Thursday, November 16, 2006
My Imaginary Airline Business By Walter H. Barrett
I’m writing this because I consider it a good lesson about running a business, large or small. Anyone that knows me well enough also knows that I have a brain wrenching drive to break things down to their most simple terms. I have often been accused of oversimplifying the solutions to problems. My response to them is that my business is going well, how well is yours going?
I am also known by my friends to be “news junkie” in spite of the fact that the news these days infuriates me. It is an addiction that I cannot give up! Well anyway, the news, as biased as it can be at times, is what motivates me to write. It’s the only way I can vent my frustration with many of the daily events.
My latest rant is with the Airline Business. There is a lot of merger talk again. Several airlines appear to be hemorrhaging money. Gee, what a surprise! This is where my terrible trait of oversimplifying things kicks in. Let’s consider some of the following questions nagging at my poor old brain.
The Airlines spend millions, and perhaps billions of dollars every year for advertising. Why is that necessary when you have to fight for a seat to get anywhere these days, and personally, on recent trips my flights have been totally full?
What do they expect the public to think of them when the public (Airline Execs please note that “public” means paying customers”) has to deal with their daily flim flam fair game? How much does it cost to deal out their almost minute-by-minute manipulation of the fairs that appear from the bottom of an endless deck of websites on a daily basis? Then we have the famous situation where you may live on the east coast, and unfortunately a family member living on the west coast suddenly dies. You are choked with grief, and you have to get there right away. So what does your friendly neighborhood Airline do, why they charge you a much higher rate of course! Can you possibly imagine why anyone would get upset about that, because that’s just good business isn’t it? Then there are the higher rates for the holidays. You want to fly back east to visit your poor old mom for the holidays, and money isn’t tight enough these days so these angels of mercy up the rates! I could go on and on, but I’m sure you get the point. Now here’s where my over simplification come in.
If you keep an honest set of books you know exactly what your expenses are. You also have a very good grip on the average number of people that travel on each of your aircraft every single day of the year. It doesn’t exactly take a genius to figure out what it would take as a cost per seat to make a profit every day. It certainly makes a lot more sense than paying for the constant juggling and price manipulation that we have seen every day for years. Someone has to be getting paid for the endless upgrading of the rates on the computers every day and all of the other baloney that goes along with that package. Then there is all of the printing and other promotional crap etc. Imagine what they would save if they just stopped for even a month!
All I am saying is that in any business you have to examine your operating costs, set a fair price for your product, and keep your customers happy. I blame it on the business schools. The graduates that have been emerging from these factories of fantasy (staffed mostly by people that couldn’t last six month running a business on their own today) Think that all you have to do is spend two million dollars on a Super Bowel ad, and the public will beat a path to their door and throw money at them. That is an unrealistic and dangerous attitude. You don’t stay in business by wasting your money. If people are standing in line for seats,why spend so much money on advertising,and flim flam promotions? My short summary of the Airline Business is “different strokes for different folks”, and I am sorry for that trite expression, but it’s the only appropriate phrase I can think of this morning. It’s like buying a car. I hate going to a car dealership because it’s the same deal. No two prices are ever the same. You have to negotiate with people who are constantly trying to “handle” you and I don’t like it. We are all looking for a fair deal when we do business. We don’t need people who can’t manage their businesses, and who can’t take a stand when it comes to profitable pricing policies, screwing with our heads. It seems that our business schools are producing marketing and accounting people who are too smart for their own good, and think it’s ok to operate in the gray areas of business. We’ve seen a lot of that lately. When you are running a business you don’t let your competitions’ suicide pricing gimmicks run you into bankruptcy, You don’t throw money at a problem, you don’t believe everything they told you in business school, (if your professor was so smart, why wasn’t he or she rich?), and most of all, you don’t take it out on your customers. There is a framework of rules to follow. It is the same for any business and when you deviate, you die!
Thanks for reading. Please send it to a friend.