Rob Britton OPINION
Our industry, plural Rob Britton explores the fundamental differences between airlines worldwide
I have often been a guest lecturer on airline topics at business schools worldwide and explaining a complex and changing business – and one that fascinates most people – has long been a passion. Students ask a lot of questions, and one of the most common is: “Why can’t [an airline in the country where I’m lecturing] be more like [an airline from somewhere in Asia]? My answer has been constant for a long time and begins: “If we look at the world as a whole, there is no airline industry, singular, but a collection of airline industries, plural. Comparing airline X, here, to airline Y on the other side of the globe, is difficult, like apples and oranges. Over the century of their existence, airlines worldwide have evolved differently. In this column, I’ll explain why it’s important for industry stakeholders, and not just students, to understand this distinction. Meaningful distinctions turn on three
factors. First, the nature of ownership: government, private, or in-between. Companies with shareholders behave differently to those under state control. Although the trend in the past 30-40 years has been to privatise, many airlines are still beholden to government. Second, and partly related, is the
regulatory regime. In the early decades, virtually no airline, private or state- owned, was free to compete in an open marketplace typical of other industries. The trend for nearly 40 years has been to open domestic markets to competitive forces, and for 25 years to remove limitations from international markets. This has been the main cause of opportunity and of pain, the latter for stakeholders who grew used to a business protected from market forces. Third, airlines reflect national culture, which in turn may be codified in law. A perfect example of why this matters can be seen in cabin crews: in some places,
the job has become a long-term career, and in others it’s either not customary or perfectly legal to fire a flight attendant if she (and it’s usually ‘she’) is older than 35. Suppliers need to understand these fundamental differences because they deeply affect the way their airline prospects and customers make decisions. State-owned carriers buy differently than thin-margin airlines in North America. And there are many other impacts. Customers are another key group that need to know, and here’s where it gets difficult, because they are not interested in industry structure. But in markets where highly varied airlines compete with each other, consumer decision-making is becoming more nuanced. Does a traveller want to do business with an airline that practices age discrimination? These are complex issues but be aware, they are becoming more pronounced.
rob.britton@
airlearn.net
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