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	<title>Comments on: Airline Business: More Fees are the Solution</title>
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		<title>By: Greg</title>
		<link>http://www.blackboxstrategy.com/archives/uncategorized/airline-business-more-fees-are-the-solution/comment-page-1#comment-2</link>
		<dc:creator>Greg</dc:creator>
		<pubDate>Tue, 05 May 2009 18:36:54 +0000</pubDate>
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		<description>I think most people would like &quot;a la carte&quot; pricing: http://www.itfacts.biz/consumer-sentiment-towards-a-la-carte-price-plans-by-airlines/11727

Hey ... I&#039;d love the option on my phone so that I could handle things easily while traveling.

And the airlines (at least at the top) know this. The problem is that it requires significant IT spending and expertise (in the consumer frontend and in airline ops system). Both are in short supply in any airline. And it is the first thing to be cut in bad times. A significant amount of an airline&#039;s IT operating budget is directed to maintaining legacy systems. Capital goes to new planes, not new IT systems.

I couldn&#039;t find figures on any of the big U.S. airlines, but I seem to remember that when United and American were both $20 B (revenue) airlines, they were spending around $500 million. By contrast, UPS and FedEx, spend around $1 B each. And they consider IT a core competence. 

In a bit of a defense of the airlines, there isn&#039;t a large-scale consumer business that supports &quot;a la carte&quot;. You would have thought that this would be mainstream for car companies by now as well.</description>
		<content:encoded><![CDATA[<p>I think most people would like &#8220;a la carte&#8221; pricing: <a href="http://www.itfacts.biz/consumer-sentiment-towards-a-la-carte-price-plans-by-airlines/11727" rel="nofollow">http://www.itfacts.biz/consumer-sentiment-towards-a-la-carte-price-plans-by-airlines/11727</a></p>
<p>Hey &#8230; I&#8217;d love the option on my phone so that I could handle things easily while traveling.</p>
<p>And the airlines (at least at the top) know this. The problem is that it requires significant IT spending and expertise (in the consumer frontend and in airline ops system). Both are in short supply in any airline. And it is the first thing to be cut in bad times. A significant amount of an airline&#8217;s IT operating budget is directed to maintaining legacy systems. Capital goes to new planes, not new IT systems.</p>
<p>I couldn&#8217;t find figures on any of the big U.S. airlines, but I seem to remember that when United and American were both $20 B (revenue) airlines, they were spending around $500 million. By contrast, UPS and FedEx, spend around $1 B each. And they consider IT a core competence. </p>
<p>In a bit of a defense of the airlines, there isn&#8217;t a large-scale consumer business that supports &#8220;a la carte&#8221;. You would have thought that this would be mainstream for car companies by now as well.</p>
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