Learn from the Airline Crisis - Keep Your Business Flying
The aviation industry is having a particularly turbulent time at the moment.
Ryanair’s costly pilot shortage and the shocking and very sad news that Monarch have gone into administration are recent headlines. Increasing fuel costs, a falling pound, political unrest and a more cautious consumer are just some of the dynamics the budget aviation industry has been forced to navigate around to adapt and survive.
They might have made it through the credit crunch but their current industry crisis is surely now going to teach them a thing or two? Not least about the importance of staff retention! (Not enough pilots, seriously Ryanair?!)
Obviously this is a highly complex situation, with many contributing factors, but it's worth trying to learn from any obvious mistakes. Where might they have gone wrong? Are there any parallels with your own business challenges? What can you learn, to keep your business flying in a tough and turbulent climate?
Making it all about low pricing.
What Ryanair started and Monarch and others followed is the commoditisation of flying.
Whereas consumers tended to be more discerning in the past and remain loyal to trusted companies such as British Airways or Virgin, the Internet has created a trend of bargain hunting.
The budget airlines have engaged in this price war with gusto, with Ryanair undercutting competitors so aggressively it can be argued they've bought their lion’s share of the market. But is this approach going to come back and bite them? Consumers have been grumbling for years about the confusing price strategy (priority boarding or reserved seats anyone?) but recent events are truly the last straw.
Ryanair are learning a hard lesson; while consumers might have tolerated poor service and hidden ‘extras’ for the sake of a bargain holiday, they will not tolerate being stranded or having flights cancelled at short notice.
Not only will they claim any refunds or compensation the Civil Aviation Authority tells them they’re entitled to, they’ll also go elsewhere next time.
So what pricing lessons can we take from this?
- Don’t cut your margins so severely that you compromise your product or service. Make sure you’re delivering a good service and use that as your edge over the competition, not a rock bottom price which undervalues your offering.
- Don’t make your customers frustrated with misleading price structures. Keep it simple.
- Think about what would happen if your market becomes more hostile and make sure your prices are sustainable. If you really have reduced margin to the bone, then you have absolutely nowhere to go. No customers enjoy price hikes...
- So focus on building real competitive benefits into your customer proposition, don't just trade on low prices. Let's be honest, even the lowest prices can be undercut if a competitor really wants the sale. Check out our Sales Excellence course, which centres on building real and lasting value into your customer proposition.
If you are in the challenging position of needing to raise prices due to the falling pound or other market issues, then check out our negotiation skills course. This will assist you in maintaining a strong price point in challenging market conditions.
Failing to prioritise recruitment and retention.
Unlike Monarch's demise, Ryanair’s current operational issues appear to have been more avoidable; there are several factors in the mix, but surely understaffing and weak planning have to be at the core to some degree? While Ryanair are now training more pilots (which is no quick solution for such a highly skilled role) and will hopefully employ some of Monarch's newly redundant talent, some fundamental questions have to be asked. How can an airline can be actively selling more flights than they were ever geared to fly? There is certainly no shortage of wannabe pilots. Is it their recruiment strategy that's failing? Or is the problem retaining talent, or both?
How to prevent similar issues in your business?
- Ensure you are able to attract, recruit and retain your talent.
- Look as far ahead as possible. Be it 6 months, a year or preferably 3 years, what level of resource are you going to need to deliver goals? Operational planning and resourcing is pivotal not only to customer satisfaction, but to basic delivery.
- There are so many great out-sourcing solutions too these days, to help cope with those shorter term sales peaks. Make sure you are aware of them, so that you can lean on this highly effective method of upskillng fast whenever you need to. Find out more about our Sales as a Service model here.
- If you’re failing to attract experienced talent, then make sure you bring in fresh faces and have them trained up and ready to go.
If your sales team needs a boost, why not bring in some of the new generation of graduates? Generation Z are famed as the most entrepreneurial, hungry and business-minded generation yet (check out our Gen Z whitepaper to find out more). They can soon be trained up to be sales pros.
Get them on board, keep them happy and they could be an invaluable resource for your business’s growth and survival.
Putting customers last.
If you’ve flown budget airlines, you’ll be painfully aware of some of the basic 'services' that come at a cost.
From priority boarding (standing in a slightly faster queue), to paying for luggage and random seat allocations (unless you pay extra!), to even being charged for boarding passes (this one is a bit like buying a house, but not being able to get in unless you pay extra for the key!) - there's a list of tactics to leverage that basic ticket price price up. What none of these ‘extras’ does is buy customer satisfaction.
This is all very well when you control the market, but when you are surrounded by competitors, as soon as one of them swoops in with a more appealing offering, those confused and dissatisfied customers could cost you your business.
So what should you do to ensure happy customers?
- Clear communication goes a long way; offer a good customer driven service and support function and don’t try to trick or fool your customers into spending more money.
- Be sure to collect customer feedback so you can fix any issues before your brand suffers and sustains irreparable damage.
If your sales, support or customer service team are under-resourced, why not bring in some newly trained graduates to boost operations? If headcount is an issue, we operate the market-leading contracting model in sales, giving you access to the resource but without the commitment.
Underestimating the powers that be.
Ryanair have also taken a hit from their regulating body, the Civil Aviation Authority. Thousands of people are stranded or don’t have flights and Ryanair are legally required to both compensate and provide alternative flight options.
This is undoubtedly a huge bill for the company but they made an error by failing to inform the customers of replacement flights they could take with other airlines. The CAA have been quick to very publicly condemn them for this, which again is going to hit their brand reputation.
Who oversees your industry?
- If you have a regulating authority, be sure to comply fully with their rules to protect your reputation.
- Make sure you adhere to any other required regulations such as data protection, payment compliance and others to avoid negative press.
The aviation industry is undoubtedly going through tough times. Ryanair's stranded customers are probably feeling it the most. It goes without saying that these issues are complex, but it's clear that businesses are more at risk when price undercutting is rife, customer loyalty is low, and employee motivation and attraction is weak.
After all, what’s an airline without pilots? And what’s a sales team without salespeople?
Do you have the right talent and skill sets on board to keep your business flying in a tough climate? Pareto's business development training will empower you to overcome a range of obstacles and unlock opportunity in the most challenging of markets. Our recruitment strategies will also equip your business with the talent you need for success.
To find out more about our graduate training and recruitment options, contact us today for a no obligation conversation.