What strategy can do for an airline?
In my long career in the aviation industry, I am frequently asked to solve aviation related challenges.
One such challenge is related to the importance of strategy.
Why is Strategy fundamental for the success and sustainability for Airlines?
Well, from the first glance it might seem to be just a theory, more paper-work, more useless discussion.
So is it just another meaningless job in our very busy lives? Does it bring any value? And importantly, why do we sometimes choose to bring in an outside team to assist us with achieving our strategic goals.
Our statistics show that most of the problems within an Airline operation stem from a lack of understanding within the company of the senior management’s long-term goals and intended direction for growth…its strategy.
As a consequence, staff often lack a united approach to their tasks, which often gives birth to misunderstanding, and the waste of time and money. Often as a result, departments work on their own, with people struggling to respond to new problems. This lack of a central goal, this lack of mission and vision statements, result in a misalignment of an airline’s development strategy.
Frequently, the central goal of an aviation company is to obtain funds, increase income, double profit, etc. However, the challenge is to do it continuously while still delivering safe and secure services. Today and in the future, airlines will be under unprecedented pressure to produce economic results or perish, all the while fuel, labor, and asset costs escalate. In some cases, profitable and sustainable operations are threatened with declining demands, stagnating economies, labor strikes, natural disasters, and currency crisis.
Studies show that airlines which employed a narrowly focused short-term strategy often struggle to produce a return of investment that will exceed their capital costs.
Airlines which aim to achieve outstanding performance, create and sustain competitive advantage need to implement a long- term, flexible and effective strategy based on fluctuation of the external environment, and the demands of market. Companies need to understand what changes are going to affect the operation, all the while planning for changing political, social or technological environments. Success depends upon companies understanding, adapting and responding to those changes.
Companies must constantly search for opportunities for growth and for sustained profitability. They must be pro-active in identifying and responding properly to risks. The airlines that don’t follow this simple rule often struggle and then finally disappear from the business landscape.
Even successful airlines need to realize that what made them successful yesterday may not make them successful tomorrow. It is increasingly important to understand what trends will impact our business and our industry, and how they will impact us and how we must respond to them. It is crucial that during strategy formation, we consider what can affect us and our business, both short term and long term.
For example, several macro-level socio-economic factors such as the rising oil prices, the economic crisis, the outbreak of epidemic diseases, natural disasters, and rising terrorism impact profitability adversely.
An Airline’s strategy and competitiveness, and in particular its organizational competencies, need to support the delivery of service excellence in a cost-effective manner. This includes operational configuration and functional strategies, such as the human resource development and internal innovation processes.
Strategy leads to the creation of specific goals. What needs to have clarification is: how much of something is needed, how long will it take to get it. Also, what steps have to be taken to obtain it and most importantly, how to ensure these goals are realistic. And all the while, taking into consideration existing resources, external challenges and risks.
By creating good strategy, an Airline can configure its operations and internal processes to develop the core competency of cost-effective service excellence, achieve sustainable competitive advantage and outperform other airlines in its peer group for decades.
Well defined Strategy helps Airlines better design themselves, so that they are focusing on the right things that will deliver the best performance, productivity and profit both now and in the future.
In anticipation of an economic rebound and industry growth, airlines need to start shifting their strategies by seeking innovation, seeking new service opportunities and designing new business models.
In future success of an airline will be decided, in part, by its ability to motivate employees, to harness emerging technologies and deliver superior customer experience. An airline brand depends on delivery, and delivery is about employees who need to be encouraged to have positive attitude and enjoy when they deliver customer service. The training is very important for employees to embrace organization values, its corporate’s vision, and fully understand their mission and the corporate strategy.
So create or review and update your strategy now!
Here is sample solution for beginners:
Gather staff, friends, supporters, or everyone who might be helpful in giving a word of advice;
Start discussing with them and most importantly asks questions, respond to questions;
Discuss core values what will support the vision, plan how to shape the culture in order to reflect the company values;
Tell others in your sphere, your opinion, encourage discussion;
Try to understand the challenges associated with putting into place an airline strategy;
Ensure that afterwards you have these answers: what do you want, how much do you want to achieve, and by when;
List your existing resources. Please note that a lack of money does not mean that you are lacking resources. You may have friends and colleagues who are capable to market your initiatives through word of mouth, social channels, any number of free webs, or even announcement pages. Just list all of them and start creating an action plan with dates included;
Set a goal and small targets to that goal with existing resources and time-schedule;
And do it today.
I wish you success.