Airline Business and Titanic Syndrome

Stiff competition among airlines is indeed unavoidable these days. Leading airlines, which used to enjoy brisk business, now have to reorganize and revamp their business in order to survive, especially in view of the regional open sky policy coming into effect in 2015. The sad fact is that a number of airlines have gone bankrupt in recent years. In 2008, 32 ceased operations while in 2009 no fewer than 26 went bust.

Regionally, Singapore Airlines (SIA) suffered an operating loss of S$428 million in the first half of 2009, compared to its S$95 million profit in 2008. MAS is reported to have lost about RM 117.5 million in the January-September 2009 period while Thai Airways reported losses of approximately 1.57 billion baht in the first nine months of 2009. Vietnam Air is estimated to have earned US$14 million pre-tax profit in 2008 which dropped 42 percent to $8.1 million in 2009. Qantas lost about A$93 million in the first six months of 2009 but is expected to make a profit of A$50 million to $150 million for 2009/2010.

Another gloomy note is that some airline companies have had to merge in order to survive; for example Delta with Northwest, United with Continental, American with US Airways, Frontier with Midwest, Lufthansa with BMI, British Airways with Iberia, Vueling with Clickair, Avianca with TACA, Spirit Airlines with Air Jamaica, China Eastern with Shanghai Airlines and possibly Ryan Air with Aerlingus or Delta with JAL.

So what has gone wrong? We can ask the same question about the sinking of the Titanic. What really happened that caused the gigantic ship to sink? Did it run into an iceberg? Or was it carrying too many passengers? Or was the captain incompetent? Or was the ship’s construction faulty? Or was the crew substandard?

It could have been a combination of all these things. As a matter of fact, the entire world has undergone drastic changes spurred by new economic and global influences. People are changing and so are cultures. Likewise, airlines are experiencing huge changes.

Realizing this, Garuda Indonesia, for instance, keeps introducing changes. Even more so because previously Garuda Indonesia enjoyed a monopoly on the business here in Indonesia, but since early 2000 changes have occurred. On the domestic level, Garuda has to face competition from private airlines, such as Lion and Wing, while globally AirAsia is one of its aggressive competitors.

Therefore, to spoil passengers Garuda has launched “Garuda Indonesia Experience”, which is a service concept based on well-known Indonesians friendliness to boost its service level to a four-star rating. “This is our new service concept that combines friendliness that is uniquely Indonesian with safety and comfort aspects like clean toilets and larger passenger seats,” said the general manager of the Garuda Indonesia Medan branch, Muchwendi Harahap, as quoted by medanpunya.com.

Apart from that, said Muchwendi, specifically Indonesian cuisine is efficiently presented by the company’s professional human resources. “In short, we are a full service airline,” said Muchwendi, adding that Garuda plans to enhance its service to a five-star standard by 2012.

Indeed, full service airlines have to work harder than low-cost carriers, because service has to be a top priority, not price. That is exactly what Qatar Airways is doing. Headquartered at Doha International Airport, Qatar Airways currently flies to 75 international destinations and is one of five airlines in the world that has been awarded five-star airline status by Skytrax. Qatar Airways is a member of the Arab Air Carriers Organization.

Qatar Airways was established on Nov. 22, 1993 and commenced operations on Jan. 20, 1994. Initially it was owned by the royal family of Qatar, but in April 1997 a new management headed by Akbar Al Baker took over the running of the airline.

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