Are Airline Managements Prepared?

87
Cargo/Chinese joint venture out of Shenzen; in conjunction
with the start of China operations, established a German
Center together with a Kempinski Hotel, a business center,
and a beer garten in Beijing; established a Lufthansa Technik/
Air China joint venture for the overhaul of large aircraft.

• It started a “classic” low-cost subsidiary (GermanWings) that

operates as a true low-cost operator (different staff, a different
hub, no frequent flyer program integration, and so forth)

• It was the first operator of in-flight broadband Internet

access (Connexion by Boeing, now replaced by a new
consortium).

• It successfully integrated (at arm’s length) the operations of

Swiss (similar to the experience of Air France and KLM).

• It established a joint venture between Lufthansa Cargo and

DHL for a Boeing 777F operation out of Leipzig (DHL’s new
European hub).

• It acquired shares in jetBlue, partially to develop “hybrid”

connecting traffic at JFK in New York.

All of the above initiatives are not exclusive to Lufthansa.

For example, a number of network airlines, in the US and
in Europe, started low-cost subsidiaries. Almost all did not
Copyright © 2008. Taylor & Francis Group. All rights reserved.

survive. Lufthansa has been an exception, due, in part to a more

disciplined approach. Now, some other network airlines are
developing their own “branded” low-cost subsidiaries using a
disciplined approach. Examples include Singapore’s Tiger and
Qantas’ Jetstar.

Takeaways

• The strategy levers used in the past to deal with the

changing environment are no longer sufficient, in their
current form, to deal with even the current environment
airlines must optimize their current business models by

Taneja, N. K. (2008). Flying ahead of the airplane : Adapting to imminent head and tail winds in the flattening world. Taylor & Francis Group.
Created from upcatalunya-ebooks on 2024-05-16 15:44:46.
 88 Flying Ahead of the Airplane
(1) improving dramatically the alignment in their
organizational structures, (2) managing complexity, and (3)
developing and implementing analytically based strategies.
Technology, often viewed as a constraint, must be viewed as
an enabler, as a differentiator, and possibly even a driver of
future airline business strategy.

• To deal with the expected “step-phase changes” in the airline

marketplace, airlines must conceive new business models.
They must do this by (1) benchmarking less within the
airline industry and much more outside the airline industry,
and (2) moving the innovation concept from buzzword to
become core airline competency.

Notes

1 For a more thorough description of strategies to manage through

business cycles, the reader is referred to a book by Peter Navarro,
The Well-Timed Strategy: Managing the Business Cycle for Competitive
Advantage (Upper Saddle River, NJ: Wharton School Publishing,
2006).
2 George, Michael, L. and Stephen A. Wilson, Conquering Complexity
in Your Business: How Wal-Mart, Toyota, and Other Top Companies Are
Breaking Through the Ceiling on Profits and Growth (NY: McGraw-Hill,
2004).
3 Mariotti, John, The Complexity Crisis: Why Too Many Products, Markets,
and Customers Are Crippling Your Company—And What To Do About It
(Avon, MA: Platinum Press, 2008) pp. 7, 13, 39–40.
4 A good reference for developing the capability to compete on
Copyright © 2008. Taylor & Francis Group. All rights reserved.

analytics is a book by Thomas H. Davenport and Jeanne G. Harris,

Competing on Analytics: The New Science of Winning (Boston, MA:
Harvard Business School Press, 2007).
5 Schmitt, Bernd, H., Big Think Strategy: How to Leverage Bold Ideas and
Leave Small Thinking Behind (Boston, MA: Harvard Business School
Press, 2007), front jacket.

Taneja, N. K. (2008). Flying ahead of the airplane : Adapting to imminent head and tail winds in the flattening world. Taylor & Francis Group.
Created from upcatalunya-ebooks on 2024-05-16 15:44:46.