Technology use could generate larger profits.

• Position: Airline Industry; Nawal Taneja analysis

The world's airlines should take a cue from the banking and retail sectors to survive the current fiscal crisis, according to Nawal Taneja, chair of the Department of Aerospace Engineering and Aviation, Ohio State University, Columbus, and author of Airline Survival Kit. The way these industries have used innovative technologies such as the Internet to connect with customers and generate revenue is just one of many strategies for the airlines to confront their difficult problems.

Air travel generates billions of dollars every year and yet yields a cumulative profit margin of less than one percent. "The airlines have many different problems they have to solve at once ... including high labor costs, varying seasonal demand, and vulnerability to weather conditions."

Among advice Taneja offers:

Focus on one unique service. "With the traditional business model, airlines have tried to be all things to all people." A better strategy is to pick a niche, such as budget, regional business, or global travel--and be the best airline in that arena.

Let go of destructive competition. In their blind pursuit of market share, airlines sometimes have devoted resources to competition that hurts the industry. For example, lowering ticket prices to beat a competitor--even when it means losing money--or continuing to fly an unprofitable route just to keep a competitor from gaining a foothold in that territory hurts in the long run.

Be disciplined to make tough decisions. To institute these changes, carriers will likely have to restructure, and jobs will be lost. "Because the airlines aren't turning a profit, the investors who gave them money in the past will soon say 'no more.' Then the [companies] will have to pay more attention to shareholders."

Use technology to enhance customer relations. The industry can offer travelers a Web interface customized to a specific type of travel. Whether someone flies frequently, checks many pieces of luggage, or likes to enjoy certain amenities such as an airport club lounge, the Web interface can direct the customer to services that cost a little more, but offer desired benefits.

Another opportunity lies in the automated check-in machines some airlines now operate. Instead of checking in with airport staff, travelers swipe a credit card through the machine as identification, and print out their tickets. Currently, each carrier manages its own machines, and travelers of ether airlines may not use them. However, just as one...