Airline Start-Ups – an Unreasonable Risk?

Mass Market - No Profit

Two (good) articles today about the riskiness of starting up an airline and the comments they got shared with, triggered some controversial thoughts with me.

The Articles + Comments

Airline Cash BurnOAG summarized on the Evolution of airlines since 2019 (just before the Pandemic) to today. While their findings are very interesting, there is a tone in the summary and a resulting summarization by Tim (someone I generally value) that I happen to disagree with. OAG’s John Grant wrote:

“Airline start-ups are incredibly difficult, cash rapidly disappears and securing the necessary operating licences frequently takes longer than expected and that’s even before sourcing aircraft, securing slots, avoiding the competition, and building all the necessary reservations systems and back-office support functions.”

And Tim shared the full post with a comment: “OAG is a great data resource for large scale review and schedule activity. This data really doe strike a chord. Airlines are a very risky business. This is very illustrative.”

The other one was an analysis by McKinsey, checking on the aviation value chain’s recovery shared by Patrick, which he introduced with these words: “McKinsey & Company has done an interesting analysis of the aviation value chain. For each subsector, they’ve calculated the “economic profit”, meaning (return on invested capital – weighted average cost of capital) x invested capital. In other words, are firms in that sector creating or destroying value? Their conclusion: only fuel suppliers and freight forwarders created value last year, and airports and airlines lost a lot!”

The Economist’s (My) Response

Mass Market - No ProfitAs an economist by original education and having experience with Startups and Business Angels, I do happen to believe in a sound “business case”. As an airliner, I learned with American to focus on the business case. Like to reconsider twice before approving any waiver on fare rules or trying to upsell to the more expensive (i.e. more flexible) air fare. But I also learned the value of a renowned brand (AA) and service. Or to treat your colleagues as your most valuable customers – they help you sell each and every day. And can ruin a customer relation as quickly.

In “global fares training”, I learned the cost of a flight transfer, something that I never forgot; thanks Ruth King (our fares trainer), I will never forget you.

At Northwest Airlines, I learned that airlines and their managers just sold “cheap”. With full flights in summer season, the airline generated losses on the transatlantic flights. A lesson I’ve seen later over and again. Most sales staff had neither information, nor idea about the “yield” they had to generate to fly profitable. Northwest focused on a minimum yield (revenue per seat-mile) half of that of American. Then sold at that yield as the standard “special fare” and making group offers or “reseller-rebates” below that rate aplenty. As I summarized 2019 on my article about why airlines keep failing, “know your cost”.

Yes, talking about Why Do Airlines Keep Failing. It’s the same response I have on the above two mentioned articles. And many like them. At ASRA 2008, I emphasized brand faces. But I also told those brand faces – the airline sales managers – that they are not there to sell the cheapest price. Anyone can do that, the Internet lives of that. A real sales manager understands that they have to sell the high-end tickets.

Live story, also happened today. Qatar Airways passengers (mother and three kindergarden-aged kids) arrived with >18 hour delay in Düsseldorf. German Rail (clerk) sold tickets to the customer to pick up the passengers that are neither change- nor refundable. So they had to buy completely new (expensive) tickets. A good clerk of this company renowned for it’s unpunctual trains (<60%) would have mentioned the possibility of a flight delay and sold the slightly more expensive tickets that allow for a change. Or at least the optional insurance.

So thinking back to my experiences with Northwest and other such airlines, it’s my questioning about KPIs as well. If my KPI is load and not revenue, I must expect to loose money. It remains beyond me, why airlines offer connecting flight at what a rough calculation on Ryanair or easyJet CASK/CASM (cost per available seat km/mile) proves as below cost, even without the “stop en-route” (landing fees, complexity, etc.). Those are managers who had a nap, when their tutors talked about sound economical calculation? And I keep questioning, why airlines publish loads without revenue per seat. To date, we have hundreds, if not thousands of flights every day, that fly full but loose money. All this is confirmed by the above mentioned and many other such articles.

The Fairy-Tale of Loss Making Airlines

Heresy. Aviation ain't profitable - and the world is FLATTo claim “aviation” is a loss making business is true and can’t be further from the truth.

Yes, many airlines are loss making. And it fits the common reasons I elaborated before. And yes, you can make airlines very profitable, if you have a management that thinks just a bit outside the box and applies economic rules to their modus operandi (mode of operation). But this also goes in line with route development and other areas. If you don’t have your numbers under control and focus on the ones that are “good to sell to shareholders”, you’ll fail.

Like with any company, with any startup, in and outside the aviation sphere, we must constantly have an understanding of our cost. And of the competition. What is it our customer wants? There is a psychological price. If you missed that in your economics studies, make your Internet-search for it now. If you have sales teams, train them to upsell the seats. Sell the higher yield fares. Not at a discount, but at a value!

Natural Leader LemmingsThis is one reason, I do not believe we can make Kolibri ever happen by taking over an already failing or failed airline. Wrong structures, wrong thinking in place. I learned this lesson with Air Berlin. The force of inertia was simply too strong. There are some airline that make revenue, but even their managers I find often blindly “follow the worms” (a Pink Floyd referral, yes, the picture is lemmings).

(That’s) The Way Airlines Operate

But unfortunately, all investors we talk to, always think inside their boxes. Can’t tell how many talks I had to radically change our approach and take A320 and do like everyone else does. Ain’t that contrary to the concept of Unique Selling Propositions?

And has ever a “disruptive investment” (another investor buzz word) been developed out of the box using the same thinking? The same values (I’m the cheapest)?

The others are usually starting to tell you that you have to start with smaller amount of money. Sure way to burn your money is a cheap business plan. As OAG writes “getting to size is so important”. You can’t produce a low cost in small numbers. For us, the ideal mix is seven aircraft, where the “administrative overhead cost” becomes manageable. i.e. You have the same cost if you maintain one – or seven aircraft. The same reservations office (just less staff and calls), only little less marketing. You must outsource your operations (at cost) to share the necessary organization with other small airlines. Etc., etc.

Source firewalkeraussies.comTo date, I am still working with consulting companies reviewing airline business plans. Aside the usual failure issues, size is a recurring issue. Another being the lack of fallback in case of flight disruptions, may they be caused by technical issues, weather or other events. Their focus on cheap “human resources” and missing team building results in friction and internal competition that further weakens their product offering.

