Book Review:
“Flying off Course” (5th edition) March 2019

Professor Rigas  Doganis has produced the fifth edition of his classic book on airline economics. The theme of this book is that for individual airlines, financial success depends on matching supply and demand in a way which is both efficient and profitable. Entitled as usual “Flying off Course”, it might well this time have been retitled “Flying on Course”, reflecting the vastly greater commercial focus  of the industry and consequent improvement in returns on capital, but publishers are reluctant to change an established brand.

The book focuses initially on how different factors influence airline costs and the degree to which such factors can be controlled or influenced by management. It then covers the perennial details of regulation that pervades the industry. It provides a detailed coverage of the different airline business models with a clear explanation of the modus operandi of each, showing with examples that no matter whether low-cost or high-cost, legacy network or point-to-point, the key for success is to achieve unit revenues higher than unit costs.

The author examines a much neglected topic in the aviation literature — the charter sector. The short-haul charter airlines, integrated into inclusive tour companies, have been badly hit both by the growth of LCCs and by the changing travel patterns associated with the internet and the desire for more independent holidays. While the author shows that the charter model can produce lower seat-kilometre costs, he argues that its survival depends on offering passengers greater flexibility and choice than has been the case in the past.

The second half of the book focuses on airline marketing, that is the demand side of the equation, dealing with product planning and pricing and analysing the impact that LCCs have had on changing traditional airline pricing structures. 

An extra section in this edition proposes strategies for success. Rigas suggests that there are priorities common to all airlines: vigilance on costs and improve revenue generation. He highlights that cost control must be seen by airline management as a long term necessity and not just a short term reaction to profit erosion or losses. One of the more intriguing subsections looks at the potential for the mid-sized and smaller network airlines. The author suggests that for some of these, collapse and closure, or sale to a larger network carrier seems to be the future. Some may only survive if supported by their Government; others if (such as TAP on routes to Brazil, or Finnair on routes through Helsinki to the Far East) they can find a niche.

The first edition of “Flying off Course”, published in 1985, sits proudly still on the bookshelf. It was the one industry bible that taught the dynamic economic forces of this complex global industry and inspired a lifelong career of analysing the sector. The new edition is again well written and illustrated with real examples and case studies. Rigas Doganis has again succeeded in giving an insider’s lucid view of the economics and marketing of the airline industry.