Da Vinci is looking down in awe

As I finished my 2 week jaunt across the globe - 6 flights of 2,500+ miles and other shorter ones, I had plenty of time on those flights to think about why the airline industry is so maligned.

Bob Brooks of Hooters Air said last week as he shut it down : "The flying industry is in a terrible mess," Brooks said. "I've got a fair amount of money, but I don't have enough to fix this animal."

I saw Donald Trump say on Larry King's show a couple of weeks ago "the airline business is a terrible business ..between the fuel and the unions and the problems and the technology"

Warren Buffet : "...it would have been far better for airline investors if Orville had failed to get off the ground at Kitty Hawk"

They are, of course, talking about a $ 400 bn global market which has become clogged with government monopolies and private companies which treat their employees worse than just about any other industry. And price their product opportunistically – and try to get away with it. We howl when a gas station gouges us for another 20c a gallon. We have quietly accepted the airlines yo-yo pricing with simple demand and supply explanations. And yet they lose money – and lose money.

Thank God for the handful of dreamers in the industry who survive in the mess, delight their customers and treat their employees like family. I was pleased to open an issue of Business 2.0 on one of my flights and see a smiling Richard Branson quoted in a Samsonite ad:  “To me, business isn’t about wearing suits or pleasing stockholders. It’s about being true to yourself, your ideas, and focusing on the essentials”. Good for you, Sir Richard. The best single flight I have had was London Heathrow to JFK on Virgin Airways. Upper Class pampering – massages, open bars. Virgin has survived and thrived against overwhelming odds and raised the bar for trans-atlantic flights.

In the same Business 2.0 issue I read about Michael O’Leary of RyanAir experimenting with zero-fares while running Europe’s most profitable airline. The “Open Source” alternative to the convoluted (and failed) yield management generated opportunistic fares so many US and European airlines cling to.

I wrote recently about Jet Airways blazing a trail in India, a country where government-run monopolistic airlines cling to old ways of doing business. I was speaking to a pilot who recently resigned from one of the government airlines, and the government bullied him in to a 6 month notice, when his contract said a month. They are losing pilots in droves to dreamers like Naresh Goyal who got tired working for one of those government airlines and turned entrepreneur and started Jet.

Singapore Air which has taken over from the role Pan Am played in global aviation by being an early adopter of so many new pieces of equipment Boeing and Airbus keep innovating. Soon it will be flying A380s on key global routes while US airlines try to compete with it on international routes with under-sized, dated 767s. Singapore Girl delights businesspeople by stretching the bounds of non-stop travel while making it pleasant. She is not too shabby to its economy passengers either.

I have marveled before about Southwest Airlines and its customer empathy and its predictable (and amazingly profitable) approach to air transport. And Jetblue innovating with technology in its operations and passenger comforts.

These airlines and their employees love the business. In different ways, they keep tweaking, innovating – keeping the airline industry viable. If governments did not intervene and keep sick and broken-model and attitude airlines alive, these airlines would each have much more market share, and deliver numbers Warren and Donald would salivate over.

I am finishing this post on a Southwest flight and a gentlemen had a medical problem on the flight. A doctor next to me jumped up and put him on oxygen and 2 flight attendants have been fawning over him for most of the flight. He would not have received anywhere near the care on the ground. God bless these crews who put their heart in to this business.

Leonardo Da Vinci dreamed of flying – he is looking down in awe at the marvel of modern aviation and those who keep pushing the industry envelope. Even as those on earth love to hate the industry.

Update : BusinessWeek on how a new generation of airlines is brining Europe together

Comments

[Chris Yeh]

I think it's no coincidence that the industry is both heavily regulated and horrifically unprofitable.

If we removed A) money-losing flag carriers and B) antiquated landing slot restrictions based on political connections, the well-run airlines would rapidly destroy their less competent competitors, and everyone, especially the passengers and investors, would be better off.

[viinnie mirchandani]

Chris, great point. I flew Spirit Airlines for the first time today and was pleased to see them also blanket the Carribean with their new A 319s, reasonable fares and great service. I wish we would let some newer US airlines fly European and Asisn routes. The old guard has had its chances - many of them.

[Dennis Howlett]

RyanAir has been doing the zero fare thing for a while - what they don't say is that everything else except your place on the flight is extra. They're planning to introduce baggage charges sif it's not already happened.

That's either a cost cutter (reduced weight=reduced fuel usage+lower ground handling staff costs) or a way to make money in a different direction.

They don't think twice about cutting routes at virtually no notice.

They may be initially cheap/zero cost but it's almost impossible not to give them *some* money. They're not my favourite low cost ailrine.

[vinnie mirchandani]

Dennis, I guess it is a preview to what Open Source Software will look like. Part of the risk with the RyanAir model is they may be creating illusion of zero total cost. They have to make money somewhere. I think instrinsically people like to know upfront rather than being nickel and dimed. But the reason I included them is in contrast the yield management of the big airlines - one day $ 200 to a destination, another day $ 1,0000 is the other extreme. I credit RyanAir for having the guts to try a radically different model

[Dennis Howlett]

Sure - of course - and it may well be the comparison is an issue of internal geographical scale between operational territories.

But what I can say as an ex-pat is that 'on the ground' RyanAir offers the equivalent of a bus service into the boonies that has a direct impact on property valuations - a principle reason why ex-pat Brits get interested when RA opens up a region.

For that reason, people will accept the nickel and dime thing - at least up to 3 hours' flying time.

But given the ex-pat population is mostly online (and getting more so) and is expected to grow by x3 over the next 10 years in this region alone, then it would be a brave person who sees RyanAir as the only contender, the only winner or the example for models going forward.

Service matters and those who forget that for a sophisticated audience in a potentially competitive market do so at their peril.

RyanAir may be the profitable incumbent today - but those with the nuts to charge even a few € £ $$ for 'real' service stand a better chance (IMO). I sometimes wonder whether we forget that in the race to utility computing .

Unless of course the RyanAir gamble is the 2-3x per year numb nuts traveller who is prepared to accept a bus stop service in exchange for being 'sold' to from the moment of check in, until the moment of deplaning will always be the majority audience. That's neither a given nor a certainty.

The British ex-pat populatoin is getting younger and younger. Our youngest 15-16 year old son wants to take an ex-pat year out here.

IMO, RyanAir doesn't apply innovation, only appplied psychology. And responses to those approaches change over time. IMHO.

[Simon G]

There's an example in South Africa of a small commercial airline that has been doing really well using the RyanAir-type approach - it's called Kulula.com.
Check out http://www.airkiosk.com/news_item_11.php?item=1
http://www.busrep.co.za/index.php?fSectionId=553&fArticleId=2115282

[vinnie mirchandani]

Simon, good to see change...though Dennis above sounds some caution about Ryan's model. I just want to see more dynamism in that industry. Too many government and protected old airlines have clogged the market.

BTW - some day soon I hope to visit S. Africa...one part of the world I have missed out on.