But even taking that into account, we believe the business and financial plans we developed are sound. And profitable from the outset. With a focus on services and a military-style responsibility “for ours” (no “HR” in that company), a “service-focused concept”. Everyone to pull on the same side of the rope. Yes, not starting with a dead corpse, trying to revive, adds some bureaucratic hurdles. But it allows you to think outside the box and instead of following the worms (or other airlines), to do things “right”.

So ever since I entered into the business, I learned at American Airlines under Bob Crandall how to do things right. And learned over and again that the same mistakes are made by short-sighted, narrow-minded managers. And I know all the reasoning used to distract and divert off the incompetence to operate an economically sound business. Usually, I account this as “no faith in your brand”. That then goes along with topics I mentioned before, like brand dissolution (airlines are often academic example), missing USPs, etc. – Cobalt CEO told me about their USP shortly before their demise “We are Cypriotic”. Seriously? When I started, Lufthansa was the brand. Lufthanseat was the employee. All employees of American Airlines knew “Proud to be AAmerican”. Then came the button counters. And mighty AAmerican was taken over by their once-small rival U.S. Airways. Another box of memories.

So yes, airlines are often a loss making business. With bureaucrats leading them into disaster. Sometimes fast, often times a veeeery long death. Air Berlin and Alitalia are very good examples. “Too big to fail”? Simply “prestigious”? And there are “the others”. Airlines that have an idea about what they are doing. That know their niche(s). That know their cost and marketing. That value their brand. That build a reputation. Until button counters (aka. bureaucrats) take over.

I hope that someone of my hundreds if not thousands of readers (hard to believe, that’s what my server stats claim I’d have) knows some investor with the guts to understand that profitable aviation and sustainable aviation can be the same thing. That the stories those consultancies and their statistics and reports tell have two sides to the coin. And that we get a chance to proof, that climate neutral flying is no heresy, but the future of flight.

Food for Thought – Jürgen

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Too Many Chiefs …

… and the Question about System Relevant Jobs

Managers vs. Executives

Today I had a very emotional discussion about the need for new IT, new processes and all that other stuff the consulting industry keeps telling us, we got to have. Consultants, that have a standing relation inside the aviation company, with constant projects to “improve” and streamline the work.

At what cost?

Having addressed Consulting, Outsourcing, Cloud? COTS or tailormade back in August 2020, we meanwhile discussed over and again the issue of “System Relevant Jobs”. Back in my economics studies, 40 years ago, the general manager of my intern company questioned the increasing “management jobs” by academics, reminding, emphasizing that in the end, it is all about products. Even in whole sale (it was a central logistics warehouse) it’d be a question about benefit for seller and buyer, where the warehouse we worked in distributed the goods to the own satellite stores. He warned, that every intermediary becomes a leech and products becoming more expensive, not cheaper, by adding more and more intermediaries into the pool. His assumption was that 50% management surplus would be viable. And I should mention that he warned about dependencies from “rogue countries”, like China. Cheap but at what cost?

Being very pro globalization in general, he did call it hypocrisy to buy cheap in China, knowing that this is simply based on abuse of work force and stealing of patents and other ideas from other countries – back in the days, China did not much invent themselves, they were known copycats. In Germany meanwhile called “precarious jobs”, that don’t provide decent living, the living standards of workers in China at the time were at best questionable.

System Relevant Jobs

System RelevanceIs your job “system relevant”? If you work in home office, I can tell you the answer is No. If you work in consulting, I can very likely tell you the answer being No. Working in aviation and transport, the answer very likely is No. And if your salary is above average, the answer also very likely is No.

It’s all about leeches. Draining the money out of the really system relevant people, who normally are overworked, but underpaid. Not on the picture are farmers, friends of the family farming, living since I grew up on the brink of bankruptcies over and again. With more and more demands and pay for their products (milk, meat, grain, etc.) being often below the cost of production. Then they get generously state aid, to keep them working on subsistence levels.

The NHS personnel is on strike, the medical situation there in the U.K., also in Germany, being devastating. 24 hour shifts, 3 days “on call” duty?

Logistics drivers, the one delivering all those fancy goods we all buy, paid at minimum wage or just very little above for good feeling? Uber being a gigacorn? Delivery “Heroes”? But the managers in their offices having a “decent salary”? Who’s doing the work and what do we pay them?

U.N. Sustainable Development Goals

The United Nations Sustainable Development Goals

There are 17 SDGs. But all statistics show that all of them are actually still deteriorating. And if companies call themselves “sustainable”, they usually focus on the easy SDGs, most times at the cost of the others. Yes, we invest into climate, we buy CO2-certificates. And buy our growing hunger for power from the grid. Sure we buy “green power”… We upgrade our HR Director to “Chief HR Officer” and call it a board position, but only on paper to look good. We invest in R&D to find solutions how we can become sustainable in the future, while we fight the unions and deny salary increases for our workers. We add the (female) position of Chief Sustainability Officer to express our commitment to the SDGs. Oops, we forgot to give her a budget or empower her responsibilities? Examples aplenty…

We need companies to do the right thing. To embrace sustainability and evolve. It’d give them a competitive edge, a USP. When I was a child, it was common that people worked for “Daimler” (Mercedes-Benz) or “Bosch” all their live. You looked after your stuff from post-school training to retirement – often even beyond. Then they became “Human Resources” to managers who turned “shareholder value” from “what’s good for the company” and “long-term thinking” into “what’s good for my bonus” and “who cares about the time after I’m gone”.

A Question of Respect

My “intern” boss (again) taught me respect for everyone. The guy on the fork-lift, the cleaners, truck drivers and “secretaries” (yeah, we still had those). He taught us to set up the coffee when it was empty and not bother the secretaries. To clean up ourselves to make the cleaners’ jobs easier. To think beyond our petty box as “office workers” and value the hard work of the real workers. Also to question, but then also embrace the value of our work. IF we added value.

And in the pandemic, we should have (but obviously didn’t) learn the other lesson. That it’s not enough to sit at the windows “applauding” the system relevant workers that went above and beyond any perceivable “line of duty”, but to pay them decently. To look after them and keep in mind that they also have families to sustain, vacation wishes that go beyond the balcony on an old residential block they only can afford with added state aid.

