Jul
30
O’Leary tap dances the recession
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Love him or hate him our Michael is thriving. Those that slim down, cut costs and innovate survive recessions and emerge fit to fight with the field clear of cowboys and fly by nights. That’s the theory at least and O’Leary is clearly a believer.
‘Old model’ carriers are struggling to survive the vanishing of their premium cabin customers with their staff used to feeding on the the pickings from the glory days. Cargo is predictable having the same problems under the squeeze. Lufthansa, KLM, Air France and the rest are in pain and suffering potentially crippling losses. Will they come back? Perhaps but not in the way they have done before is what the realists are saying, the pessimists are planning a wake.
BA is restructuring its offering to its short haul customers, not quite following the spartan low cost model but removing meal services is a start I suppose. Was there ever any logic in feeding people a meal on a flight lasting less than a couple of hours? Well if you follow the full service ethic I suppose there is but … they don’t want to pay for that so why provide it? Airline catering costs a fortune to get through the service door so why bother? Save the money, pass on the benefit and pressurise the catering companies. O’Leary understands …
He also grasps that the point of maximum uncertainty is the time to cut the best deals with aircraft manufacturers and service providers. Risky of course but as the economists say, “We always come out of recession in the end.” Michael is gambling on when and fortune favors the brave.
The French Foreign Legion used to say, “March or Die.” Airline bosses are applying the same stark but essential message to change. Still, few Unions are listening.
Like The Leaning Tower of Pisa and its little problem with inclination, is there a theoretical point at which no amount of money, effort or energy will stop a company failing? The banks don’t think so and demonstrably they are right, but then they already have our money. Remember the businessman in the dentists chair? He grabs the dentist by the nuts and says, “we aren’t going to hurt each other now, are we?” Airlines don’t have that exquisite position or grip.
What an interesting year 2010 is going to be, always assuming of course we are all there to welcome it.