The “no frills” flight was popularized by Southwest Airlines in the U.S. and subsequently by the likes of Ryan Air and easyjet in Europe.  Low Cost Carriers or LCCs as they are known in the industry became possible due to reconfiguration of their operating model to lower cost, such as point-to-point flights, disembarking on the tarmac and not the gate, use of secondary airports for lower access fees, standard planes, cooperative and non-unionized employees, outsourcing to reduce fixed cost, simple offices, use of IT for efficiency, bypassing travel agency channel, and increasing asset utilization by adding more flights per day benefiting from faster turnaround time per flight.
 
            Gone are the days when airlines would offer hot meals in local flights to economy passengers.  Nowadays, it is customary for airlines to sell snacks as part of their effort to raise revenues, as they compete in a red ocean of low prices. Other airlines resort to reducing complimentary weight of bags, still others impose luggage fee, fees for changing flights, upgrade fees, or higher prices for seats that have bigger leg space or that can recline more, part of ancillary fees that are increasingly becoming popular among airlines.  Other types of ancillary fees include seats for the obese (counted as two seats), early boarding, advance seat assignment, seat with infant, and the list keeps getting longer.
 
            Of course, not all seats are sold at low prices as consumers are trained to book their flights early, which also help airlines maximize their revenue management approach (meaning, demand-based) in determining prices.  Other revenues also come from in-flight movies, wifi and commissions from shopping items, hotels, car rentals, theme parks, insurance and the likes when booked via the airlines.
 
            In the Philippines, Cebu Pacific Air, a LCC, has reconfigured their resources, process, activities and offering, to create better value for both its passengers and investors.  Except for 2005, it has consistently gained market shares versus Philippine Airlines (PAL).  Initially a niche airline in domestic flight in March 1996, it has moved on to operate regionally and has provoked PAL to respond with their own LCCs.
 
            Starting with leasing small DC9 planes, Cebu Pacific Air has since acquired bigger  and new Airbus A320 planes since July 2006 not just for greater safety and better image, but also for fuel efficiency.  It has attracted unserved and underserved passengers – those not travelling due to prohibitive cost, and those using sea and land transportation, a market-driving strategy that has expanded market size, instead of the usual market-driven strategy focusing on the served market.
 
            Structurally, Cebu Pacific Air has been organized for the price sensitive passengers from the beginning, except in 2005 when they briefly lost their focus due to the launching of their premium economy seats (equivalent of business class), which entailed lounges in major airports.   
 
            Late last year, Cebu Pacific Air was in the news again, not just with their stock market introduction but with millions viewing their dancing stewardess in YouTube, reinforcing their unique fun flights brand identity and a clever way of challenging assumptions that there is no way to make passengers pay attention to pre-flight instructions.
 
            How can more innovation happen in the airline industry? How can airline promote more air travel for college students for instance? What about the socio-economic class D (monthly family income between P10,001 to P20,000)? They comprise 63.7% of the Philippine population, the biggest group in the Philippine society.
 
            During peak hours, it is not uncommon to see people using the strength of their arm to hold on to an overhead metal bar in buses and jeeps while standing for over an hour.  How can airlines learn from this consumer behavior?  Is it true Ryan Air (Europe) and Spring Air (China) are in talks with airplane makers as well as regulators about the possibilities of installing ledge seats, which will be sold at even lower prices because it can cut cost by 20% and increase space by 50%?  Ledge seats are about half the size of the usual seat and more like “standing” seat except it allows passengers to rest or perch on these seats.
 
            Whether true, testing public reaction, or being used as publicity stunt as part of word-of-mouth campaigns, we cannot discount the fact that while it may sound hilarious to incumbent passengers, marketers should look into both served and unserved / underserved markets, and the ledge seats is something worth thinking about.
 
Josiah Go is a recipient of the Ten Outstanding Young Persons (TOYP) of the world in business education. For inquiries, email info@mansmith.netor visit www.mansmith.net.