Excerpts from our interview with Senior Partner Rohit Sachdev who discusses the challenges facing companies in the low-cost airline sector

What do you see as the current challenges facing the "no-frills" airlines?

I think its is difficult to pinpoint a particular challenge but you could certainly group them in the order of macroeconomic and operational challenges. Macroeconomically, we are dealing with a period of high fuel prices which makes it exceedingly difficult to compete when price trends are generally moving downward and competition continuing to increase. On the operational side, it is an issue of efficiency.

What do you attribute to be a major reason for the failure of some of the low-cost airlines such as Song?

My belief is that Song failed from its inception as most larger airlines do not understand the intricacies of running a low cost airline. Executives from the larger airlines are too used to running high overheads and do not understand the critical success factors of the low cost sector. Additionally, the corporate cultures of the larger airlines do not match well with what is required to run a "no-frills" operation. A successful operation needs to be quick and nimble to react to the changing dynamics of this market.

What do you believe is a major critical success factor for the low-cost airline?

One of the major critical success factors is to invest in business process automation and technologies which can be a major factor in streamlining operational costs in order to reach profitability. One of the areas we are recommending low cost airlines to move forward towards is in the development of work-force and CRM portals to automate internal operations and customer relationship management to a self-service scenario. Additionally, we are recommending the implementation of business intelligence tools in order to have greater access to information and metrics relating to corporate performance management.

Any Others?

Two words..product differentiation. Customers today are looking for an experience that has value-for-money but offers them something unique, an experience that differentiates from others and one which they would like to come back to. Creativity doesn't have to cost money.


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