Sunday 30 March 2014

A re-look at the way Indian Airline Industry Operates!!

Airline Industry is the one of the latest and most dynamic industry India has. We all are very much aware of the turmoil in this industry with a limited set of highly competitive players with decent market share and with good span of coverage trying to push up revenues despite sinking profits (in fact zero profits, with an exception of one or two).  As this goes, I would like to state my observations on the dynamism of this industry which has left a few players bankrupt (Kingfisher, Air-Deccan, Sahara) and forcing the rest to look for new means of funding their future expansions like getting into a joint venture with a well-established foreign player (such as Air Asia with Tata, Jet Airways with Qatar).
Though I do not have any grey hair yet due to my intensive study of this industry, but from my limited interactions due to frequent air travel since the past 2 years, and my management education has helped me develop a perspective on this industry which I feel strongly and could help the industry if explored along my line of thought.
To make the basics clear, as we all know Air Travel is one of 3 modes of travel, and it is also the most expensive and faster means of travel which was affordable by only a certain segment of the population. During the advent of privatization of airline industry, back in 2000s, only the upper middle class and the rich class could travel. Since the air travel was mostly for the affordable’, all the glamour (within the flight cabin and in the airport) had to be maintained in a way that is ravishing. By inside the flight cabin elitism I mean is the the quality of cabin crew, the food services, and other stuff which goes along with it. This was the scenario in the early 2000s.
Now, in the second decade of the millennium as we all have witnessed and experienced that the quality of life has improved. Many unaffordable things are drawn into household expenditure. The various reasons which have contributed are well known, such as rise in business growth which further propelled rise in employment, rise in average salaries, rise in education levels, etc. And importantly air travel too became affordable over the decade. The rise of low-cost airlines has contributed much to this as a result more population is now under the ambit of air travel.
Times have changed for airline industry now. The industry as a whole witnessed change in terms of rise of low-cost carriers, competition, cost escalations, etc. but individual airline businesses have not changed. With changing times, as a management graduate, I expect that business should change too; customizing itself to the environment. In contrast, the industry is still using the old pillars to run the new environment. Take a close look at the industry changes which have happened.
1.      Inclusion of middle class as customers.
2.      The fading away of the elite club brand of air-travelling.
3.      Cost escalations
4.      Low cost Carriers emergence
5.      Air travelling has become a necessity more than a luxury.
The nature of the Airline industry is a service industry and service industry thrives on margins. Most service industries such as retail, hotel, etc. try to bank on new customers as well as loyal customers (meaning who own a loyalty card sort of). The business decisions are always bent towards having more and more loyal customers and increasing the first time customers.  Considering that the above mentioned changes and the nature of industry, I would like to portray few of my observations which could help add to the lean cost systems and also provide some thoughts on how to increase the customer engagement for the airline industry as a whole.
1.      “Quality of cabin crew” The current cabin crew is of far more superior quality than required. As mentioned earlier, the elitism which existed in air travelling a decade ago has faded because of the increasing affordability amongst many. Hiring of good quality cabin crew complimented the customers then, but now… this hardly makes a difference apart from adding cost burden (paying more salaries for the superior quality). The airline companies should question themselves, ‘Why do I need so 3-4 equally very well qualified persons to offer food and maintain the place?’ Having a close look at job of a cabin crew job reveals that it starts with offering food and ends with cleaning the mess. This is a practice which originated along with the privatization of the airline business but did not adapt to changing times. Paying good salaries to 3-4 people for running errands is neither affordable nor sustainable. In management terms, its’ best to have one horse rather than 10. Having one Horse (talented and well-versed person heading the cabin crew) and the rest 2-3 fairly (not superior) qualified persons who can communicate in Hindi and get the job done of making the customer feel comfortable yet paying only half the salary of the existing cabin crew would be an apt staffing strategy. In the latter case, one would be able to run the show with reduced employee cost per flight. Not only this will help manage costs, but also provide better ways to manage talent.
2.      “Cab/Taxi Service” A moment after a customer books the air ticket he/she then starts to search for booking a cab. In my view a minimum of 25% of revenues for a taxi business (just an estimate) comes from the to and fro from airport to customers location. When travelling by a taxi has become a must to reach the airport, in my view it becomes essential for the airline businesses to tap this share of profits. Airlines should start to see from a holistic customer delight perspective. If today, customer X books Y airline for travelling, then the Y airline should be able to provide me with the Y taxi at market rates which thereby would make customer X feel more secure about the services as by the end of the day it gives a satisfaction that the taxi is being arranged by a trusted party.  
3.      “Pool Travellers” Like we have a pool-cab, how does a pool traveller sound? Many a times, while getting off the flight, customers (especially young crowd) generally look around with a smiling face hoping that somebody would grasp their face gesture which resonates ‘I want to travel home from the airport, is there anyone whose house falls in the same direction? We can split the bill’. Many travellers would want to find a person who is travelling in the same direction so that they can travel comfortably in the cab yet save on their travel expenditure. If airlines can cross the current line of customer engagement and look beyond what customer needs, then they would find an answer to this problem. If only the airlines could collect information during the issuance of boarding pass from the customer w.r.t to his post flight travel details, and categorize their seating in such a manner that all similar direction people to be seated together and also introduce them to each other as ‘same direction to home’. They might as well end up sharing a cab and start to know each other, rather than just staring at each other’s faces all the while of their journey. This way the airline business can start getting more into the shoes of the customer and delighting him, rather than just serving the customers superficially.
4.      “Safety Demonstrations” As all flights have mandatory safety demonstrations, which are done purely for compliance sakes. Just to reiterate to the airline folks, except the new customers, nobody else gives a damn to the instructions as they do not change in years. A thought into how to engage travellers while giving safety demonstrations could add to the flight positive mood.  If the flight chief cabin crew member could identify some highly seasoned traveller, and encourage him to perform the safety demonstration and take his pic from his mobile, then you are not only adding cheer to the cabin, but also engaging your traveller. Imagine, next time you get a seasoned traveller, request him in a jovial mood stating
‘Sir/Madam, You have been identified as the star safety demonstrator because of your frequent air travel; we request you to kindly demonstrate the instructions in line with our speech’.
You may cheer the person while the demonstration is being done. This way, it may better engage employees than just doing mere compliance.
These are some of the ideas I would like the airline businesses to adopt by getting into customer shoes. Other service industries such as mentioned earlier like retail & hotel have adopted the philosophy of ‘getting into customers shoes’ & ‘customer delight’ long ago, but the airlines have been slow to catch up. Pondering over the above mentioned suggestions would benefit the overall industry as a whole.
The bottom line is the no different from what Mr KM  Birla had said in his speech ‘Butter Chicken at Birla’ that ‘There are opportunities out there for ambitious and well-run Indian companies—as long as they remember that the world will change them as much as they hope to change the world.’

*The article is my personal view.

No comments:

Post a Comment