According to IATA General Secretary Giovanni Bisignani, aviation warns of a decline in global aviation. But is that reasonable? Yes, global economy suffers. But look at the global maps and you will find a clear relation between airport and decent aviation and the size of cities. Aviation is a key motivator for business, but the travel industry suffers from a major inferiority complex:
Travel Agents: Any financial consultant who at the end of the year gets you €1,000 interest a year will be decently paid, but the consultant where you spend €5,000 for a vacation shall work for free?
Airlines: Global economy needs aviation. But thanks to price dumping (and not only since “low cost”), airlines operate for years at the edge of commercial harakiri.
In December, I was asked by an airline manager, what I would change in the airline industry if I’d have a chance. What I mentioned, many of you heard from me before again and again: Remove the price tag from the tickets!No other industry in the world provides the information about the price the seller pays for the product. Or you would not buy a car or even a yoghurt without arguing with the cashier about a discount! This is a relic from the decades when airline tickets were decently priced and the travel agent truly was an agent, receiving 9% commission. At the time, many agencies cross-financed other business with their airline sales. An Economy Class ticket for €2,000 at 9% was a nice deal… The hotels, at the time frequently not paying the commission were “negligible”. That’s “the good old days”! Gone.
But if the travel “agent”, or better the travel consultant sells today, they get no commission. Then why do the airlines show the price? It is totally outdated thinking that must be addressed.
The second thought I had in mind I mentioned last week: Airline sales is “suddenly” en vogue again. The managers promoting sales-free and sales-independent “self service” and “internet” without a strategy find themselves the most hit by the financial crisis and the recessive commerce. Because cheap flights sell themselves, but they are also the most vulnerable. Selling a product is a question about long-term relation. So better have or build a sales team with a personal reputation in their market. As they represent you.
This blog-post has been prepared, as are the next ones the next two weeks. I decided to go for an adventure trip to Russia. And no, not to Moscow or Saint Petersburg, but into the country.
The region I visit is addressing international markets but lacks a decent airline connection. In fact, there is one. But being expert for aviation distribution, I was simply unable to book the flight and have to travel from Moscow more than 12 hours by train. The flights I intended to fly out of Germany on were just cancelled on short notice. So I had to adjust my plans and that involved to stick within the schedule. Ad hoc changing the visa due to a flight cancellation? No way! Booking an affordable flight to Moscow? Nonrefundable. So I had to wait for the visa to be issued before I could book. Hotel? More expensive than in Berlin. So the entire trip turned out to be a preplanning nightmare and a bureaucratic Ironman challenge.
If I would like to do business there? There is a lot to be done and I work on a study to give them the look from the outside.
Thanks to exceptionally motivated people in the German Foreign Chamber of Commerce in Moscow, Olga Bleykhman, being a member of the Russian Marketing Guild in St. Petersburg, who became quickly a very close and valuable friend, Alla my personal translator in Magdeburg and long year friends such as Heinz, Richard or Mike, to mention some, I have been able to compile quite a detailed study, I am now trying to complete “on site”.
I will report upon return!
Is low cost at its end? Lately Ryanair sued a German tour operator for combining Ryanair product with hotel, etc. for a travel package. Concern was posted, if that was an intelligent move, though I did reply that it was in line with O’Leary’s public known strategy.
But now Ryanair grounds aircraft, stating it would be more expensive to fly them. Just two years ago, talking about the need to turn around aircraft faster, O’Leary assaulted all other airlines, stating an aircraft needs to fly, time on the ground loosing the company”s money. 180° turn…
Ryan Air now tests “hand luggage only”. That’s a niche of the niche. With a body diameter of about 3,6m and no cargo hold, how about a “Mini-A380”-design with two levels, adding passenger capacity in what was the cargo hold? “Sub-Economy”? Who needs seats? I used the above image in this year”s ASRA-presentation, I didn”t know, how advanced my thinking was.
Now Ryanair reports an 85% drop in net results for the first quarter, a net loss of 60 Mio. Euro being a serious possibility. Just two weeks ago, I just mentioned the joke here about the guy purchasing the screws for 1 $/€, selling it for 99c. No Mr. O”Leary, selling your seats for 99c does not improve your revenue…