Cutting Capacity – a necessity ?

The following is my take on cutting capacity by airlines. What is yours ? Comments are open for discussion.

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“If we’re growing, we’re always out of our comfort zone” John Maxwell said. This might be why many airlines nowadays try to cut flights and to stay afloat, to stay in the comfort zone. But have you ever heard of any airline which saved millions of money and made a profit by cutting the services they’ve been operating ?

“If you run you may lose, if you don’t run you’re guaranteed to lose” Jesse Jackson said. That certainly is true. There might be airlines which narrowed its loss by cutting the routes and laying off employees, but how many airlines have gone down in recent times by doing the same practices ?
Then, what about the likes of AirAsia, Emirates and THY – who have always grown at the times when others have cut ?
Certainly, there are times that you’ve to cut and manage things, but do airlines need to cut the flights in great deal to narrow the loss ? Why not try to operate profitable flights more ? Why not innovate something ? Why not experiment something ?
Sure, cities like Bangalore and Trivandrum might not have seen important to other international airlines before Emirates tried it. Low cost carriers might not have been seemed feasible before Freddie Laker innovated it.
Like an aircraft has a flight envelope, any airline has a certain capable catchment that they can realise, but the unfortune is that many do not. And unlike an aircraft, airlines do also have the capability to expand their envelope. It all is a matter of being smart and getting it done. But sadly it seems that the airline industry is lacking such great executives, except for a few of the likes of Tim Clark and Tony Fernandes.
A good example is Turkish Airlines, which in the last fiscal expanded very well but still increased its profit. While in the same fiscal, SriLankan Airlines which got free from Emirates and into a new management team embarked on a heavy turnaround program, including cutting flights by more than 30%, to achieve a loss of Rs. 6 billion in the end. Turkish increased and embraced its image in the markets it serve and SriLankan lost the dominance in many markets it served, including India where they cut weekly flights from 110 to 46. Turkish might be bigger than SriLankan, but in the end it all was a matter of believing in their potential and achieving it
It is your attitude that sets your altitude.
Overcapacity is an issue, but if you can stimulate the market, how come there be an overcapacity ? This does not mean you should stupidly expand at any cost – that any small airline should operate an A380 or every low cost carrier should launch a long haul arm, but instead airlines should try to innovate and expand and achieve the true potential of their operations, a skilled executive has the ability to sail through every storm and arrive safely, cutting drastically is not the answer. If you stop evolving, you stop flying.

With some exams coming up, this will be my last post till around 22nd Aug. Good bye all !

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