Tuesday, August 03, 2004
How the airline industry has got into trouble
It has been said that since its inception the airline industry has not, in aggregate, made money. We hear that "hub and spoke" systems are the answer, then we are told that "point to point" is the solution. As a student of airlines, both as an advisor and a frequent traveller, it seems that there is one other key difference between the traditional carriers and the new, low cost carriers in addition to investment or cost structure. The older carriers treat the work-force as primarily a cost, to be cajoled, browbeaten and suffered. The newer carriers regard the work force as a marketing tool which can create or destroy customer satisfaction and loyalty. The ex-CEO of Scandinavian Airlines, Jan Carlson, who coined the phrase "moments of truth" to describe the times when a member of the work force was face to face with a customer. Yet, the airline industry has never internalized this fully.