How Small Airline Companies Compete with Larger Ones

Although the 30.2 million American small businesses make up well over 99.9% of all businesses in the country, employ 47.5% of the entire U.S. workforce, and collectively act as the backbone of the world’s leading economy, large corporations are routinely able to beat out their smaller counterparts.

Since airlines cost so much money to run, are there even small businesses within the world of aviation? It’s time to find out.

General Advantages Big Businesses Have Over Their Smaller Counterparts

There are many strategies large businesses employ to oh-so-often clobber their competition into the dirt. These advantages include things like:

• As businesses grow larger – or as they scale upwards, in other words – they purchase goods, equipment, and services in larger batches, securing them discounts that smaller businesses aren’t privy to.
• When it’s time for people who are new to flying, for example, to pick an airline to fly with, they often choose the largest companies in the game – this is due to successful branding.
• Having more sources of income, or revenue streams, in other words, improves companywide stability and improves chances of hitting it big by having more opportunities, among other benefits.

Because Airlines Have Largely Been Focused on Competing Against One Another, Little Airline Businesses Have Been Able to Enter the Fray

In a capitalistic economy, common sense suggests, the number of active competitors in an industry will decrease. This is due to the accumulation of the competitive advantages listed above – though those are far from being the only such forms of advantage. The largest airline companies, for several decades, have been competing with one another by offering all sorts of options to airline passengers. Since they weren’t interested in starving out smaller, low-cost competitors from a successful initial entry, small airline businesses were able to grow.

Rolling out Innovative New Offerings – Another Manifestation of Big Airline Companies Competing Against Themselves

Big airlines have introduced countless new innovations to the market over the past couple of decades. Whenever airline companies come out with new, innovative offerings, customers have flocked to them in droves just to see what’s new. As you might imagine, the cost of research and development incurred by the commercial airline industry’s most substantial competitors has been, itself, substantial. Since so much money has gone to competing against one another, the big guys have little left to compete against low-cost and ultra-low-cost airlines.

Big Airline Corporations Have Vied Against One Another for Airport Slots

Yet another way that the largest airlines have competed against one another is by maintaining economies of scale and, with the heaps of assets they’ve drummed up for themselves, focusing on beating out equally-large competitors for airport slots at already-well-trafficked airports.

Here’s What’s Driving Competition – Globalization and an Unwillingness to Fly to Airports That Aren’t as Popular

As the years have passed, the global economy has become increasingly interconnected. In such an economy, people in less-well-trafficked areas largely weren’t served by the major airlines. Because major airline companies wouldn’t have generated enough revenue by flying to such destinations to maintain economies of scale, it’s easy to understand why smaller airline companies were able to grab market share in the first place.

This pattern of decision-making among large airline companies gave way for new, smaller airlines by giving them the first-mover’s advantage in accessing these areas’ customers.

Airline-Focused Business Software Has Also Aided the Plight of the Small Airline Companies

Airline revenue management programs have helped smaller competitors capitalize on all underserved areas of the global airline industry – not just the underserved geographic areas mentioned above. Another way that these programs have helped weave small airline companies’ way into the global industry is by staying true to customers that make up their target market segments, such as giving greater availability to more consistent customers with longer, more consistent flying histories.

Small Airlines Are Here to Stay

For these reasons, as well as the low barriers to entry that the airline industry currently has, small airline companies aren’t going anywhere.