Beyond White- and Greenwashing

I recently attended a multi-week project by United Nations Climate Action on Circular Economy. And the need for lifecycle-assessment. But it was also mostly #talkthetalk and academic ideas. And I had several objectives that then led to my image about the panacea distraction.

Aside me wondering, of that lady in the image might be an unpaid intern? Another reflection of the value HR managers and their bosses have about the value of training and labor. Any employer not paying their interns should be put in the pillory. For labor abuse!

Oh yes, and that goes in line with midwifes that quit their jobs as governments don’t reduce but add to the legal strains in the job. Or riders asked to bring their own bikes – and repair, all at minimum wage and abusive “time management”. Or airlines outsourcing their pilots forcing them into bogus self-employment without vacation or sick-leave cover, paid wages below their own pilots. Back in my intern-days, there were “personnel agencies” too. But to hire someone for short-term was always about 50% higher cost than employing someone directly. What went wrong there?

Yes I could go on.

Food for Thought
Comments welcome!

Yes. Comments welcome: Do you agree, disagree, partially, am I right, wrong, do I oversee anything? Have your own examples? What would, could and should we do?

 

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A-CDM, TAM, NDC and other Wishful Thinkings

This last week began with a client in North America, continued with a call from a subject matter expert in South America and culminated in two discussions I commented a bit longer on. Triggering this new article talking about “digital in aviation”, pioneering days and the impact of dinosaurs. And why we suffer in aviation from too much #talkthetalk

Not Invented Here, part 1

Too busy CavemenLast week, I had a lengthy phone call with an airport manager in the U.S. Snow-Belt, asking me about ideas, how to break up the silo thinking that keeps all his ideas about a common airport operations center as a basis for some A-CDM-style development from moving forward. Next winter approaching, he’s worried about repeating the past years’ experience of unnecessary delays. “The airline always knows better” he complained to me. If we offer them solution, it’s not theirs, so it’s being turned down. Communication is faulty and in crisis, everyone works on their own. #talkthetalk

Passengers spend 156 Minutes at AMS

AMS Schiphol: Did you know a passengers spends about 156 minutes on average strolling through the airport?Now give me a break. When I read this “promo” on LinkedIn, is it just me, seeing the fault in it?

As I outlined 2011 and 2014 in my two posts about a contemporary check-in process, contemporary airport passenger processes, to be attractive for the passenger, we need to minimize the wait time, the “ineffective” time spend at airports! It’s the big advantage of regional aviation, to minimize airport spent time.

Planning my current travels, I will spend some time with the family in Northern Germany, in between two events in Switzerland. In both cases, traveling eight hours by train will reflect in several hundred Euros in cost savings, and adds less than an hour on the total travel time door-to-door. As no, the meetings are not in Zürich.

This reminded me of the time we pioneered online travel booking (today Amadeus’ Cytric™). Own story. But as I mentioned back in 2018, compared to those pioneering days, development has almost come to a halt, with just little cosmetics and changes to the functionalities. Very little real improvements.
Working on what was to become Cytric and the first commercially used corporate online booking tool, we discussed:

The Multimodal Approach

Multimodal Travel. Source: http://bonvoyage2020.eu/crat-demonstration-on-personalization-of-multimodal-travel-planning-services/Our vision for what was to be Cytric, that we wanted to follow, a vision not existing now, 25 years later, was to enter the home address, the destination address and the system would provide you the best travel options for you to get to the airport using car, rail, taxi, whatever, fly towards your destination and again take rail, taxi, rental car, whatever, to get to where you needed to go.

Back in those days, we already understood that it’s not about the flight. Or rail. The customer, especially the business traveler, needs to go somewhere. Getting to and from the airport, the check-in process and delays, connecting and waiting for the connecting flight, getting off the airport, all adds to the travel time. But even mighty Google only offers me to select one mode of transport, i.e. car, rail or flight… #talkthetalk

Travel Agent or Data Processor?

American Airline 1987Speaking about Business Travel Management, we don’t need data typists any more. In the good old days, travel agents were the experts, knowing how to get the traveler from A to B, halfway (or all) around the world… Then came the GDS and the travel agents became data interfaces to the big data accessed through travel computers being connected with mighty servers. Something we call cloud computing today, using “dummy terminals”. Using codes like AN19DECFRAMIA and SS1B1M2 to search for and book a flight. Or similar complicated tools to book a rail ticket.

(And yes, that’s me in the American Airline office back in 1987 at an “ICOT” terminal.)

Then we enabled online booking and all that easy trips anyone can “book” now without any help. But what if you want to combine several destinations? What if you’re not living in Frankfurt or Paris, but in a rural, small industrial town with not many flights? We need the real travel agents again. Not the data processors. We need travel experts, that require strong and ongoing training and some specialization to provide the customer with a solution to their travel needs. That think beyond computer algorithms and understand “cross tickets” or “interlining” or multimodal travel. That take into account getting from and to the transportation hubs. And less conservatism, opposition to change and other #talkthetalk

Total Travel Time

HAJ Airport CheckInIt is why I believe we need regional aviation and we need more of it. Smaller aircraft, connecting secondary cities, offering quick and direct connection. Hubs are good for the global networks. And as I kept and keep emphasizing. Regional airports must not look out, how to get their locals out to the world. But to justify their existence, they need to bring the world to their regions! If that is by car, bus, train and/or flight is irrelevant for the passenger. To offer good connections at competitive cost and speed is the task at hand. And no, there is no reason for #flygskam if you do that right.

We need holistic thinking. Beyond our petty box. And less #talkthetalk

The “C” in A-CDM

A-CDM data silo puzzleOn the call from an aviation IT professional it triggered that A-CDM is for big airports only. Is it?

Also the first article today on LinkedIn was from my friend Kalle Keller about TAM (Total Airport Management) and A-CDM.

As I outlined in my articles on that topic and i.e. the article about the Polar Vortex + Collaboration, A-CDM is about the C: Collaboration! It’s not what EuroControl, with their own agenda of this, markets as A-CDM. Neither that “bible” of theirs, they call the Airport Collaborative Decision Making (A-CDM) Implementation Manual. A “bible” about everyone I speak to reads and believes it to be the holy grail. It isn’t.

