Insight: Airline sector must target credibility in 2012

Last year was a mixed bag for the Indonesian airline sector. On the positive side there was record growth in passenger traffic, several new routes were opened up to facilitate better connectivity, Garuda made progress towards a commendable turnaround, Lion Air created waves with its huge order for Boeings (and even managed to get US President Obama to witness the signing ceremony) and domestic economic growth trends provided a strong back for strategic plans.

However, the sector was also fraught with its fair share of controversy and mismanagement. Infrastructure development has been tardy and in many ways inexcusable. Whether it is the case of a big city such as Medan that requires better international connectivity or a small but growing city like Malang that needs better domestic connectivity, in both cases the condition of local airports leaves much to be desired.

Growth in the number of flights is only adding to existing congestion, ground handling issues, security loopholes and an overriding sense of chaos.

Equally serious is the issue of airline safety with a rise in number of accidents and shocking reports of drug use by some pilots and crew members. Much publicized reports of more stringent drug testing have spooked an already weary public, who can often be seen reciting the prayers offered for several religions, conveniently provided in the seat back in front of them.

Landing is also often a challenge in various parts of the archipelago with the vagaries of weather adding to the complexities. But the notion that your pilot could be a closet junkie adds another dimension of fear. Until the public is reassured of a zero tolerance of drug use by authorities and the airlines, the prayers will continue to come handy. Airlines must immediately review all aspects of safety and raise their standards to stringent international norms.

Rapid growth has also brought about significant challenges related to airline crew preparedness and training. Like other service businesses, airlines face some peculiar challenges related to service. Infrastructure issues often result in the passenger experience getting off to a bad –at little fault of the airline.

For example there is little to distinguish between Terminal 1 at Jakarta’s Soekarno-Hatta airport and Gambir, the city’s main railway station. But where the budget airlines can step up relates to process efficiency – thoroughly analyzing passenger flows, properly resourcing counters, upgrading systems to enhance processing and efficiently managing the various stages from check in to baggage handling to boarding.

The key objective should be seamless efficiency but this requires rigorous process analysis and optimization of the human and technology interface.

Hiring the right people and inculcating employees with superior service attitudes is absolutely critical for demonstrating correct airline service. Passengers in Indonesia often come across two categories of airline employees – those who are older and experienced but lack energy and simply go through the motions and those who are younger and more eager but who are easily rattled and confused when they are required to think on their feet.

In both cases airline training and evaluation systems are lacking. With all the aforementioned issues the Indonesian airline sector will continue to be characterized by pressure, high processing volumes and unexpected challenges. This requires the right service mindset, a willingness to take the initiative, proactive coordination between various teams and empowerment to key personnel for on-the-spot decision making.

A plastic smile and parroted welcome greeting are only the beginning and less than one percent of the expected service experience.

High priority

A critical aspect of airline credibility relates to problem solving. Take two practical problems that passengers often face. It is well known that airline schedules are flexible and prone to delays if some VIP is late. All of us have experienced late departures without information only to see some self-important passengers strut in several minutes after the official gate closure time.

When airlines compromise in such situations they are compromising their credibility. Timely departures and arrivals are a top priority for passengers and critical in determining an airline’s reputation. Where there are delays, passengers expect openness and honesty in communication not confusion and contradictions.

No flight is complete without carrying the obligatory oleh-oleh or presents for near and dear ones whether at office or home.

However, the smaller aircraft commonly in use have limited baggage capacity. Despite all these years, airlines have not been able to ensure discipline regarding cabin baggage.

As a result there is frequently a scramble for cabin baggage space and a lack of discipline that the airlines encourage through tolerating continued bad behavior that even borders on aggression regarding ‘grabbing’ the cabin baggage space of others.

Clear, well-communicated rules – one cabin bag and one box of snacks and everything else gets checked in, and consistent enforcement, will help everyone and demonstrate that airlines are problem solvers not problem ignorers.

Prudent and proactive risk assessment and financial management is another determinant of airline credibility. The airline business is one of the most challenging industries, replete with cyclicality, volatility and vulnerability. Oil prices have shot up, hurting bottom lines. Aggressive pricing tactics have eroded the ability to reasonably price fares. International routes pose profitability challenges and aircraft and technology require high upfront capital expenditure.

A majority of the world’s airlines are bleeding and appear to be hurtling from one crisis to another, requiring frequent infusions of government aid or debt restructuring. But Southwest Airlines, AirAsia and Singapore Airlines established their credibility precisely because their leaders had the insight and discipline to create business models that succeeded despite these challenges.

There is little doubt that Indonesia’s airline industry has taken off. Targeting and achieving credibility in tackling all-round challenges will determine the lasting power of the wind beneath the industry’s wings.

The columnist is the CEO of IndonesiaWISE, an international strategic advisory firm, and a visiting professor I strategy and services management at leading business schools in the region.