(University of Management and Technology, 2016) Sajid Nadeem
The airline industry has been struggling to survive in economic turbulence throughout its history. The volatility of the industry structure has driven the policy makers to come up with new sources of income in order to survive the fierce competitions from local and foreign competitors and the high fuel costs. Although airlines have been generating non-ticket revenue in the past by auxiliary functions, e.g. ground handling, maintenance, cargo logistics, duty-free shopping, consultancy, charters, inflight catering, and so on but these functions were generally viewed as separate businesses.The current mutually destructive competition market has created what strategy guru W. Chan Kim called a Red Ocean. In order to create a blue ocean, airlines are now focused on competing through brand differentiation. One strategy for differentiation is offering lower airfaresvia unbundling and offering ancillary services.