How High Can Discount Airlines Fly?
netessine.com/”>Serguei Netessine, professor of operations and information management, recently approved a 31% pay increase over the next four years for pilots. “Labor sees those airlines are much more profitable than traditional network carriers, and they believe they need some share in those profits,” Netessine says. One scenario is that some of the large players will regroup and rise up to challenge the discounters. “If the large airlines are able to pare back expenses in bankruptcy court, that would level the playing field with the discounter on price and they would still have rich route structures,” says Allen. “What do I like about United? Not a lot,” he adds. “But it can take me to the Pacific and to Europe. If it came back with a lean and mean model, I’d be interested in flying. I’m a lot more interested in going to Paris than Lubbock.” In addition, there is still some value in the familiar brand names, like United and American. “There is a cachet” about them, Allen says. Many
