Making money, and losing money, for airlinesBack to Forum
Anonymous1 Dec 2015
This is largely a question for the industry professionals.
To what extent do airlines actually investigate the extent to which the odd things around their business cause them to gain, or lose, customers?
Here I am in the IST lounge, on my way to Kazakhstan, thinking that one reason I route through Istanbul is the excellence of this lounge. Others on this forum – posting this evening – will never book with TK again. Does TK calculate that the lounge makes them customers and therefore money, and that their complaints system does the reverse?
Does Easyjet realise that their boarding protocols can lose them business customers? Does BA think about the downside of altering the lounge service? Does AF calculate a benefit from the improved srevice at CDG.
How much do they actually look at these things? Or is cost everything?1 Dec 2015
DavidGordon10, I think airlines are no different to any business. A cost benefit analysis has to be undertaken when any cost is incurred to ensure in some way it will result in increased business or margin. The problem is, (like BA taking away the cheese on medium haul inbounds to LHR), calculating exactly what the difference may be or even was. You can measure everything, but when you have multiple variables and airlines sure do, no one thing can guarantee to make a positive or negative difference. That’s when good management comes in to play and the accountants have to step back.1 Dec 2015
I have pondered the same question David. As Michael says a C.B.A has to be performed, including on some of the smallest and mundane things that we might not even notice and or take completely for granted.
That being said, until something major enough happens to tips the scales in either direction, its sometimes easier giving money away at point B, to make it 2x or 3x back at point A…1 Dec 2015
Good management teams include accountants. Good accountants appreciate the big picture and not just go on a cost cutting rampage. Disaster strikes when key players (finance, operations, marketing etc.) are operating in silos and are not engaging effectively, resulting in organisation going on triage (cost cutting) mode.2 Dec 2015
TheRealBabushka, I agree with you and did not mean to offend you. However the adage that “an accountant knows the cost of everything but the value of nothing” is in some cases not wide off the mark. Few businesses will survive without good accountants, but often, too often, a short term view is taken to the detriment of long term brand growth.
AisleSeatTraveller, I would advise you take your own cheese, crackers (Carrs not Jacobs), and other accoutrements you may enjoy with it. Stilton, now your talking.2 Dec 2015
An interesting topic David,
I believe as a starting point you need to take into account on this subject is how an airline see’s itself…….
Is it like Ryanair, a company that basically promotes itself as a bus with wings, or is it an airline that sees itself as a hotel in the air
Then your thoughts should move to the corporate beliefs of the company. And what time frame they plan their future strategies when assessing ROI or indeed as MrMichael pointed out their CBA decisions.
If it’s in the short term, you can bet your bottom dollar their focus is on delivering shareholder satisfaction, i.e. year on year profit growth ….. IMO, BA and it’s cheese falls into this category
The gulfies, irrespective of alleged hidden subsidies clearly look at the long term as they compete with each other, trying to woo our loyalty with small touches here and there, that are memorable, but are they really necessary…ie flowers in toilets etc !
Then you’ve got the good, bad and ugly scenario……..
The good ……Westjet, balance cost controls whilst at the same time attempting to enhance the customer experience.
The bad…….. BA and it’s continual stripping back, walking the tightrope between loyal customers noticing their stinginess towards cheese and then decide to fly someone else and those who don’t.
The Ugly….. Air Canada, who clearly don’t give a damn about customer service anymore and have now become the classic business study in a screw them at any cost company.
Sadly, history shows that an airline that balances it’s profit with investment in customer service, eventually succumbs to airlines that greedily abdicate a customer ethos in favour of increased profit margins.2 Dec 2015
@ canucklad – 02/12/2015 09:56 GMT
Speaking of cheese… on our recent return BA FCO-LGW, I had the most fantastic cheese and biscuit offering I have EVER had on any airline anywhere… After everything that has been said and written, I was delighted with some excellent cheddar and mouth-watering Shropshire blue.
It’s just that… I hadn’t been expecting to get any such thing after all of the coverage.2 Dec 2015
AnthonyDunn, Maybe the cheese has remained on LGW flights, or depends where they are catered. From the cheese you describe I doubt it was catered in Italy but was catered outbound and inbound at LGW. Maybe it is inbounds when catered at the stopover airport that has to forego the delights of a cheese course. Or maybe, I have just been unlucky.2 Dec 2015
So your point about expectations is well noted, and all fits nicely into this topic………
The dilemma that all businesses have, put simplistically is the old adage……
The difference between ordinary and extra ordinary is the 5 letters……..
When the extra then becomes the expectation how do you then remain extraordinary!2 Dec 2015