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Rédigé par La Rédaction le Vendredi 7 Mars 2014
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Long haul: companies engage in a new "class warfare" for quality

Jean-Louis Baroux’s Chronicle


Obsessed with lower costs, European carriers have neglected the only feasible strategy to break the deadlock: the improvement of the quality of their product. Well, times are changing and they have now entered in this virtuous spiral. The fight is well underway and truly declared and Air France/KLM is not the only one in the ring...



The choice of recreating a First Class seems intelligent because it will not only have a ripple effect on product quality in Business, experiencing changes, but also on the morale of the crew that will regain pride in serving a quality product - DR: Michael Lindner / AF
The choice of recreating a First Class seems intelligent because it will not only have a ripple effect on product quality in Business, experiencing changes, but also on the morale of the crew that will regain pride in serving a quality product - DR: Michael Lindner / AF
The struggle for the improvement of the service has begun and is well underway. And it’s about time.

For a quarter century, traditional carriers had a marketing strategy only aimed at the reduction of prices to counter the offensive of the "low cost" trend that they did not see coming or rather they refused to see coming.

And to implement this scheduled drop in rates, they had to degrade their product.

In fact, not having the courage to make the necessary savings internally, they made customers suffer the consequences of lower costs. And little by little, this policy has led to a deadlock.

Lower expenses related to the service failed to close the gap in the production cost compared to "low cost" companies.

And where new carriers make more money, sometimes a lot, while not all of them that is true, regular companies are losing. So much for the short haul.

A phasing out of European carriers

The long haul for its part has suffered a powerful offensive from the leading Gulf carriers and Asian companies.

Led by Emirates, which has intended to conquer the European and Asian customers because the local market is too small to support its ambitions, the attack was brutal and effective.

It was conducted not by lowering revenues, although the rates of classes before were smaller for Gulf carriers than in Europe, but by constantly improving the product and particularly that of First and Business class. And little by little, the gap has widened.

And passengers, driven by travel agents who are not paid by the companies but by their clients and by repeated strikes among European carriers, began using the services of these carriers and they were able to measure themselves the difference in quality to price ratio.

In short, all the ingredients were there for a phasing out of European carriers, because unlike Americans, they do not have the tool of the "Chapter 11," so useful to carry out the restructuring of companies in the light of massive layoffs, the only effective method to significantly lower costs.

Let there be no mistake. The leaders of European companies are not stupider than anyone else and they carefully analyzed the almost insoluble problem they were facing.

Only, as obsessed they were by lower costs, they had neglected the only break from the deadlock that was still within reach: the improvement of the quality of their product. Well, times are changing and they have now entered in this virtuous spiral.


A great fight is has begun

Let us rejoice, Air France/KLM has resolutely welcomed this new strategy: winning back its high-end customers by offering a world-class product, which had been neglected for so long.

Thus the new First-class has made its world premiere in Shanghai. It is an improvement over the previous product.

However, its implementation will take time and its effects will take more time to be noticed.

But the challenge is taken and the choice of recreating a First Class seems intelligent because it will not only have a ripple effect on the product quality of Business class, also being restructured, but will also effect the morale of crew members who will regain pride in serving a quality product. Let us welcome this decision.

The fight for product quality is well underway and Air France/KLM is not the only one in the ring.

Etihad responded by launching an unprecedented level of product quality, including Emirates and let’s bet that Qatar Airways will not allow to be outdone.

Moreover, it has also announced that it is not destined to stay out of the race towards quality.

A great fight is beginning. It does not stop there. All traditional European carriers will join sooner or later.

Asian companies will certainly not be left behind. And U.S. carriers will be well obliged also to join the game if they want to keep their business customers.

At a time when there has never been so much money available, and the number of millionaires and billionaires on the planet is exploding, it is time to return to fundamentals.

Air transport may be a mass product and for that there are appropriate carriers, but it is also a product of class and pleasure that merits an appropriate price, provided that the quality is up to par.

Long haul: companies engage in a new "class warfare" for quality
Jean-Louis Baroux, is the former president of APG (Air Promotion Group) and the creator of the CAF (Cannes Airlines Forum) which became the World Air Forum.

Air Transportation Specialist, he signed at L'Archipel Publishers ''Compagnies Aériennes: la faillite du modèle” [“Airlines: A Bankruptcy Model” – translator’s note], a book that all tourism professionals should have read.

The copyrights will be donated to charity. It can be purchased at: www.editionsarchipel.com

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