Commentary: Last week I wrote a short piece on lower oil prices becoming a management challenge for airline C suites, and their employees. My focus was really on labor – management relations, cost control, and how the discipline of higher energy prices is at risk for being lost. Since that time, a handful of articles have touched on similar topics with a focus on system capacity as well as airline pricing habits. During a recent airline conference call on earnings, a pesky Wall Street analyst challenged management on capacity discipline. Said analyst then got his hind quarters politely handed to him, depending on your perspective.
The gist of the analyst’s question was whether or not management was paying enough attention to capacity discipline when making new route decisions. The airline’s managers seemed to be pretty sure that they are, and I don’t have any reason to doubt it. The hidden danger here is that when you become so wonderful and so profitable you can be lulled into a false sense of security….or would that be, superiority?
A lot of interesting little things have happened in the airline industry over the last few weeks that bear watching, none more so than right here in my now hometown. Granted, each of these developments has some merit in the marketplace, and it will be interesting to see how things unfold. Cheaper oil, assuming it sticks for any substantial period of time, may become a catalyst for other changes in the airline industry, only time will tell. One thing is certain, the airline industry attracts its fair share of characters and egos, even if they are better at counting money than they used to be. My advice to airline managers and their co-workers – keep your eye on the ball, and be leery of your own BS.
-MJ, October 22, 2014