Meaning of Capacity Dumping in Aviation

The field of aviation is highly competitive and quite complex to understand. Even the pricing of the air tickets is a juggernaut that is not easy to understand. Add to it the various operational strategies which the airlines might adopt for gaining more ground and the complexity increases further. Due to the high levels of competition, you would find that some or the other of aviation companies files for bankruptcy after being browbeaten by high competition. One of these strategies is what is referred to as “capacity dumping”.

Capacity dumping refers to adoption of various ways and means to increase the offerings of seats for meeting the travel needs of the people from certain cities. By offering more capacity, the airlines try to thwart the competitors from gaining more ground in the market. As a consequence, the competitors have to either provide lowest air fare or make attractive offerings to the customers which might even mean that it becomes financially unviable for them. Now, the question is how can the airline dump that excess capacity? There are two ways of doing it. First is by way of increasing the number of flights in that segment, if it able to do so. And, the second is by way of plying larger airplanes when the competitors are using the smaller ones.

By adding more capacity, it brings more seats on offer and increases the supply which leads to lowering of prices of flight tickets on those segments of travel which are already having a highly competitive market. Most of the time, the airline which is stronger than the others is in a better position to resort to capacity dumping as it has more variants of aircraft in its fleet. To kill competition, the airline might also resort to incurring losses by way of capacity dumping for some time.

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