tourist destinations. But he believes the fare differential could be small, and justified by a better travel experience with a superior product.
I still believe that the vast majority of travelers are just price-sensitive, no matter the experience. The low cost carriers might just win anyway here, in other words. Tough game, I don't have the right answer, but maybe that hotel management style of model is worth a shot. Which is what he intends to do in Europe. I'll be following closely.
Read the original article over at Skitch.