Eeee...gypt?As I approached it back in 2016/17 and shared the learning curve at Passenger Terminal Expo 2017, the first step into A-CDM is and must always be a collaborative approach between the stakeholders at the airport. Systems and IT are secondary. Less than secondary! It is about tearing down siloes in the heads, between the stakeholders. The development of a common understanding of the common goal to optimize the processes for the greater good: A smooth management of airport operations beyond “the operations management”. Overall. Holistic.

And unfortunately, only once you did your homework at the airport … or the airline … the air traffic control, only then you can reach out to integrate with other A-CDM systems. And beyond. Not behind paywalls, but sharing for joint process improvements.

But then I research airports and my birth country Germany, mighty pacemaker in A-CDM, the ANSP (German Air Traffic Control) hides the basic aviation data from the Aeronautical Information Publication (AIP) is hidden behind a paywall. So other sites, like OpenStreetMaps, Wikipedia, etc. are forced to use secondary sources. Are you kidding me? And yes, even for countries with a truly open AIP, we find some 10% of discrepancies on the data. As those AIPs are published as PDF, not as data tables to quickly update. And the IATA code search is full of airports defunct for years. As they simply “add” but never check… And hide their misery behind a paywall? #talkthetalk

OTA + NDC – Barrel Bursts

AIRIMPAn older article addressed NDC, the “New Distribution Capability” as a barrel burst. And reminded me of my project back in 2006/07, when we tried to develop a common database for hotel-information (descriptive) based on the OpenTravel Alliance XML standards that I had originally worked on in the early days. The standard has been so blown-up, that you simply can’t “comply” with a standard set of features, but anyone can pick what they want and that not being the same that others use, we have an overblown “standard” that in practical life allows everyone to be compliant, but still speaking totally different languages.

The same is with NDC. Original idea of NDC was to allow standard packaging of new or unique parts into the package. I recall early discussions when airlines started to unravel their travel packages and thought a way to package their individualized offers with new and unique ancillaries. The demand was to overcome the limitations of the smallest common denominator represented by the classic GDS. Nowadays, the GDS-ability to manage NDC is a key driver… In my opinion, the original intend was completely turned around. It’s now focused on a solution to put anything the airline comes up with in boxes that the GDS can manage.

As a bold example, we had the AIRIMP back in the 80s. To date, it is the smallest common denominator all airlines work with. Even though, a large number of functionalities specified in the AIRIMP are amiss in all those hip online (flight) booking interfaces (here’s the AIRIMP’s table of content). 26 years after we did the first commercial flight bookings on the web. Again a lot of #talkthetalk, tons of bold ideas how to make things better, whereas the basics are not yet covered? #talkthetalk

Disruption Management

Adverse Weather

A-CDM and TAM are in a large part about disruption management. Ten years ago we talked about “situational awareness” to manage disruptions. And I ask the same question ever since. I would like to see a tool that reflects the contemporary visualization of not what hits us now, but to see, how our industry-partner’s efforts impact the setbacks from weather, technical etc. – to identify hours ahead bottlenecks from aircraft delays, crews exceeding their duty hours, technical problems, peaks exceeding capacity, ATC problems, ground problems.

To do this, we must exchange data in large scale. All I see is data siloes and paywalls and a distrust to share data, keeping defunct and outdated processes alive, but no vision of collaboration on an industry scale. That even no matter that the same data is available in island solutions on interfaces like flightradar or the individual airports’ websites. #talkthetalk

The Source of the Most Common Truth

Our main problem is that our Powers-That-Be still consider themselves in a competition. Data is value, so put it in siloes. Where OpenStreetMap enabled mapping solutions, aviation data is still locked away. It takes two months until IATA publishes passenger data, after four months those numbers happen to differ substantially.

Looking at ICAO vs. the national AIP data, there are differences aplenty, worse even for IATA. So instead of working all together to manage common data together, we have different sources with different data. It is what I learned at SITA to be the art to find “The Source of the Most Common Truth”. There are industries living to develop and manage tools to overcome standard industry messages with airlines adding non-standard “features” to their messages, forcing rejects and delayed processing.

Back in 1995, Bill Gates spoke about the Internet about “Information at your Fingertips”. For the aviation, that is #talkthetalk

Status Quo + Outlook

I think this time we got the numbers right ... we just don't know which ones to use.Where aviation in the 1960s to -80s was a pacemaker in global eCommerce, it is now limping behind. Can tell stories about replies from industry bodies when I informed them about factual mistakes in their data. And their ignorance shown by neither directing the report to their PTBs, nor updating the faulty information. Instead of working together to develop the aviation of the future, we have conservative forces in play that hinder real development. Be that about A-CDM, data interfaces, data intelligence. We limp behind and instead of doing, we #talkthetalk.

Sure the same is true on sustainable aviation, but that’s another topic I discussed and discuss in other blog articles.

To overcome this, we must strengthen IATA and ICAO and demand the change from our PTBs. Stop the paywalls, speed up the availability of LIVE KPIs. Once a flight is finished the data must be available. Not tomorrow. All else is #talkthetalk.

My humble opinion. Happy to discuss how we can encourage real CHANGE.

Food for Thought
Comments welcome

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Cognitive Disonance Resolution

Cognitive Dissonance Resolution

Cognitive Dissonance Resolution

Working this week with a group on topics like P.R. and Corporate Strategy, there are some basic rules, again resurfacing on my conscious thinking…

Two topics were in hot, heated discussion these days, especially when we talked bout Cognitive Disonance: Greta Thunberg and Boeing 737MAX.

Greta Thunberg

Not only in the big cities around the globe, also in towns like Brunswick (Braunschweig), the movement Friday for Future is a root movement. Following the example of a little girl from Sweden, kids go demonstrating around the world to promote the need to counter climate change. In Germany, formerly pacemaker of “green development” the government is way behind their own targets, let’s not talk about the Paris world climate targets. In Tirana, the city “stinks” from car gasoline fumes. Scientists believe it’s not five to, but five after twelve already! We can only reduce the impact, no longer avoid it.

So now, surprise surprise, that kid in Sweden went on the street to demonstrate against the political powers that be (PTBs) ignorance. That action triggered a cord and other kids around the world thought it a good idea and joined in the demonstration. Demanding action to secure their future. And all those PTBs can respond with is that they’d be truants? Their only reason to go on the streets is to be skipping school? That’s all you can come up with? Sure there are the one or other camp-followers, but mostly those kids have genuine concern about their planet.

