Last week, I wrote an article for CNBC, which talked about the agility of Qantas that keeps the airline in profitable territory. The article resulted in a lively debate with a number of Aussie aviation experts down under, and one of them kindly offered to write a detailed Guest Post on SimpliFlying on how it’s actually Jetstar that’s keeping Qantas afloat.

Grant McHerron (aka Falcon124) is an opinionated aviation enthusiast & co-host of Plane Crazy Down Under, Australia’s only aviation podcast. He is an online/digital project manager and perpetual student pilot who can often be found crewing hot air balloons, working airside at Avalon Airshow and plane spotting at airports around the world. He graciousouly hosted me when I visited Melbourne last year, and we almost watched the sunrise in his hot-air balloon Enjoy!

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The latest half-yearly results from QANTAS continue to show an airline that is hemorrhaging cash on its mainline, full service routes. While QANTAS are certainly showing signs of agility, the primary factor keeping the group afloat is the success of their Low Cost Carrier brand Jetstar.
The creation of Jetstar
Towards the end of the 1990’s, QANTAS saw …

This article was first published on the CNBC blog———-Qantas announced today a net profit after tax of A$58 million for the first half of the financial year, down from $210 million a year earlier, although the airline did recover from a loss in the second-half of last financial year. This 72% dip in profits resulted in the shares falling by up to 7.2% in early morning trades. However, Alan Joyce, the CEO, says the carrier has done better than most of its rivals. And it has, indeed, thanks to its agility.Agility through smart cost-cuttingAlthough revenues dipped by 13.4%, costs were slashed by 16.2%, which shows Qantas’ diligence and discipline in reducing expenditure in the past year. The cutting of frequencies to unpopular routes and grounding of older aircrafts was key to these cost savings.Load-factors have been the highest in five years – at 82.4%, on flights that carried a lesser number of total passengers as compared to the past year.This simply means that flights were more full than in the past, despite the recession. Of course, the downside was that this was achieved by …

At the Aviation Outlook Summit in Sydney early this month, where I delivered a keynote on airlines + social media branding, the first day was mostly doom and gloom whereas the second day was much more up-beat. Not surprisingly, executives from legacy carriers like Qantas, Air New Zealand and the European Commission spoke on the first day, and up-beat executives from rising stars like AirAsia X, Oman Air and Gold Coast Airport spoke on the second day. That got me thinking…are legacy airlines dead? I now believe they are. Here’s why.
1. Legacy airline brands come with legacy baggage
Unions, legacy systems, government bureaucracy, old planes, old workforce, high costs, bankruptcy… these are all words that can be easily associated with Air India, Alitalia, Japan Airlines, Air Canada and many more legacy airlines. And these are all aspects that do not allow these airlines to function efficiently in the current climate.

The airline industry has evolved drastically in the past decade. With each new shock (9/11, SARS, H1N1…) we see new stars emerging, which have streamlined costs, efficient operations and specifically targeted markets they go after. And they beat the hell out of monolithic airlines that legacy carriers have become. Just read …

Dear SimpliFliers,

As most of you are aware, a couple of weeks back, I delivered an expert address in Miami, Florida at the Low Cost Carriers Americas Summit, at the intersections of three topics – airline branding + social media + budget airlines. My ideas were very well received by the audience of key executives from LCCs in North America and South America. And I thought I’d share a video recording of my speech with all of you as well.

I’m keen to hear your feedback on my ideas, whether you find them feasible and how we can help airlines adopt these well. You may go through just the slides here.

Regards,
Shashank

This is a guest post by Rob Mark from Jetwhine.com in Chicago. We’ve decided to begin a little cross-posting here at SimpliFlying and at Jetwhine.

A commercial pilot and journalist, Rob has been writing Jetwhine as the blog of “aviation buzz and bold opinion,” for two and a half years. His posts are never dull because you never need to try to figure out where he and his co-writer Scott Spangler stand on an issue. Enjoy.

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For as long as I can remember, Southwest Airlines, now the largest U.S. domestic airline, created in the 1970s by Herb Kelleher and Rollin King, has been the low-cost airline others most want to emulate. The need to copy isn’t just about money, although Southwest has a profit history better than any other airline in the world. Most Southwest look-a-likes have, in fact, been dismal failures.

