Successful Major Airline Business Model.

[pilotyip]

From the CEO's speech given in Washington, Air Canada after a complete overhaul is returning to profitability. They realized the lifeblood of the full service carrier, the premium traveler is not coming back, and anyone who thinks he is, is in a state of denial. So how did it do this?, by a strategy of simplification. This removed excess management burden and uncontrolled costs. The unbundling spun off its non airline divisions, maintenance, overhaul and traffic services. These are now stand alone businesses. This has turned areas that were cost problems into profit centers. Ford and GM followed this same strategy with their parts suppliers, now Delphi and Visteon stand alone and complete with other suppliers to provide products at competitive prices. The airline has stopped being everything to everybody and it concentrating on a specific market segment to become profitable. The three new Air Canada airlines, Tango, Zip and Jazz target different travelers and operate as seperate airlines, that compete against each other. With a spun off division like maintenance if they charge too much, the airline can go to someone else and purchase a similar service at a lower cost.

 

[JTrain]

I used to think Robert Milton, Air Canada CEO, was crazy when he started all those Air Canada brands - Zip, Tango, Jazz, Jetz, etc... However it has revitalized the company..... I was wondering why no U.S. airline has swooped in and tried to lure him to their top job. Especially UAL - their current plan seems to be create two separate brands. I'd rather have a guy with proven experience & leadership like Milton calling the shots that a complete outsider like Glenn Tilton. BTW Milton worked in DAL mgmt before tagging along with Hollis Harris, Air Canada CEO in mid-90s, and eventually getting the top job.

 

[SpeedBird]

I agree with the premise here, but Air Canada also another benefit in its home markets, no other major network carrier to compete against.

The US market will need to do the same thing, in order for this adaptation of the traditional business model to find traction and benefit those who adopt it.

This segment of the marketplace still has too many seats chasing too few customers to make it profitable, nevermind sustainable.

Bottomline, it will be a depressed market for those who want to pursue a career with a major airline for the next few years at least.

 

[Draginass]

Successful Major Airline Business Model? Which week are you taking about.