But their activity provides a good example for cognitive dissonance. They put a finger in a wound that most of “us” adults have long found our way to suppress. Because the information does not compute. We know we kill the planet, but let the others start saving it. What can I do?

My personal answer is to support the kids. To not “look away” and “blame the others”. In German history, our people looked away, the blamed others. It caused a holocaust.

Michael Jackson sang about “The Man in the Mirror” to make a change.

In Germany we had a barrel-burst campaign “You are Germany” – what do you do to make things better?

Interesting, what discussions are triggered, discussing cognitive dissonance resolution and how different nationalities and cultural background result in totally different approaches. In Germany, a typical approach is to dissect good ideas and find faults. Can’t tell you, how many “friends” in the past year told me that KOLIBRI.aero cannot work. It did very often remind me of that favorite quote by Lazarus Long (a Robert A. Heinlein character): “Always listen to the experts! They tell you it is impossible and why you can not do it. When you know that: Go Ahead!

Boeing B737MAX

Another very good example and discussion topic this week about cognitive dissonance resolution was the Boeing B737MAX.

Our industry always promotes Safety First. But I have a lot of examples that our industry works on the limits, hoping for the best. Be it my recent post about disruption management or the managing of airport turnaround (A-CDM), we all know that we do not work efficiently. But cognitive dissonances often result in ignorance, suppressing conflicting information. We know the truth, but we suppress it, give ourselves explanations to justify the shortcomings.

Now there was another crash of the Boeing B737MAX after Lion Air Flight 610 crashed in Malaysia half a year ago (29Oct18). While there are also “supporting reasons”, as usual a chain of events that leads to disaster, I personally believe it was mainly the ignorance of Boeing engineers, developing an MCAS, not informing pilots about such an important design change. Combined with a semi-religious faith in their technology. But I believe computers are there to assist us. I remember the Air France flight 447, where the instruments showed wrong data, switched off the computer, in result the flight stalled and crashed into the the Atlantic. We also should be reminded about the “unsinkable” Titanic.

After the recent crash in Ethiopia, there were calls for grounding of the aircraft instantly, given the similarity to Lion Air 610. It is noteworthy and was discussed very controversial, that our own minister responsible for aviation voiced against a grounding, only to be overruled by EASA. But neither America, nor Europe responded “safety first”, but focused on the commercial impacts of a grounding instead. Meanwhile even the U.S. under Donald Trump confirmed the necessity of the grounding and aviation sources expect that grounding to take on for several month. Which does remind again of the pioneer in jetliners, the de Havilland Comet, loosing three aircraft in nine months, which lead to understanding of metal fatigue on the air frame called by the way the metal was connected using bolts – creating micro-fractures.

Oh Gawd... Helpdesk: Final Level. Pray
Boeing MCAS development

Now Boeing implements a new technology to cover up for the new behavior and instead of being transparent, they hide. Then the sh** hits the fan in Malaysia. The event now shows that Boeing did not operate “safety first”, but mismanaged it by delaying the necessary update. A result of cognitive dissonance resolutions? It must not be, so it is not? That backfired now and is a rather pathetic expression of professional disaster management. That the U.S. and Boeing had to be “convinced” to ground the aircraft has proven a big mistake. Today, the media reports that the Ethiopian officials confirm a very similar situation and “many parallelisms” to the Lion Air crash.

We cannot and must not operate on the Principal of Hope! An airliner recently posted that we need a crash to change something. I disagreed, but Boeing did itself and our industry a major disfavor to the reputation of aviation safety. Media today also refers back to the 787-incidents and grounding resulting from batteries catching fire. What I do not understand is that following Lion air Boeing P.R. obviously did not develop a “worse case communication plan”.

From Wikipedia: “On March 11, 2019, in response to the Lion Air and Ethiopian Airlines accidents, China was the first country to order all 96 of its 737 MAX aircraft grounded. In the days following the Ethiopian Airlines crash, airlines and authorities around the world suspended the operation of Boeing 737 MAX 8 aircraft (or in many cases all 737 MAX variants) one after another, contrasting with the usual coordinated approach. Two days later, the U.S. Federal Aviation Administration […] became the last in the world to ground the aircraft, reversing its previous stance. Boeing eventually recommended the grounding to the FAA.”

It must not be! It cannot be! So it is not.
Cognitive Dissonance Resolution at work…

Food for Thought
Comments welcome!

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10 Years “Shift Happens” – review

“Our Heads Are Round so our Thoughts Can Change Direction” [Francis Picabia]

shifthappensnarratedMy first ever blog post in the new WordPress blog was Shift Happens. That was 10 years ago. Now in honor of it’s 10th anniversary, Karl Fish took a look back on his Blog The Fish Bowl.

The best video is still this one on YouTube and I’d love to find a decent update, but to date, it’s unmatched and I urge you to watch it.

10 years have gone by and still our children don’t learn for their lives, about compassion, tolerance and respect. They don’t learn to apply the rule of three to compare 200g of product X with 800g of product Y. They don’t know how to socially interact without a screen. They can chat for days but not structure their ideas. Crowdfunding, couch surfing, big data and hightech, but they are still asked to use “printed” information for their diplomas, WiFi is not available in many schools. And if you’re poor, the school neither enables you access to all that new high tech. Nobody’s left behind?
Yeah. But they know how to calculate mathematics that their parents left to calculators and for the past 10 years our smartphone app does.

So we don’t produce enough children in “the West”, so population shrinks and more people get older and fewer young will have to look after them. But instead of making our kids smarter, we limp behind the average school in Asia. And the U.S. industry recently published that they depend on their Asian employees for new developments…?

verwandert.deI had a student I made my assistant back in Erfurt. When I left, her fellow colleagues degraded her back to “student” (cooking coffee, assisting their work). She left aviation. A loss to our industry!
Her business uses Blog, Facebook, Social Networks.

thenomadoasisSame for Celinne Da Costa, traveling the world “couch surfing”. Exotic. And I’m asked, how that can work. With smart tech, an online world and a device to write and share the written, with paid-for articles and speaking. And I know more people doing that! Are our kids ready for this?

