16 July 2009

The View From The First Half Airline Results

The results are now flooding in - a clear picture is emerging.

The traffic is off. The yield is way down. the number is best expressed by AMR's recent results.
Traffic off by 8+% and total revenues down 20%.

However judging by the last few flights I have been on you wouldn't think so. This also seems to be reflected by the airports numbers. So the travel is stabilizing. But as my recent poll shows - we are not going to see the rebound until 2010 at least.

So are we seeing a fundamental shift?

For once I have to agree with the esteemed Mr Walsh. Traffic is not going to come back the same way. We will see a real change in the corporate market. The business man is actually learning new tricks. The use of Skype and such tools as Webex etc has changed how we do things. The drop in business travel is permanent.

It is however interesting that yesterday I received an email froom British Airways telling me how they have commissioned a study of Harvard Business Review readers who astoundingly it would appear believe that face to face meetings are the best thing.

I reprint the whole text right here:

Dear Professor,

British Airways commissioned a survey of Harvard Business Review readers and the poll shows that nothing can take the place of a face-to-face meeting. We also believe that the bond formed during these meetings can make all the difference.

As you are a loyal Executive Club member and business traveller, I would encourage you to
read the research summary and enter to win a free business trip on British Airways.

Beginning in September, we are dedicating three entire planes from New York, Chicago and Los Angeles to London Heathrow. Simply tell us how connecting face-to-face will help your business grow. If your submission is selected, you and a colleague will be on one of those free international flights.

In the meantime, please feel free to review the highlights of the Harvard Business Review
research. And discover for yourself how face-to-face meetings can help your business grow.

Warm regards,

Anne Tedesco
Vice President, Marketing

I recall that great expression from Microsoft about eating your own dog food. BA has a policy of not allowing its people to travel for business. I think its still in place.... I am sure that Anne must have been in receipt of that memo.

OK so I am perhaps unfairly picking on BA. I am an unloyal customer but my decision to use them remains consistent. From this I have learned that an airline decision is not really about being positive. It is really about the least worst. I realize that a lot of you will not think DUH! the Professor has lost it. But humour me here. The use of a product by its consumers is driven by so many factors. What the airlines must learn is that they need to be far more nimble. The airlines have never been truly tactical in their marketing. The maturity of the internet and its attendant new tools like social media is finally bringing about that change. Airlines are however consistently behind the curve.

What I find very hard to appreciate is that after now about 12 months of the GFC, the airlines are only just now starting to do something seriously different. It could be because all the traditional tools they have used to modify their positions in the market (laying off staff, slashing budgets and yes stopping business travel), have largely failed to move the needle. Only the truly nimble and dare I say it smart airlines (particularly in the LCC category) are making sense of this current market.

So airlines after this pretty harsh half year - I hope that you will finally realize that it is NOT business as usual. And that you will examine ALL aspects of your current marketing and of course this means you are going to have to change how you reach your customers. The easy path is no longer working. Welcome to the brave new world.

And if you need some help... give me a ping


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