Short- and Long-Term Reaction to Exogenous Demand Shifts

In less than 10 years, the liberalization of the European airline industry has placed flag carriers in a highly competitive and dynamic environment. One of the reasons for the demand dynamic clearly results from the peculiarity of the industry: airline carriers have to produce one of the most perishable goods (passenger transport). This fact has forced carriers to implement and refine practices and strategies in order to react promptly to the ups and downs of the demand. In Chap. 2 we described the common practices employed to face short-term demand fluctuations that usually rely on advanced pricing policies, called ‘yield management’. Long-lasting demand shifts require a reaction in terms of capacity supply described in Sect. 2.4.2 as ‘network planning’.