We set-up CheckIn.com. Us in the middle of nowhere in Braunschweig, Germany. Our mapmagician from Berlin, our server admin in Frankfurt, the algorithmic genie from Texas. Will we ever set up an “office”? I doubt it. But still most (relatively old) managers stick to “workplace”. Even relatively young Marissa Meyer, taking her post at Yahoo ordered an end to ‘remote’ work as all staff are told to be in the office as part of a new era of collaboration. Old thinking. She’s a “role model”? I’ll teach my girls better. I promise!

Karl Fish closes his review pointedly: “In 2006 I was worried that we were preparing students for our past, not their future. In 2016, I still am.”

Food For Thought
Comments and opinions welcome!

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Type Talk

“Our Heads Are Round so our Thoughts Can Change Direction” [Francis Picabia]

strangers_and_friends
“There are no strangers here; Only friends you haven’t yet met” [William Butler Yeats]
Years ago, my friend and mentor Richard (yeah, him again) introduced my to “Type Talk”, a book about the Myers-Briggs Type Indicator, introducing me also to the Keirsey Temperament Sorter. As I am at the crossroads again checking out options for my future what-to-do, I just redid my assessment (see below), though it didn’t change really…

There are online tests for both on the web, which simply identify how your brain works. Not in black&white, there’s gray scale. But dominantly. Generally (according to Myers-Briggs) there are four indicators in the end. Indicators, not “rules”. You are either introverted or extroverted, intuitive or sensing, feeling or thinking, perceptive or judging. I found this understanding very helpful to identify my strength as such and understand that being different, is not a weakness but a different strength.

extro_vs_introvertMany of you know, Yulia is an introvert, where I’m an extrovert. Where it is very easy for me to stand in front of a crowd or meet strangers, this is a real challenge for Yulia. Which is also, why I help her promoting CheckIn.com. That difference in personality is rather easy to grasp. the other differences are more difficult in the beginning.

Intuitive or sensing in a nut shell is about how you gather information. You need to touch them (with your senses) or can you imagine them?
Thinking and feeling are about decision making, being straight-thinking or more intuitive following their “gut feeling”.

Judging and perceptive is not about ruling, but they influence your expression. Where judging types like more that things are clear and settled, perceptive types constantly challenge them.

enfp-aBut then we move on from Myers-Briggs to Keirsey and we step into a different world. In fact, we leave theory behind and come to the practical application. Because the Keirsey Temperament Sorter’s results are observable. Again, there is no black & white, but in many facets certain behavior is dominant. Such as the easily observable extro- vs. introversion.

Before you continue, you might want to do the official test, though that requires (free) registration on Keirsey’s website to get the results. And only the mini-result is free, giving you a general indication (like me, being an idealist “NF”). If you don’t need it for business, I found this a good online source to do the Myers-Briggs test (try to avoid neutral answers), which tells me (again) I’m a “Campaigner”, an ENFP-a. But the strongest, dominating type in me being the extrovert. How surprising ツ And doesn’t that fit with my passion in “Marketing” and challenging the frontiers?

listen_and_learn

What triggered this blog article is a quote by Steven Covey seen on LinkedIn (as so often, not properly referenced to him), which quickly reminded me also of that Peanuts “Great Pumpkin” cartoon by Schulz. Intuitively and being an extrovert, I jumped to it, but at second thought quickly identified it as simply a good example on how extroverts and introverts react to the same extrovert statement. And also, how judging types “believe” strongly in what for them is “settled”, the perceptive types do question the Great Pumpkin. Or Life, the Universe and Everything.

An introvert listens by nature. So Yeats was an extrovert and just expressed the typical extroverts view…

Food for Thought
Comments welcome!

And do me the favor and click on the (new) heart ♥ below the article if you liked it. It’s not linked anywhere but local for me to know the topics that my readers prefer ツ

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Management Salaries

“Our Heads Are Round so our Thoughts Can Change Direction” [Francis Picabia]

The highest paid workers in Silicon Valley are not software engineers … but “project managers”.

Reading this, it reminded me of my own experience, as well as something my dad told me decades ago: “Keep in mind that the people doing the productive work pay for all those supportive jobs.”. Including the bakers, the medical, schools, trainers, … Not talking about all those “managers” that nowadays make a living by explaining how to do things differently.

Source: https://fabiusmaximus.com/2012/09/10/american-military-force-changed-43153/
Source

Growing up with American military, there was a saying that you can’t have more chiefs than Indians. In fact, it’s a clear pyramid with given salary schemes where the general earns more than the private, but in a reasonable amount. At the same time, there were only about four generals and flag officers for each 10,000 uniformed personnel*. Today it’s seven. And they soon have more “admirals” than ships…

CaptainsvsRowerLooking at current structures in the industry, we have too many Chiefs and too little Indians. In fact, I know companies (i.e. consulting) having 10 Chiefs on a single Indian or less. Mostly secretaries, IT support and cleaning staff, often enough outsourced. And we pay the Indians badly and feed the Chiefs. Some figures in Germany make me afraid. In the last years, the numbers of people living of social security despite having a job increased year over year. Yes, they have work. But not enough to live from, they need state support to survive!

The number of retirees needing a side job to survive grew the past years from 15 to 35 percent. That means that one out of three can’t survive of the retirement plan they paid into most of their life?

German Wirtschaftswoche (“Commercial Week”) magazine reported 2015 that top managers make 54 times the salary of an average employee. This is the average. At Volkswagen they made 170 times the salary of their workers, Adidas 100 times. In the U.S., they make in average 273 times the salary of their workers the German Zeit (“time) magazine reported. 30 years ago, top managers made approx. five times that of the average employee. This is about paid managers. It’s a different issue on the owners of the company, but even those usually made about the same income as their top managers and invested the revenue into the company, their employees and reserves. When there was a “crisis”, they had reserves to dig into. Where today the managers fire their workers (same time often increasing their own “salaries”).

