Airlines - A secret formula for success
What makes for profitable, successful airline? Here is the secret recipe I hope Air India uses and dominates the skies once again.
This month Emirates announced a record profit of $ 3 billion. A few months ago, Air India announced a record aircraft purchase deal signalling a major revamp is coming up. The arrival of Air India on the scene may change the global dynamics of air travel. But what can Air India do to enter a new glorious era? Here are some pointers.
On-time All the time
This is a basic expectation from an Airline. In its early days, Indigo did not offer any other advantage. It only had clean aircraft and on-time performance.
Guest land-side experience
The guest experience begins when a person lands at the airport taxi drop-off point. So the customer experience has to be controlled from the drop-off point to check-in and baggage drop to immigration and security check to boarding gate and also in reverse order at the destination terminal.
In-flight experience & the in-flight meal!
In-flight meals are the most shoddy they have ever been since I started flying. In my time, the best food was served by Indian Airlines, followed by Alliance Air (both are now part of Air India, but Air India food is shoddy). The best food by private airlines, domestic or international, by far, was by Kingfisher, but it was second only to Indian Airlines and Alliance back in the day. Also, the only Airline to offer proper masala chai was Singapore Air (not the tea bag). So it gets a special browny point from me.
The entertainment system is another pain point. Many airlines try to skimp on entertainment by asking passengers to use their own devices. This is bullshit.
Legroom has shrunk to an extent we need body modification to fit the seats in some airlines.
Passenger treatment has gone down. Convenience and ease are critical. The attitude of the crew is also critical. Passengers are irritated because they are cramped for space, without entertainment, are served bad food and are stuck in queues of a very limited number of toilets for the entire duration of flights.
To get the customer experience to the top tier, airlines must treat their employees very well. “Happy employees make happy customers” is the motto of SouthWest, and it works. Airlines must ensure that crew is trained properly, not overworked and paid well.
Pricing the ticket
Unlike popular perception, people do not mind paying a premium for a premium experience. However, the airlines must match their ticket price to the customer experience. Here managing cost-less benefits can help (this is why you get upgrades when Business class is not fully occupied).
In Sum
The airline business is quite simple - take care of the customer in a real sense, and things will take care of themselves. However, to achieve a top-quality customer experience, many things need to get done behind the scene. If you really like to know, we have some pointers below and a list of references that detail different strategies under different categories described below.
Geeking out
Whenever you think of Airlines, you must think of:
Passenger Issues: Some of the things we discussed above.
Employee and Crew Issues: The most important part of airline operations.
Hiring, training and ensuring crew and employee morale is MOST critical.
Good employees solve the problem for customers and ensure customer satisfaction. You need to empower the employees to make decisions. SouthWest has been known to take care of its employees.
You must ensure crew and employees are not tired and that they are not overworked. As much as it applies to pilots and cabin crew, it is also important for land-side operations. This is a service industry; attitude is everything.
Every shift, every location, you need trouble-shooters. These employees take care of complications and outlandish situations. Unruly passengers, booking confusion, misplaced baggage, flight delays etc. These trouble-shooters ensure that the rest of your employees are fresh and do not have to deal with complications and irritation. If you find employees who are good in these roles, cherish them.
Baggage and Cargo Issues: Baggage and Cargo operations are most under-rated. Baggage handling is tied to customer experience. Cargo is quite valuable for airline profits. So these are important operations.
These operations are complicated because they are handled by three different entities - the airport personnel, the security and customs personnel and the airline staff.
Coordination and management are critical.
Operations & Maintenance Issues: This is an area of core competency for airlines. If you cannot manage operations and maintenance, your on-time performance will be affected.
Airline fleet composition plays a very important role in this space. The mixture of narrow-body or wide-body aircraft and the differences in makes and models create an array of permutations and combinations that can affect aircraft availability and efficiency.
Route planning and managing hub and spoke or direct haul styles also create unique challenges. Here you need extensive data - passenger data, baggage data, cargo data etc.
Financial Issues: Most of the airline problems come from this area.
Planes are costly to buy but if you time it correctly and you have strong balance sheet then you can get good prices for aircraft.
Most airlines buy aircraft and then do a sale and lease back so that they do not have to carry the purchase price on their own balance sheet.
If you want to go into the details here are some links
Airline Operations and Efficiency: Unlocking the Secrets Behind Successful Airline Management (All I Know Aviation)
Digital technologies in airport ground operations - Kovynyov, I., Mikut, R. Netnomics 20, 1–30 (2019). (Springer Link)
The six secrets of profitable airlines ( from - Mckinsey (jargon-filled))
How can airlines return to profitability? By following these 5 steps (from PWC)
Who Are The Top 5 Airlines, And What Makes Them So Successful? (from V-HR)
Secrets of Successful Airlines (from Motley Fool)
Flying High in a Competitive Industry: Cost-Effective Service Excellence at Singapore Airlines - by Loizos Heracleous, Nitin Pangarkar & Jochen Wirtz (Book)
Southwest Airlines' Seven Secrets for Success (2008 article from Wired)
The Secrets of Southwest's continued success (The Economist 2012)
(2021), "Revealing the secrets of Qatar Airways' success: Emerging economy strategies for building a global brand against the odds", Strategic Direction, Vol. 37 No. 3, pp. 18-20. https://doi.org/10.1108/SD-12-2020-0215
Secret Note for dedicated readers:
Will we ever get to the golden age of flying? Do you go to the lounge often? Have you noticed how crowded the lounges are these days?
I really hope flying becomes enjoyable once again. Let me know what you think.