Tag Archives: PROFIT

Air Travel – A Business Model to Behold

Airplane! Need I say more?

Airplane!
Need I say more?

You’ve got to hand it to the airline industry. Their business model must be the envy of every other industry.

  1. No one likes to travel by airline. It is an trial to be endured. You may want to get to Vail or Orlando but the getting there via airline is not any part of the fun. Whenever there is an alternative, most people choose to avoid commercial flight. Unfortunately busses take forever, trains are unreliable and expensive and there’s a limit to how far the average person will drive.
  2. You can’t get there from here—not directly anyway. You have to stop at one or more additional airports, each of which gets landing fees, gate fees, profit and taxes from fuel sales, etc.
  3. Customer service is so abysmal that one might well consider it customer abuse. No leg room—let’s pack seats closer together. Boarding, which according to queuing theory could be handled significantly better, continues to be handled in a manner markedly worse than animals entering a slaughter house. During the flight, cabin attendants hawk the benefits of signing up for the airline’s very own Visa or MasterCard to a captive audience. “Get more points so we can abuse you more often!”
  4. Customers have been trained to accept additional charges for anything and everything. Check a bag? Twenty dollars. Check a second bag? Thirty-five dollars. Want to sit with your spouse and kids? Better dig out the gold credit card.
  5. Of course, the airports and the shops in the airports have jumped on THIS bandwagon. Parking fees are such that buying a beat up car and abandoning it at the airport is cheaper than paying for parking. Then, of course, there is the magnitude increase of prices for sodas, and food prices that Manhattan restaurants can only dream about. (In the Charlotte airport—a major connection hub—there is even an attendant in the men’s restroom with not one, but TWO Plexiglas tip receptacles [complete with padlocks]. I confess, he was entertaining enough, but aren’t airport restrooms supposed to be seedy places where members of congress seek out casual sex?)
  6. Fuel prices have been dropping, but ticket prices haven’t budged, even though they went up when fuel cost more. Why? The planes are full, so there’s no incentive to lower prices. (More customers? We don’t need no more stinking customers!)

Airlines have complained of being unprofitable for many years, but there’s unprofitable as in “Ohmigod we can’t pay our bills,” and then there’s unprofitable as in, “The accountants have figured out how to juggle the numbers even better. (Those of you who live near airline corporate headquarters—have you ever seen a rusted-out five year old compact car routinely parked in the CEO’s reserved parking spot? Didn’t think so.)

“Please remain seated until the aircraft has come to a complete stop—at which time we’ll sit here for a few more minutes before opening the aircraft door—Why? BECAUSE WE CAN! We know you have a choice in airlines, but we’re buying each other as fast as possible to eliminate choice as the last tiny vestige of human dignity. You can attempt to retrieve your baggage, or what’s left of it after we’ve kicked, dropped, crushed and perused the contents of it on the lower level. (We get some really neat stuff this way—as well as finding out some of your more embarrassing secrets). Some of you may be lucky, while the rest of you will have to make the 120 mile drive back to the airport tomorrow because after standing in line for three hours it made your luggage check in late. In any case, just like your luggage, your dignity has been shredded beyond recognition.

Maybe their motto should be, “We love to abuse, and it shows.”

 

Profit or Loss?

My education is in business, an interesting field, but not necessarily for good reasons.

Simple business is when you find something that people want, build or buy it, add in your other costs (rent for your store, salaries, etc.), and determine a selling price. In an ideal world, both you and the customer leave a transaction reasonably satisfied.

Today, many people are in the business of cooking the books. By using creative accounting, tax loopholes or other corporate they make a significant profit without actually providing anything of value.

When you read history, you may see Spain, Great Britain, and the Netherlands as great explorers opening new sea routes and discovering new (at least new to them) places. What happened to their power and prestige?

Generally they became banking and finance experts. In other words, they became experts at moving money and making a profit without providing anything of value.

Profit is not a dirty word – it encourages us to succeed. To invent. To build. But profit should actually be earned.

When Jesus sent out the 72 disciples, He told them that the worker was due his wages.

His parables often utilized the rich master as a metaphor for the Father. The good steward invested the master’s money and made a profit.

He also taught that we should build up our wealth where moth or decay won’t destroy it.

That’s the kind of business advice that we can live by.