“Human Resources”?

automationAt the same time these highly paid managers reduced their personal risk in case of failure by insurances and contractual clauses. But imply that their mega-salaries are because of all the responsibility they have for the company and its employee and their well-being. Whereas the net income of their workers have in reality dropped many years as a result of inflation, tax and social security increases, etc. And not to forget by making “Leiharbeit”, subcontracting labor. That way, the history of working for a company throughout your lifetime became a myth, companies, no, not faceless companies, but company managers are no longer loyal to their workers. And not paying subcontracted labor a surplus for the job risk but paying them mostly even less than their own.

branson_quote_train_people
“Train people well enough so they can leave, treat them well enough so they don’t want to.” [Richard Branson]
My friend Erica was hired for a temporary job with one of the large global players. While they denied her any surplus for the risk of a temporary contract she was asked to not do any side jobs. Similar for me when SITA acquired delair. The same time that they both denied us any job security. Are they crazy? Companies recently start paying minimum wages, adding contract clauses that the workers are not allowed (!) to have a second job. Forcing them to live of state aid, despite a full-time job, often in combination with unpaid overtime. That is reality. Now Erica is happy to leave the bureaucrats, I was quite happy to part ways with SITA (with +400 peers). I prefer smaller companies with less hierarchy but also support and fair pay for the Indians. Recently there’s studies and case studies proving better payment proved to be far better on the motivation of the work force with substantially higher return on the “investment”.

Source: http://jampackedbear.blogspot.de/Another issue on salaries is “variables”. I truly believe a fair base salary and a fair results scheme are motivating. Unfortunately – and I hear that from a lot of friends – the “targets” set are unrealistic. Such you can rarely rely on them. The manager’s goal not being motivation, but cost savings, is also counter productive. Aside, it’s simple greed and also just aside, that’s a mortal sin.

Food for Thought
Comments welcome!

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Ethics in Tourism

“Our Heads Are Round so our Thoughts Can Change Direction” [Francis Picabia]

There is quite a discussion in Germany these days about Tourisms and Ethics, ever since German politician (Klaus Brähmig of Merkel’s governing party CDU) called for a boycott of travel to Egypt and other “non-democratic” countries. It also comes up on Lufthansa’s latest move to not charge a “service fee” on their website.

Shift Happens NarratedAll in all, I am being questioned by many friends about topics, that make me wonder, how you could call Germany “social market economy” and not what it is: Capitalism! But that is not just in Germany, we talk about a global trend. If you believe in Capitalism, the world is good. The rich get richer, the poor get poorer and the middle class erodes one way or the other (likely “the other”).

There was this video in 2006, I referred to ever so often: Shift Happens Narrated. I did not yet find a good update with 2011 figures, but believe it, it get’s worse.

Is capitalism the right answer? Everything that makes money is good? Do we learn from Exxon Valdez, Deep Water Horizon or the recent gas leakage in the North Sea? Obviously not.

MonsantoRecent reports claim that the international hydra Monsanto intentionally spreaded gene-manipulated (GM) corn crops in Mexico – against the law and in attempted secrecy. This way, they try to get a hold on Mexican farmers, who will in return be charged the “license” fees for using GM corn of Monsanto origin! There is no way, the corn could have reached the fields in a natural way, where it was found. Is everything allowed if it brings money?

Lately (2010), a strong movement forced a political acknowledgement to the Human Right to Water! Do you see the little blue planet picture? But people starve to death, simply missing access to clear water! The consumption of bottled water in Germany exploded from 12.5 l in 1970 to about 130 l in 2006! Did you know that multinationals pump water in areas where the local people face a dry period? This happened even in Michigan, USA – it is not limited to third world countries. That is anti-social, unethical and simple capitalism of the worse kind.

And despite the growth of Solar Power and other alternative energy possibilities, our governments build atomic power plants where we don’t know how to get rid of the waste products, they support building of dirty coal power plants, emitting more Carbon-Dioxide than thousands of old cars could, simply dancing to the whistles of the energy lobbies. They let Greece go into a major crisis, simply to give the banks time, to move their foul papers to the state. Don’t believe it? There is extensive German coverage on Monitor, a bi-weekly report by public television channel ARD in it’s dossiers.

All that said… What about the travel industry?

wigMany years ago, there was a question about the difference of a Tourist to a Terrorist. With tourists, there are no bombs involved, but the results are even more devastating… Yes, this is exaggerating. But thousands of divers ruin the coral reefs around the world. Thousands of tourists skiing the alps (or Rocky Mountains) have a devastating effect to that natural preserve. Aircraft exhausts are in high altitude, having a worse effect than ground time. But even back in 2007/08, when I was involved in the feasibility study for a WIG, all development I hear about is “less kerosene”, bio-fuels replacing kerosene (with unknown new side-effects), but that project stalled with the world financial crisis and seems to be of a low priority. Coutries like the Maldives could replace their entire local aircraft fleet and replace by a clean alternative.

I hear a lot about the “reduced noice levels” of aircraft, but in the discussion about the night flight ban in Frankfurt, I asked publicly, where there are hard facts about this? How did the noise levels reduce and why are the airports then paying new millions every year in counter-noise-modifications in their neighborhood?

Many meetings could be replaced by professional video conferencing, but our managers keep the “need” to meet for their routine meetings “in person”. Trains focus on high speed route networks in competition to air (and that makes sense), at the same time neglecting the local traffic – how to commute from a small township to the bigger town for work?

Yes, I love aviation, I am an airliner by vocation. But yes, I have a soul and yes, I question the tendency to keep status quos without need. The feasibility study provided figures that such a solution would pay off within maximum three years, then it’s a cash cow. It could revive the old harbor cities (the ones on the seaside). But such revolutionary developments are opposed by the “old school”, all the investment going into the airport infrastructure.

Responsibility begins with each and everyone of us. We are supposed to be Christian’s, but Christian behavior would call for social behavior and I cannot see such. The question is: Where will we be in 100 years? Watch the “Shift Happens” video again:

flat-earthName this country

Richest in the World. Largest military. Center of world business and finance. Strongest education system. World center of innovation and invention. Currency the world standard of value. Highest standard of living.

… England … In 1900!

