Why ‘No frills’ operators’ indulge in the costly cost obsession

Aviation brands need to look beyond price wars to bring perspective to their challenges. Read on to know the simple solution to the challenges they struggle with.

Beyond the primary challenge the low frills airline operators of being labelled ‘low cost’ the brand is seriously limited when it comes to focusing on its secondary challenges. All the resources and energies are directed towards ensuring in winning the ‘price war

The secondary challenges that actually complement and bolster the Brand positioning focus on:

 

  • Better emigration facilities
  • Better seating facilities
  • Better connection to neighboring countries

Unfortunately pure Sales [read hardsell] dominates and drives the Marketing funnels. Classic paradox of sales killing marketing.

While its easy to blame the CEO, CMO and the leadership of these companies, what we need to really understand is the complexity of the business model. Besides the plethora of external variables like ATF, Government Regulations, Competition etc which are constantly in flux the additional complexity of a complicated Break even equation when it comes to Revenue Maximization.

Picture a scenario where the same cost radically changes from being Variable to Fixed when one swaps the Break even model! Weird right?

This phenomenon is prevalent for the industry as a whole. Calculation of Break even based on number of flights renders the the ATF [fuel] cost variable BUT flip over and calculate Break even for a single sector [trip] and the ATF becomes fixed!

Considering the constant Cost focus that percolates deep within the organization and a ready association to cost led leadership possibly causes this overhead. Here I am not hence suggesting a reckless approach, merely suggesting that the Cost overhead bordering on obsession is the ‘No frills’ operators proverbial Achilles heel!

After all cost minimization is finite..and Revenue maximization infinite!

For more details on how to succeed please keep watching this space

Want to learn more about the ins and outs of introducing Customer Value Maximization in your Organization? Find out more through our services here

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