Southwest has a record of solid labor relations – despite last week’s pilot contract rejection – and a culture of customer fun in an industry that most others have never been able to duplicate. Southwest simply delivers a solid, consistent service at a …

Over the past year, I’ve had the opportunity of interviewing a number of senior airline executives. Here’s one with the CEO of SpiceJet, Sanjay Aggarwal, recorded in Dec 2008, which left me mesmerized by the man’s wisdom, simplicity and frankness. These are qualities difficult to find in an airline CEO these days – and he puts them to good use too – running one of India’s most successful airlines.
Making SpiceJet one of India’s best airlines
In his interview, Sanjay reveals a number of gems that have made SpiceJet so successful. His clarity of thought is evident in this sentence:
“We want to focus on what we do well, and we will do it better than anyone else out there – which is to provide a quality, safe, clean and reliable transportation.”
Lessons from Marriott
Having worked at Marriott, Sanjay sums up its philosophy as to take care if its people, and ultimately they’ll keep the customer happy. And with 150,000 employees, they still maintain their culture. And this is the culture Sanjay is trying to re-create at SpiceJet, by “finding the right people and motivating them to deliver an unmatched in-flight experience”.

I’ll let you enjoy the succint interview. Please feel …

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Recently, the Centre for Asia-Pacific Aviation (CAPA) published a report which concluded that the “full-service airline model break down in the new-world order“.

“Worldwide, the number of passengers travelling on First or Business class tickets fell by 16.7% in Jan-2009, a further substantial fall from Dec-2008 levels, which were 13.3% down on the year.”

That means that legacy airlines, which made a majority of their money from premium passengers, are struggling, even as low-cost carriers see greater traffic from people downgrading and new people taking to the skies.
What does the future full service airline model look like?
Here’s my prediction.
It will consist of airlines charging for providing value added services, rather than those un-bundling their products. Moreover, customer service will become a key brand distinction for the full-service airline, as prices would generally be competitive and so would most of the in-flight products too. The savvy traveler of the future will not only hunt the lowest prices, but be loyal to the airline that treats him well. Lastly and most importantly, employees of the full service airline will be part of the family, and share the love with customers at every touch point too (up to 16 …

Continuing with the ancillary revenues special this March, I’d like to explore the issue whether ancillary revenues are good for the airline brand, or detrimental. We all know they’re good for the balance sheet, but what about the brand? To answer this question, let me segment ancillary revenues in two bands – charging for value addition, and un-bundling current product and services.
Charging the passenger for value-addition
A comment on the hotly debated article I wrote on RyanAir’s competition for charging passengers got me thinking. Here’s what Shyrose had to say:
“RyanAir should link up with the local taxi companies of the detination airports and agree a deal with them, whereby flyers can book their taxi on the plane so it’s ready and waiting for them the other side. Taxi companies give Ryannair a referral fee, and Ryanair will be positioned as offering greater value service for customers.”
And I think Shyrose is bang-on-target. Customers don’t mind paying for additional services they value. And this is especially true when the offer is in-sync with the brand expectation. There are ample examples of such value addition. Travel insurance and car rental are popular ones. The intelligent …

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[caption id="" align="alignright" width="320" caption="Source: RyanAir"][/caption]

It seems like RyanAir folks read SimpliFlying! Just when we’re having an ancillary revenues special this month, they’re giving us all the fodder to write about!

The airline has launched a competition where anyone in Europe can suggest ideas by email to competition@ryanair.com on how RyanAir can make more money off their customers! The best idea wins €1,000.

Some of the wackiest ideas are already stated on RyanAir’s website:

Charging for toilet paper – with O’Leary’s face on it,
Charging €2.50 to read the safety cards,
Charging €1 to use oxygen masks,
Charging €25 to use the emergency exit,
Charging €50 for bikini clad Cabin Crew.

An airline which laughs at itself
These days, companies, especially large, international ones that dare to laugh at themselves are a rarity. And an airline that can do that earns my respect. Others in those ranks? I’d say Southwest, JetBlue, Virgin America, Kulula.com, Indigo and AirAsia. Ironically, no legacy carriers made to this list. Do you know of any more?
A “cheap”, but authentic brand
Alright, many of you woul classify this RyanAir move as “cheap”. But isn’t RyanAir a cheap airline for the …

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Ancillary revenues – money an airline makes from things other than the asirfare – have always proven to be attractive profit centers for airlines. But very often, they tend to be random, with airline executives making their decisions based on how much money the source brings to the airline, rather than anything else. Moreover, ancillary revenue streams are often garnered from outside the cabin, like having special offers on the website or charging a fee for baggage check in.

But as I mentioned in my white paper on airline branding, Brand eXperience is one of the most important factors affecting the brand perception and the time spent in the plane forms the most important part of the eXperience. According to recent research, the most important factor determining the in-flight experience is not service or in-flight entertainment, but the person you’re sitting beside! 80% of passengers feel their seat neighbor’s bahaviour influences their overall flight satisfaction. And there lies the opportunity.
Bring in Satisfly – to optimize your seating in the plane
A friend of mine, Sergio Mello, has started up a company called SATISFLY, which solves …