Question

Discuss how aviation companies can increase its profitability. Identify the shortrun
and long-run strategies(Min. 3 examples each). Provide numerical support, if possible. Be
as specific as possible.

Answer 1

For any industry to increase its profitability or market share it needs to be efficient and innovative. Profit can be increased in two ways either by decreasing cost or by increasing price which doesn't effect the demand. Here we are talking about aviation industry and hence they can adopt many strategies to increase its profitability.

Some short run stretigies to increase profitability are -

• In short run they should try to attract customers by offering festive offers and other benefits to its passengers.
• They should adjust their number of fligths for particular locations according to their demand, for a particular place there is high demand at a particular time of the year and hence they should study it very carefully and act accordingly.
• They can charge higher prices for the busiest routes and for the busiest time of the day.

In the long run, they can increase their profitability by increasing their efficiency, which can be done by -

• Reducing the cost by buying fuel efficient and big aircrafts.
• By providing training to its employees and hence increasing their productivity.
• Planning and providing more facilities to its customers and hence increase customers satisfaction which will make them loyal towards that particular firm.
• Providing service to large number of places as possible, both domestically and international.