The Honest Jonny | BLOG
On the Soapbox 1 Time!
Last Friday was not a good day for the travel trade. Another domestic airline taking a tumble can never be good. 600 Odd people left jobless just before Christmas does not inspire me with confidence of things turning for our trade in the short term.
I hear people say that it is bad for our industry, I say why? Here is a clear case of an airline that thought that they could buy market share by offering the cheapest possible prices at any given stage on any given route. If you tell your customers that they are only buying on price then that is exactly what they will do, buy on price. As soon as you are more expensive you are no longer the option as you have established yourself as the "price beater". You will have loyalty as long as your price is the cheapest. Now I find myself asking the following questions, how in their right minds could 1 Time offer the lowest price on all routes? Why did they do this and commit business suicide? Why in 2009 did they not reinvest their healthy profits and cash flow into more fuel efficient aircraft that would have given the airline a chance of survival?
You see unfortunately in the Travel trade our most prized return is return on EGO. We often look beyond what does our balance sheet look like & are we making money? Rather we tend to look at Turnover, market share, passengers travelled – all in my mind irrelevant if you can't do the first basic principle of any business which is to make money. Ironically enough, Joe Public does not mind a company making a profit! For a profit means that you run a business that is able to invest in technology, in people and in fact in your customers. It means that you have a sustainable business that will be around for many years to come, it means that your customer can build a rapport with you and that we as a business in turn can offer our customers what they want through years of working together.
A few harsh facts, 1 Time had the most fuel inefficient fleet in South Africa. It cost them approximately 35%- 50% more than their competitors to transport a customer. Their acquisition of Safair was an unmitigated disaster which ultimately made them bankrupt faster. Instead of investing in new technology, they invested in servicing their old worn out & expensive to maintain aircraft. In short, the writing has been on the wall for quite some Time. The founders left some time ago and the only basic principle appeared to be sell a little cheaper than our competitors. Now this is where my soapbox begins.
As a business Beachtag has been around for five years, we are proud of the service that we offer and believe in training our staff and reinvesting in our business. We can only do this if we are profitable. We can only be profitable if we sell enough packages at a fair price. Our wholesalers determine what is a fair price for their products and we sell our packages at these predetermined rates. We offer best value as we always offer variety and ingenuity in our quotes. Profit ultimately has to be our driver, not huge and misplaced profits but merely profits for a job well done. We find ourselves under increased pressure due to many competitors discounting and following the 1 Time philosophy of just a little bit cheaper. Can you believe selling at below what the wholesaler deems to be a fair cost? This is idiotic, anyone can sell a product at the lowest price, and yes if I was a consumer I would ensure that I am getting value for money. There is however a difference between value for money & cheapest or below cost? Our consultants discuss, talk, engage, consult & ultimately offer a viable solution to our customers, that is what we are paid to do. More & more we find businesses out there that promise to beat any written quote, regardless of what this could mean to their business? Short term gain for long term pain?
That is not a problem as if you sell enough of something without making the necessary money, you will not be around for too long, your service will suffer, your staff will not be well trained. You will not actively consult to your clients & ultimately they will walk away. Good business is founded on the principles of repeat customers, referrals from happy customers, well serviced new customers and continuous improvement. None of this is possible if all you ever expect as a client is a discount or as an agent if all you ever do is discount.
South Africa is blessed with many good agents, allow them to wow you! Pay them for their services they are well deserved. To the agents out there, stop thinking that the only value that you can add is a discount. Learn your product, become an expert, prove your worth, add value. Stop discounting just for the sake of discounting, you can't afford it!
Ultimately if we all follow these principles we will all benefit, including and most importantly the customer. Fellow agents stop being short sighted, narrow minded and illogical or else you too will stop trading. I wonder how many of the customers on Friday were grateful that they had bought the lowest possible priced seat to whichever destination? It will come back to bite you at some point. By all means compete, offer great pricing, great service and awesome after sales service. But if all you do is sell or buy on price and price alone, then consider yourself warned as you will be burnt at some stage, it is just a question of time!