That said, I don’t think you read the article, and your attack of it weakens your otherwise strong case. The article does not lay out a “case” for why mainline carriers need to address their cost structures (with this much, I, and, presumably, your Granny, agree). Instead, it offers some new insights into “how”. The authors of the article contend that airline management (in its signular focus on factor costs) has failed to recognize that much of the cost structure is driven by “how” airlines execute basic daily operational tasks. This is a process-intensive, labor-intensive, capital-intensive industry. The authors believe that “process excellence” has the potential to both reduce cost and increase quality. Other companies in similar situations (Disney, McDonalds, Toyota) focus much of their efforts on refining processes to ensure maximum output from each labor or capital input. The authors, I think, put some compelling examples on the table of how airlines might further reduce costs (and increase quality) without simply slashing wages.

Certainly the case for business-model reform remains. But add the right business model reforms to a capability-driven 10% cost advantage, and you’d have an airline that might just survive the low cost onslaught

Read the article again.

AD