World airlines criticised for lack of transparency

A leading US aviation expert has criticised some of the world’s major airlines for lacking transparency, innovation in management and customer care.

Nawal Taneja, professor and chairman at the Aviation Department of Ohio State University, said many airlines were only focusing on products rather than management and customers’ values.

Addressing the first Middle East Aviation Outlook Summit in Abu Dhabi, he said only a tiny fraction of the global passengers opt for luxury travel, while the rest prefer cheaper fares, customer-friendly services, convenient travel and “of course no delays and being stranded at an airport”.

“The issue that I tried to raise in my presentation was how many airlines have the capability to be able to take advantage of the changes that are taking place.

“And there are very few of them,” Taneja told Emirates Business.

However, airlines such as Emirates, Etihad and Qatar Airways, were doing well and are starting on the right base, he said.

“But the issue is can they succeed in the long term? Can they develop a sustainable competitive advantage? Advantage, which is not just temporary but it’s sustainable over a long period of time. Can they do it?” asked the professor.

Taneja said providing first-class luxury lounges and cabins can easily be copied by a competitor.

“What airlines need to do is something that others cannot do. That is customer care. That is the key, because you have to work and focus in an area that the customer thinks, ‘this is what I want’.”

Referring to small airlines’ role and stake in the industry, Taneja said big air companies cannot undermine them. All players have to do smart market segmentation for survival.

He said there is enough business for everybody, and “the only thing is you can’t all be going after the same business. You have to divide. The wall is very big… I’m going to go after this and then develop business model for that”.

The American expert also said the role of travel agencies is changing though they still have a big stake as they control the customer and therefore cannot be undermined in the market.

“Travel agents are not dying. They are evolving into a new business model. They are becoming online travel agents, and online travel agents themselves are changing. So there are big changes taking place in the market.”

In his presentation, Taneja said the industry has been governed by the same conventional thinking for the past 40 years, but there has been innovation in management. He also said there was a lack of talented people in the industry to improve services and take care of customers’ needs.

“Money is not going to do it. You require management capabilities. You take me. I’m 63 years old. If you buy me the fastest shoe and say:

Can you run this race and win? The body isn’t there. How are you going to change this body?

How are you going to change the capability, the management capability and the culture? How are you going to change that?

“It is very easy to innovate products, and it relatively easy to innovate efficiencies, but it is hard as hell to innovate management.”

The Numbers

$150bn: worth of aircraft orders in 2007

50%: of world orders from the Middle East

513: aircraft in active service in the region

318m: passengers per year by 2012 in the region

$37bn: is marked for investment in regional airports