Comments

Trouble is the US won't let the laws of the market sort out the airline industry, they continue to bail them out through subsidy and allow them hide behind chapter 11. All this does is put off rather than solve their problems.

Contrast that BA who've undertaken a huge amount of change since 9/11 to get back to profitability all without government subsidy (they've still got some problems, their pension fund is a case in point one)

The US is supposed to be the land where the free market rules - Ha!

Posted by Andy Davies at June 6, 2006 9:02 AM

But Tom, one man's customers with low returns is another man's gold mine. SW and Jetblue are not the low fare carriers any more but they have consistent, disciplined pricing - few surprises. So SW caps its last minute anywhere fare say Tampa to Seattle at $ 300 one way. You think if there was one seat left the majors would not try to milk you and me for $ 1,500?
When gas staions raise prices 20c we call it gouging. When airlines do it, we defend it as demand and supply. The majors have lost price leadership - they just will not believe it and keep wanting to fight what has been obvious.

BTW - SW has been profitable every quarter for 35 years!

Posted by vinnie mirchandani at June 6, 2006 11:12 AM

I've just referenced this post of yours on my blog, Adventure of Strategy, in a post called Resorting to the Last Resort : The Blindingly Obvious! Don't think the trackback worked. Thanks for the insight! Rob.

Posted by Rob Millard at June 6, 2006 12:03 PM

VINNIE, AMEN: "one man's customers with low returns is another man's gold mine." t

Posted by tom peters at June 6, 2006 12:20 PM

I recently read this article & thought it might be relevant for others to know / see...

Top 10 Requirements for Any Business to Remain Profitable - Philip E. Humbert, PhD

1. Customer Benefits - You and your customers must clearly understand the benefits that your products and services provide. Most buying decisions are based on the consumer's perception that a new color will add prestige or that a smaller, lighter product will be more convenient. Customers buy benefits.

2. Extra Value - Customers must receive more in value than you charge for your goods and services. Most of us don't want a "fair" exchange, we want a bargain, the sense that we got extra value for our money.

3. Superb Service - This means attention to detail. Answering the phone on the first ring, providing an 800 number and 24-hour customer service numbers are examples. L.L. Bean has made a fortune with its "no questions" guarantee. So can you!

4. Know your Audience - Every business has to know its audience. Volvo and Nissan have very different audiences, and their advertising, pricing and even the location of their dealerships reflect this. Young adult audiences may value low price, while another group may value quality, performance, reliability or some other item. This is even more critical for service organizations whose products are invisible (consulting, education, coaching, etc.).

5. Location - In the old days, this meant the street address of your shop or store. Now it means getting your marketing messages into your customers' hands when and where they are receptive. Be certain your website is located at the top of the search engines. Make your Yellow Page ad larger or distinctive. NASCAR race fans are the most brand-loyal consumers in America. If you want to reach them, buy space on a race car!

6. Convenience - Customers expect to shop at their convenience, to pay by credit card, to call an 800-number, and to have their questions answered correctly the first time. Obviously, most service providers (medical, legal, consulting) can not be available 24 hours a day, and how you handle that problem will say much about you and your business to potential customers. Make it easy to buy from you!

7. Innovation - New is good, newer is better. Customers expect the benefits of the most modern technology. At a minimum, they expect the convenience of e-mail, voice mail, pagers, and fax. If there is a faster, better, cheaper and more reliable way to do it, adopt cutting edge techniques before your competition does!

8. Reliability - Consumers assume they can rely on your products and services. If they are purchasing your time and expertise, they rely on your availability, your advice, your attention to detail, and your follow-through. Durability may be less important in a throw-away age, but consumers demand 100% reliability. Be there for them every single time!

9. Planning - Planning takes on strange twists when a computer chip "generation" lasts 6 months and a website may be "old" in 6 weeks. Planning is the ability to monitor, influence, and profit from change. Planning means having a mission statement and the flexibility to respond instantly when new information allows you to fulfill your mission more effectively. Planning means you control your destiny.

10. Communication - This means instant, 2-way communication between every level and every branch of an enterprise. It means communicating with your vendors and competitors, and working with your customers so they become your most important designers, researchers and customer service experts. It means an "open door" policy and flat organizational models. It means listening is more important than speaking. It means ideas rule the world.

Posted by K.Sriram at June 7, 2006 12:51 AM