Since US domestic Deregulation in1978, there have been innumerable Low Cost Carriers that have come and gone, mostly gone; due to a limited life design that usually runs out of gas within 5 to 10 years. Only two t examples maintained low cost/low fare sustainability for at least 25 years. Southwest Airlines in the US and Ryan Air in Europe.
Three balanced objectives are necessary to achieve long term and sustainable success:
1) Strong Financial returns to provide Shareholder benefits, and to provide the cash flow for strong and steady profit growth.
2) Employees sharing in the increasing prosperity appropriately. This provides continuity in one’s career expectations, and provides the underlying commitment to providing superb Customer Service to Build the Brand and generate genuine Customer Loyalty. Consistent with this is the focus on building an authentic Internal Culture.
3) Maintaining true and absolute low costs which economically provides for a long runway of market opportunities that will be available well into the future.
This virtuous cycle can be replicated again and again. Scale and market development in any community will enhance productivity. Efficiency from this combination will present a sustainable competitive moat if discipline on unit costs is maintained.
I will explore in some detail what I think are essential elements in a deep and expansive market like the domestic US.
Published by Pete Mcglade, Consultant, Ballykeel Rock LLC