British Airways' chief executive Bob Ayling was recently asked what he would do to change the aeronautical world were he given the power to do so. His answer went along these lines: 'It's flattering to be asked the question, but my main ambition today is to survive until tomorrow.' In saying this, Ayling was echoing the thoughts of thousands of people in this business, from top executives to baggage handlers. If you can survive long enough to fight tomorrow's battles, you're doing well.
The pressure created by this natural survival instinct can be positive - the rush of adrenaline which it induces often helps people to find creative solutions to problems, and it frequently spurs them to great achievements. But such pressure also carries dangers. It can lead to rushed decision making, corner cutting and slapdash work, none of which can be tolerated in a business like air travel where safety is paramount. Furthermore, relentless corporate pressure to cut costs and boost performance makes managers and staff look inwards, rather than focusing where they should - on the customer.
Sadly, there are signs that the rush to restructure and achieve profitability is leaving behind the core component of any business enterprise - the customer. Look through this issue of Airline Business and you will see this theme repeated several times.
In their article on airline innovation (page 54), David Guillebaud and Richard Bond argue that many of the panaceas being adopted by airlines in their rush to survive are not necessarily in the interests of their customers.
Airlines are trying to cut out the travel agent or at least cut commissions, which in turn could mean the passenger has to pay a premium for the agent's services, but many customers will react badly to this - particularly to payment. 'Customer management' sounds like an ideal opportunity to keep passengers on your network, but has anybody considered that customers might resent being 'managed'?
It's all very well advancing the product by forging alliances and providing in-flight gambling, but surveys suggest that air travellers' first priority is speed, particularly on the ground. And the much talked about 'virtual airline' offers the potentially scary prospect of airlines handing over to outsiders two-thirds of the customer service functions.
These considerations are not restricted to the passenger side of the business. Many airlines still do not understand that they are in danger of losing much of their cargo business to the integrators who offer the customer - that is, the shipper - a fast, reliable service (see page 60). Despite the fact that the integrators have taken most of the domestic US air freight market away from combination air carriers, most international airlines simply continue to offer the same, rather poor, level of service.
In discussing customer awareness, it may seem unfair to pick on individual airlines - after all, even the best have off days and are capable of inflicting appalling experiences on their unsuspecting passengers. But on page 40 we profile Malaysia Airlines, which has achieved significant productivity improvements, but is now receiving criticism for its service levels and is currently unable to attract sufficient high-yield business.
Last month we looked at SAS, which has a fine reputation, but lost ground last year because aggressive capacity expansion resulted in poor operational reliability.
There is also a more personal experience with KLM. The 41 intrepid travellers bumped off KL743 from Amsterdam to San José, Costa Rica in early February will certainly think twice about flying KLM again; they endured a 40-hour circuitous routing via Aruba, Curaçao, Caracas and Panama City.
Turning this on its head, consider Continental Airlines. Having lurched from one bankruptcy to another and come close to oblivion, having made disastrous mistakes such as CAL Lite, Continental has now become one of the most profitable carriers in the US. It has done so without the 'benefits' of fortress hubs, massive networks, huge frequent flyer programmes and global alliances, and it started with miserable staff morale and an appalling reputation for service.
Continental is now performing laudably well in the US Department of Transportation's consumer reports covering on-time arrivals, mishandled bags and customer complaints. The carrier joins South-west, which of course has been consistently successful financially, as a top performer.
The lesson is clear. Businesses thrive by finding out what customers want, providing it, selling it at the right price, and delivering on their promises while controlling costs. Airlines which ignore these principles do so at their peril.
Source: Airline Business
