Airline Business - A Demanding Venture
Of the many businesses done worldwide, the airline business is amongst the most volatile. It is risky; requires heavy capital influx every now and then; is immensely sensitive to elements; demands highly professional management; is strictly regulated; remains vulnerable to politico-military developments, socio-economic hiccups, and market trends. The profit margins, even for successful carriers, remain low and elusive; around 0.1-0.4 percent. For start-up airlines the risks are great. The first 18 months are usually critical, and need to be tied-over with utmost care. If this period is managed successfully, the future of the carrier could be somewhat assured, yet profits may not be forthcoming for the next 2-3 years. Despite the drawbacks, it remains an extremely prestigious business.
The airline business is highly regulated. Lines of communication should therefore always remain open between the Management and the Regulator to avoid misunderstandings. The regulators also need to be sympathetic towards the airline’s problems. Acquisition of right mix of aircraft and ground equipment is vital for a start-up passenger airline. Vintage aircraft, acquired on lease, is not the right way forward. Getting newer, but smaller, aircraft is a better proposition which, besides being easier to fill, can provide reliable, comfortable and flexible service options during the critical initial 18 months. This option however, requires substantial investment and patience on the part of investors.
The Board of Directors (BoD), comprising professionals of repute is the highest policy-making body in an airline. It should assert itself, and maintain close oversight on the affairs of the airline. It should also drive the Higher Management to lead from the front, and be an example for others to perform optimally, keeping the airline’s interests in view.
Marketing and Sales network of the airline is an essential area from where it acquires its succor. It should therefore be manned with care, and monitored closely. The department should be provided with all necessary technological tools to perform efficiently. It should be heard for advice on market trends to keep the airline commercially competitive. The Customer Care Department of a passenger carrier should be sensitive both towards customers and the Management of the airline. It should be able to respond to complaints and queries promptly, and be able to seek guidance from superiors without delay. This department may also act as the Public Relations set-up of the airline.
The BoD and Higher Management of the airline must inculcate a sense of pride in the work force through meaningful training and regular refresher courses. High levels of motivation could be achieved through reliable vertical and horizontal communication. The Human Resource Department can help much by putting in place systems of rewards and punishments, apart from merit-based career progression. A professional Internal Audit Team is an essential ingredient for a successful airline. It should comprise all specialties represented by professionals of integrity. It usually reports to the Chief Executive for maximum effect, who is expected to take corrective steps through the channels and tools available to him/her.
Passenger airline business is for those who wish to mix their business skills with an element of risk to create something prestigious, valuable and useful for their country. The entrepreneurs should preferably be individuals of strong nerves, mind and character to be able to absorb the many shocks along the way without getting disheartened, and be able to guide the airline through turbulence in a calm and calculated manner.