Friday, 1 February 2019

The Origins of Disruptions

(Excerpt from my new book  ‘Beyond Airline Disruptions:Thinking and Managing Anew’)  

The origins of today’s disruption problems were planted in the 1980s when deregulated US passenger airlines all rushed to copy the FedEx’s hub-and-spoke network model, assuming it is more efficient to fly passengers via huge hub airports instead of taking them straight to their destination (just as FedEx did with parcels). Judging by the outcome, it soon proved to be a big mistake. Missed connections at hubs created huge passenger dissatisfaction and inefficiencies and have contributed to the bankruptcy of almost every big US airline. Despite the obvious flaw in the business model, European airlines were quick to adopt it, ending up with series of failures or near-failures, including Swissair, Sabena, KLM, and Alitalia. Today, over 20 European hub airports are critically congested, with Heathrow already operating at the maximum of its technical, and much over its commercial capacity. Manipulative reporting that, apart from inaccuracies, hides dependencies between operational irregularities and airline health are prolonging the decline. 

Robert Crandall, the former chairman of American Airlines said that "the consequences of deregulation have been very adverse. Our airlines, once world leaders, are now laggards in every category, including fleet age, service quality and international reputation. Fewer and fewer flights are on time. Airport congestion has become a staple of late-night comedy shows. An even higher percentage of bags are lost or misplaced. Last-minute seats are harder and harder to find. Passenger complaints have skyrocketed. Airline service, by any standard, has become unacceptable."

Deregulation offered airlines an opportunity to grow fast, and at the same time the responsibility for making air travel more affordable while offering passengers good and reliable service. Many, however, underdelivered on quality so much so that the future looks increasingly uncertain for both airlines and passengers. Passenger travel costs are going up despite lower fares, on-time arrivals are becoming less certain, and the amount of time passengers spend on the ground more often exceeds the travel time incurring additional costs. The problem is that the opportunity for growth hasn’t been synchronised with airport and ATC capacities needed to accommodate growing demand for air travel. Congested airports and airspace are expected to be even more congested and restrictive in areas with highest demand for air travel. This will result in further decline in service quality and consequently increase in cost of air travel.
While we cannot change external circumstances and our organisational divisions as sources of problems, we can reconfigure our work and better adapt it to changed circumstances. 

As Abraham Lincoln once said