Airline Consultant who gets it?

[tonyw]

I finally got the CDs from that conference that I was at last month. One speaker that I thought was hilarious was a guy from Avitas. Now, what's sad is that he had to say these things to airline execs who should know better, but it's funny what he said.

The first rule was "don't be stupid" and he listed a bunch of stupid strategies, such as mini-mes, insulting customers, extreme yield management, adversarial relations with employees and "stupid business plans."

He ripped into "sky Nazi" service, "nickel and dime" attitudes like taking olives and pillows away and taking water away from pilots, and said that costs have to be cut in a way that makes sense and improves productivity.

And, he pointed to Southwest's higher comp than UAL's 737 pilots and said that it shows that salaries aren't the only factor. He said that you've got to treat humans decently -- and that includes employees so that they enjoy coming to work.

Now let's hope that his thinking gets through to the people who pay him to come in and take a look at their companies.

[flyover]

Common sense without providing specific recommendations. That's pretty easy to do.

"...costs have to be cut in a way that makes sense and improves productivity." It's pure genius. And his methodology was...?

"stupid strategies......extreme yield management" That's what Delta is trying to do with simpli-fares. The immediate impact is less revenue, but also less alienation of the frequent flier. They've been widely criticized by their competitors for that. But it is the right move. And I assume that it is considered part of the ATA plot to lower revenues.

no "stupid business plans." True, only smart ones.

" it shows that salaries aren't the only factor." Duh.

"stupid strategies... insulting customers" I though we agreed it was stupid customers who won't pay the right amount that was the problem. They're stupid, why not insult them?

"He said that you've got to treat humans decently -- and that includes employees so that they enjoy coming to work. " That's cool, what exactly does it mean? No pay cuts? If you can keep the company solvent enough to survive are you treating them more decently than if you close the doors? Just curious.

"Now let's hope that his thinking gets through to the people who pay him to come in and take a look at their companies."
And let's hope they pay him a lot because this is pure gold.

[tonyw]

Well, if you want me to, I can dig up the presentation from Air New Zealand's GM. It sounds like he actually DID what this guy said, and you cannot argue with the results.

Actually, I don't feel like doing any work -- nobody's around anyway -- so here's some of what he said.

"As an airline, we had been incredibly successful at strategy and planning and absolutely useless at implementing and executing that strategy. It was only when we gave the strategy as a direct responsibility to [our] staff that we were able to change the business in the way you have seen..."

He added that management at Air New Zealand wants to make sure that the staff understands the strategy and understands that they are the ones who have to make it happen. And he met with all of the pilots and F/As to get input and feedback into developing the plans to come back from the dead like they have.

ANZ's CEO, Ralph Norris, is on record as saying that you've got to focus on the staff first and then the customers and that shareholders will benefit after that.

And nobody can argue with the results.

[AREA_5150]

I still get blown away by seeing stories like this. Is the lack of common-sense, something some people are born with, or does it go out the window, once someone puts on a business suit? How does one become a CEO of a airline, make millions of dollors in salary, and not have the skills to see and know, the obvious???

I swear, before people graduate from a college, with degree's in business/management/money marketing..etc, their final exam should be a practical situation, where they have to apply common-sense, to achieve a final result. If you fail, you fail out of school. That simple!! Book smarts is 1 thing, common-sense is EVERYTHING!!

I bet it's a safe bet, that if CEO's of any company, ENRON, US Airways...etc. used a common-sense approach to business, US Airways would have cash, ENRON wouldn't have put 99% of its stockholders in the poor house. But, let's not confuse common-sense, with greed.

Hey Tony, did this consultant inform these airline CEO's that you indeed, have to pull your zipper down to pee? Because, that's good information to know too.

AREA 5150

[tonyw]

I know. Flyover is right when he says that well, yeah, these are just generalities.

But the fact that a guy who gets paid a boatload of money to give advice to airline managers has to tell them these things -- and other things like revenue > expenses = good -- is simply amazing.

It makes it even nicer to see guys like the folks at Air New Zealand and Southwest who get it!

[aloft]

[ QUOTE ]
ANZ's CEO, Ralph Norris, is on record as saying that you've got to focus on the staff first and then the customers and that shareholders will benefit after that.

And nobody can argue with the results.

[/ QUOTE ]

This is the Marriott hotel chain's philosophy as well, JW even wrote a book on it.

If you think about it, it was also Bill Clinton's economic policy; take care of the people at the bottom of the food chain, and they'll take care of the rest.

[flyover]

I agree that Air New Zealand is a fine company. And the things their GM spoke of are absolutely true.

But to me the consultant's comments were like coming in and critiquing the service aboard the Titanic after it struck the iceberg. The immediate problem is that the entire US domestic hub airline system is staggeringly insolvent. Bankruptcy currently looks inevitable for every carrier. And even carriers that have used bankruptcy and/or severely slashed costs have failed to become operationally solvent. Every CEO is staring at the abyss of complete failure, something that is not at all unprecedented in this business. Right after deregulation a number of pioneering airlines just shut their doors.

The solution to all this is so apparent that the head of ALPA has been up in DC lobbying for the government, specifically the Justice Department, to step aside and allow a massive consolidation of the industry. And he knows full well that means more pilots on the streets. But there is no other scenario to rescue this industry. The only "smart business plan" is to stay alive one more year and dress your pig up so that the creditors who will end up deciding the fate of individual airlines will pick yours to keep going.

Don't forget that most airline CEOs knew this was coming to some extent. They just couldn't envision how rapidly and how deeply the travel economy was going to retract. The expansion going on at most carriers was so rapid that all the travel economy had to do was stop growing and there were going to be problems. As it was the expansion efforts met the industry contraction like two freight trains meeting head-on at full speed. At Delta they foresaw this by several years. But efforts to get Delta ready for the new competitive reality lead to the CEO being fired. It wasn't just employees that didn't want to hear it, the BOD didn't either.

You can question leadership but some employees don't much care for being led if they don't like the message. This is especially true in union situations as the union leadership often wants to filter or characterize any communication that management tries to make with the rank and file. At my old company there was near hysteria every time a manager communicated with employees directly. There is a certain responsiblity for employees to be somewhat educated about the industry they work in. Without that it must be somewhat frustrating for management to hear how poorly they are treating their workers when they are desperately trying to figure out how to keep the doors open.

[aloft]

[ QUOTE ]
Every CEO is staring at the abyss of complete failure, something that is not at all unprecedented in this business.

[/ QUOTE ]

And sadly, most probably don't care, secure in the knowledge that their compensation and golden parachute are untouchable and will leave them smelling like roses when their companies are in ashes.

[SteveC]

[ QUOTE ]
[ QUOTE ]
Every CEO is staring at the abyss of complete failure, something that is not at all unprecedented in this business.

[/ QUOTE ]

And sadly, most probably don't care, secure in the knowledge that their compensation and golden parachute are untouchable and will leave them smelling like roses when their companies are in ashes.

[/ QUOTE ]
Actually, I'm sure that most of them do care. People that rise to this level tend to be very motivated and internally driven, and failure does matter to them. Most take it very personally.