Airlines around the world are competing fiercely for business. Creativity, robust business models and effective leadership will be required to survive
Unsurprisingly, airlines have become one of the favourite sources of business school cases. The American Southwest airlines has been studied for its innovative “no frills/customer care” approach. LWD has looked at Emirates for its complex business model (is it more a vehicle for fulfilling Dubai’s development aspiration?). We have also commented on the often egregious leadership styles exhibited by airline CEOs, such as Willy Walsh of British Airlines.
Why Southwest is a dangerous case to study
I have listened to many student presentations lauding Southwest over the flailing giants of the industry which in comparison show financial vulnerability. One point that is rarely mentioned is that Southwest, a fine example of strategic leadership, is also a relatively simple business to study. [Compare its number of destinations, fleet size, freight business and scheduled passenger distances for example with Delta or even British Airways. However, the case helps Professors make the kind of glib generalization I offered for it above]. Southwest has pioneered the so-called peanut airlines which have replaced meals by peanut snacks. Even within the peanut lines the business models must not be assumed to be identical. Ryanair sees Southwest as its inspiration, but has approached customer satisfaction in a completely different way.
Dilemmas for old and new airlines
The old airlines struggle with older fleets. With a strong business model this may eventually turn out well. The newer airlines have the advantages of the technological advances in the new generations of plane. They also have the disadvantages of untested glitches that beset new models.
Just an opinion
This weekend, I read of the problems encountered by passengers on a British Airlines flight attempting to travel on the Boeing 747 to London from Riyadh, Saudi Arabia [7 August 2013]. After a forced return to Riyadh, believed to a problem with the wing flaps, the plane set off and turned back again.
On my last British Airways flight in July, from Heathrow to Manchester, the plane sat on the runway for nearly two hours. The first announcement said that the safety checks had not been carried out overnight. The second announcement said that a toilet needed fixing, the third announcement that a piece of equipment was being brought to fix a wing flap.
Personal opinions make poor business analyses. I do not suggest from these two episodes that British Airlines is a bad or dangerous airline. I still like its service, and of course its safety record and will continue to use its services. The anecdotes indicate the increasing operational pressures that accompany extremely competitive businesses. I hold a similar view over BP and the factors contributing to the Deepwater Horizon disaster.