Demand v. Capacity in Airline Marketing Operations Management

Demand v. Capacity in Airline Marketing Operations Management
Airline capacity refers to the planned total seat capacity an airline expects to offer in a given month. However, one of the biggest challenges for airline marketing and operations management is matching this capacity with actual demand. According to Barnhart et al (2012), the inability to manage these two constraints leads to increased costs of delay and low reliability.
One of the reasons for this observation is that increasing capacity might seem to be the obvious problem. This would mean the construction of new runways close to existing airports or new airports. However, this is highly unlikely given the strong interrelation of factors like environmental impact, political feasibility, availability of land, and cost (Rodrнguez-Sanz & Andrada, 2022). Thus, even as the population (demand) increases, it is difficult for airlines to increase their capacity to meet this demand due to these multifaceted factors. Therefore, airlines must be content with meeting the current demand based on the available resources including aircraft. This means depending on the factors within ...