In the introductory stage of any industry, the companies involved attract the very best the workforce has to offer and in most cases, pay them prim salaries – for two reasons. First to compete with other industries that want these people and secondly to retain them. These salaries become industry norms and the industry has to maintain the whole system they created.
Once an industry is caught up in this loop they can only try to persuade their clients that they offer value for money, go belly up or evolve.
This has been the case for the airline industry worldwide. Through my experience and involvement with this industry, I can say that I have never seen so many charismatic people, all in one industry. Its like one bought the other or those who could not handle it just left silently.
To top this, government regulations, airport slots, IATA regulations and may other restrictions had this industry isolated, insulated, protected, etc whatever the reason and purpose, the entire industry was guarded.
“One day”, everyone woke up and said, “Enough!!!” and that is when one airline after the other went belly up, filed chapter 11, merged, sold out, downsized or did something else which kept it alive for the inevitable to happen…and suddenly some new companies popped up taking the opportunity to offer the same service – transportation – with a different model. Examples are Easy Jet, Ryan Air, etc. These new models also bring along new ways of thinking, CEO of Ryan air, Michael O’Leary puts it well – “Think about it. People are happy to carry a bag on to buses so why not on to airlines? This could be revolutionary.”.
Of the last airlines to do something major is Olympic Airlines.
The time has come – and Europe is breathing down Olympic’s neck, to close, restructure – do something, because no airline in Europe is to receive subsidies any more – because that creates unfair competition. Fair enough – but…
Lets go back a bit. The period of time Olympic was owned and managed by Onassis, the majority claims that Olympic was profitable. Once Olympic was sold to the Greek State, problems started , continued and accumulated. The major reason for this is the rape conducted on Olympic by all Greek governments and their apathy towards the accumulating problems – right wing party governments, the socialists, you name it. And the funny thing is that they all agree that the basic problem comes from their actions.
To top it all, the labor unions have been giving Olympic its final blows. Here again the government is to blame, because the solutions found, between the unions and the government(s) at times, were such that would ensure votes for the governing party and not the well being of the airline and the people working at Olympic.
And here we are…EU wants something done – the Greek government has to face the travel and tourism professionals, the clients of Olympic and the people working at Olympic.
Oh! wait a minute, all companies in the free market we live in, also have another group of people to account for – the stockholders.
Stockholders want profits or they take their money elsewhere. In Olympic’s case the stockholder is the government, which is not out to make profits – because that word does not exist in any government’s vocabulary. The only similar word for profit is surplus, which is not a result of business planning, efficiency, effectiveness, yield, etc as known in the pure business world. By this I don’t want to undermine the professionals who run Olympic, they are putting up the fight of their life and the results prove it, but what can you do if the system is rigged by others (the various governments throughout time).
In view of the fact that we do not have stockholder who would take their money away, under the present conditions, management/government has to find a solution which will satisfy the people working for Olympic, the people who count on Olympic for transportation (ie the people on the Greek islands, especially during the winter) and the EU. Lets not forget that if Olympic goes under, all the millions who come to Greece with Olympic will not have alternative solutions, because no one airline has plains waiting to take up the extra demand which will be created in the absence of Olympic. This means that these people who wanted to come to Greece will not come, as a result, this will damage the positive upward trend travel and tourism has had since the days of the Athens Olympics. Now this gets messy.
So, what is their to do. Close the company, resize, restructure, optimize its routes, have stockholders invest money and appoint a management team that knows business, have them report to the stockholders and open the airline again. Clean, as the EU wants it and run by people who know that their heads are at stake if it does not go as planned.
Simple. Its been done again. So, do it. Why wait, or is there another agenda?