I had an interesting dream a few nights ago. It was the year 2018, and I was coming back to Dallas from a business trip. My flight arrived on time, and the pilot remarked proudly but humbly that this arrival wasn’t unusual, that his airline had the best on-time performance in the industry. The in-flight magazine had an article about how they had just completed seven straight years of a perfect safety record and experienced 20 consecutive quarters of growth in year-over-year Revenue per Available Seat Kilometer (ASK). As I exited the plane, I overheard the flight attendants talking excitedly about their recent award for the highest-rated customer service in the industry. Throughout my entire experience, I was struck by the happy, purposeful and energetic attitude of every employee. And I thought to myself, “Wow, this really is the best airline in the world!”
What does it mean to be “the best airline in the world” anyway? When I think of that phrase, I think of eight key factors. If an airline does not excel in each of these factors, then it cannot claim to be the best:
- Safety: With passengers’ lives at stake, an airline has an obligation to do all it can to protect its customers. The best airlines in the world accept this duty and have implemented world-class safety programs.
- Customer service: Customer service comprises many things, including friendly customer-facing staff, focused on serving the customer; airline staff who anticipate customer needs and have excellent attention to detail; relatively few customer service problems (e.g., lost bags, misconnected flights), and when problems do occur they are resolved quickly; and customer data that’s readily available for providing service.
- Product: Airline products are generally separated into two categories, “hard” product and “soft” product, with the primary distinction between them being the ease of making changes to the product. So, examples of hard product include the aircraft itself, seat configuration, in-flight entertainment hardware, gate, lounge and ticket counter facilities. Soft product is regarded as food, drinks, in-flight amenities, in-flight entertainment software, cabin and gate area cleanliness, and boarding procedures. The world’s best airlines provide both hard and soft products that their customers are willing to pay for.
- Value: Value is the relationship between the quality of a product or service compared with the price customers pay for receiving it. The world’s best airlines provide their customers with value – basically charging a price that is lower than what customers are willing to pay and thus generating significant loyalty – while also extracting a significant revenue premium over their competitors.
- On-time performance: An airline’s record of on-time performance has a direct impact on its ability to generate revenue, control costs and provide customer service. The world’s best airlines have an excellent record of on-time performance, although it can also be said that they are prudent about expenses necessary to achieve that record (e.g., block time policies, number of spare aircraft, etc.).
- Financially strong and sustainable: The world’s best airlines maintain a consistent history of strong and sustainable earnings by developing a profitable route network, adopting lead pricing and revenue management policies, and by controlling costs in a responsible and innovative way.
- Distribution flexibility: The world’s best airlines optimize the use of all distribution channels such as GDSs, airline.com, online travel agencies (OTAs), Google searches, and various partners, as well as tour, agency, corporate and group direct sites. Optimizing all distribution channels makes it easier for an airline’s customers to find them (properly displayed), choose them, and pay for them with multiple payment methods supported.
- Innovation: The world’s best airlines use innovation as a strategic weapon. They have built a culture of innovation so that they can stay ahead of the competition and satisfy the changing demands of their customers.
But…is it worth it financially to be the best airline? Let me answer that question this way. Perhaps you have heard of Edwards Deming, an expert on statistical process control who is most famous for his work with Japanese companies in the 1940s and 1950s.
Dr. Deming strongly believed that a total focus on quality and continuous improvement – that is, consistently delivering the expected product or service – was the best way for companies to succeed in the long-term. He noticed that a company’s focus on quality led to both lower costs and customer loyalty, and that in turn led to increased revenues. It sounds very Zen-like, that the best way to increase your profitability in the long-term is to focus on something else, such as quality. But it works.
I believe the same effect is true for airlines. A focus on being the best airline will also have the important side effect of increasing profitability. Notice that the airlines usually considered to be best, tend to have a history of generating strong earnings. They also tend to have happy, satisfied staff who are energized by the sense of mission concerning being the best. People want to believe in something important, something larger than themselves, and they naturally follow a management team courageous enough to state that the goal is being the best.
How does an airline become the best? I believe there are three key ingredients required for an airline to transform itself from being very good to the best.
- Management leadership: Any individual or company wishing to be the best requires a vision and a plan. Questions to ask are: What does the end of our journey look like? What does being the best really mean? How will we get there? Who will do each piece of work? The commitment to being best also requires the ability to inspire a large team toward a common purpose. Management must provide this inspiration.
- Staff: The transformation from being a very good airline to being the best airline in the world requires highly educated, hard-working, highly motivated staff focused on customer service. The nature of the airline business – involving significant amounts of customer contact – requires strong customer-facing staff. The pace of innovation required means staff must be knowledgeable, intellectually curious, and motivated to find improvements. Without sufficient quality of human resources, it’s impossible to become “best” in any sense.
- Technology: Technology is the one great differentiator in the airline business. Airlines can buy similar aircraft, adopt similar rules and procedures, operate in the same routes and cities, but technology can provide the difference in elevating an airline to being the best. Building a world-class technology infrastructure isn’t just a matter of buying certain third-party systems. It also depends on how the airline customizes those systems and builds its own proprietary, strategic systems around those third-party systems. Building and implementing the right technology – data, network, applications and infrastructure – is the way airlines can excel on safety, customer service, product, value, on-time performance, financial performance, distribution and innovation.
Do you think you have what it takes to be the best?