How did travel develop in the past 100 years. People traveled by ships, horse carriage and some railroad systems. Just a 100 years ago, Titanic sunk. Today it takes less than six hours to travel from Frankfurt to Boston. In the 60’s, American Airlines and IBM invented Sabre and revolutionized the distribution of airline seats. I was with American, when they started to provide Sabre terminals to the first travel agencies in Germany – which have already gained experience with the START-system, accessing the Lufthansa “Res”-system through a pre-windows environment! In 1996, as the “GDS Coordinator” I was primary element for the development of the first Internet Booking Engine for business travel (air, hotel, car). We had “e-Mail” (called “SITA-Telex”) in the late 80’s, no one spoke about “Internet” then. But I also introduced the “Internet” and the new “World Wide Web” to the Airline Sales Representatives Association back in 1994, recommending i.e. Continental Airlines to register their domain name for a few bucks quickly. They sure ignored my recommendation and for years used “www.flycontinental.com” instead.

GalileoCRSIs that “you”?

What is our business? Is it to manage a GDS? Many travel agents (seem to) believe so. Then we are database operators. AN20MAYFRAHKT18 – that is a database request. Is your business to issue tickets? Then you are no longer needed, as eTicket is the new standard.

What was “your business” 100 years ago? It was not to book the air ticket and the hotel. It was a complete consulting, how to get Grammy from her home in Middlesex to Aunt Cathy, who emigrated with her husband to this new colony Swaziland in the South of Africa. Could she use some of the new airplane-routes? Where could she use trains? Where were carriage routes? What vaccinations would she need, where would she stay overnight, what could she do on the multi-day-stops en-route?
Or you booked the summer seaside. If you lived in England, you were lucky, you could book one of the “packages” offered by some “Thomas Cook”. Else, you had to read a lot about the “common” spas, recommend and explain you client the advantages, book the trip, the hotel, the treatments.

And yes, it was expected from you to be knowledgeable about the countries, their political, cultural, economical and social systems. If you traveled to an Islamic country, what are the rules? Why to be careful and patient about cows in India. And to know that India was British colony. Sometimes I wonder, how many of the people selling “Seidenstraße” ever learned some detail about Marco Polo. Venice, Genoa have been the center of the world those days – the “seafaring nations”. Frankfurt, London, Atlanta, Peking are the centers today – of the “airfaring” world. What are “nations” in a globalizing world? But U.N. is a toothless tiger. Lybia, Tunesia and Egypt were (as Kuwait) some years ago immediately targets of military – for the sake of crude oil. But in Syria thousands are slaughtered, but they are not a capitalist necessity, so the world looks and doesn’t do.

Ethical DilemmaAn old saying says: Don’t talk about ethics to a hungry man!

Ethics begins with myself. Do I fly or drive – or do I take a train? Is the trip necessary? Can I achieve the same outcome with a video-conference and e-Mail? It is also about: Is this to the best of my employer – or do I justify the trip, simply because I want to see someone – or get somewhere. And it is about: Can I help to make this world a better place?

Yes, companies are about making money. But if only money rules, we adore the Golden Calf again. How un-Christian can we get? Talk to me about Ethics in Tourism. Yes, we got to survive. But at all cost?

The travel industry prospers, but for some reason, the employees do not participate. It’s all about money. Is it?

 

Food For Thought

And as usual, your comments – private or in the blog – are appreciated…

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Crisis? What Crisis?

“Our Heads Are Round so our Thoughts Can Change Direction” [Francis Picabia]

crisis-dtvGerman Tourism Association DTV reports a record year in German Tourism1, German Airport Association ADV reports a passenger record2 – the same news reaches us from all over the world… Crisis? What Crisis?

Airplus3 and American Express4 published their outlook for 2012, expecting a stable market, more meetings, but increasing cost for air and accomodation… Crisis? What Crisis?

airbusboeingordersAirbus Industry reports a record order backlog, with the Airbus 320-family (mostly 319+320) being the most demanded aircraft in the  world today… Crisis? What Crisis?

Yes, what crisis? The average income of a senior manager in the “Fortune 500” across the world has multiplied in the past five years (at least doubled), at the same time, the average income of a worker in the same company has decreased (thanks to inflation and loss of monetary value)… My tone now becoming sarcastic: Crisis? What Crisis?

Throughout the world, increasing natural disasters are reported to be a result of Global Warming. But our politicians cannot agree on counter measures. The EU Emission Certificate Trading is challenged by the main emitting countries, namely China, the U.S., but also Russia… Crisis? What Crisis?

crisis-greeceThe Greece Prime Minister informed the EU years ago about the inevitable bankruptcy.  The politicians avoided that at all cost, their delay tactics gave the banks the opportunity to move all risk from the banks to the tax payers. Thank you Mr. Ackermann, thank you Mrs. Merkel! Thanks to such “politics”, no longer the banks are “challenged”, but the European states are! This is no “sitting it out” of our representatives of state, but I call it criminally corrupt! Crisis? What Chrisis?

The U.S., it’s currency being the lead world currency, is brought close to a bankruptcy in itself, thanks to the Republican “opposition”. How stupid can such a (Republican) “representative of state” be?
But: The German Minister is caught having copied his doctorate work – “Guttenplag” has been a nominee for the word of the year. Our Federal President is being caught taking credit and other benefits (free flights or holidays) from industry managers. And while corruption is forbidden and you can go to jail for it, lobbying invests record amounts last year – securing the politicians to vote in their favor. And not just our former Chancellor Schröder is safely and well paid employed by an industry, he secured long-term deals and commitments with during his state of power… Bunga-Bunga! Crisis? What Crisis?

Russia is corrupt? At least you know that! The Arab Spring is in danger to become a barrel burst in Egypt? Global Warming is no issue, but the tourism industry is the milk cow to the politicians (whereas in the Middle East they are a factor to support commercial development). Crisis? What Crisis?

I tell you what crisis we have:bankspoliticos

The Bank Crisis: The banks are the real power in governments.

The Political Crisis: Our politicians do not represent the people, nor any strategies or ideas: They simply represent the lobbies that pay them fortunes and do everything to keep in power, not to loose these honey pots!

bierdeckel-taxIf they would have any “strategy”, they would make the beer-tab-tax-report a reality and safe millions of Euro in tax administrative cost. They would make travel and tourism a strategy. They would seek minimum wages and support future development like solar industry – and not add tax burdens on them. As they would support families, enabling them to combine business and family – and have day care for the children (something I found painfully amiss myself last year!)

Crisis? What Crisis?

Food For Thought…


Sources:
1 FVW | 2 FVW | 3 FVW | 4 FVW
ARD Monitor Dossiers

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