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Thursday, November 24, 2005

Low Cost Airlines

There is suddenly a spate of launches of Low-Cost Airlines in India. Each Airline claims a fare lower than the lowest. If this really continues soon Air travel will actually be cheaper than walking!! (kidding of course).

I have been thinking about how these airlines continue to survive. Recently, I read about the discussion on how Low Cost Airlines can be viable and it triggered some thoughts.

Actually to look at the viability I believe, we can look at Transport operators (cargo-trucks) model. They have the kind of Hub-&-spoke model that Dr. Krishnan is talking about. In fact the viability of the model actually lies in the hub and spoke mechanism.

For people-carriers though, there are slight problems as they have to break their journey and that consumes time. The viability of these low cost airlines must come from other revenue streams. Air-Cargo offers a good alternative.

I am not actually aware of the percentage of the revenues from Air-Cargo but I know that the local inter-city buses make a significant revenue from transport of cargo. A bus (in India) usually carries around 1-3 tons of cargo in addition to the people and their luggage. This cargo is typically mail and small goods. Similarly, I would expect Air Cargo to actually contribute significantly to the revenues. Typical Air Cargo is Mail (again!) and perishable goods. An airline based on this duel revenue model will most likely survive.

What say?

Monday, November 14, 2005

Cruising Along

Last weekend, I went for a cruise from Mumbai to Goa on Star Cruise Libra!! I will soon post some pictures of the trip but it was a life-altering experience.

Firstly, I now rate Columbus, Vasco Da Gama, Captain Cook and gang much higher. The feeling of being on a ship surrounded by water on all sides is something amazing. How on earth can some guy stand on a shore and dream about crossing the wide ocean! Ok I understand curiosity must have gotten better of discretion but what about the second time. What on earth were these people thinking when they started their second voyage! And the most important, how did these guys convince their mothers! These guys were not simply good "sailors" they were good "sellers" also!!

Secondly, there are sights seen to be believed! I was totally enthralled seeing the ship cut the water and splash it around. Watching the moon set in the sea you realize why moon is called a heavenly body! Just before the moon sets it paints the entire sea silver! Boy a site to watch! The breeze is so strong that you realize how sailboats could make their way across the world!

Thirdly, what a wonder is this Star Cruise Libra!! I am told its a 15 + year old boat! Its like a great factory, everything is impeccably right. Things (tables, racks etc) are fixed to the ground in a neat manner. The decks are cleaned every night! The wood is polished and everything is very perfect. The rescue boats are cleaned regularly and look in perfect shape! The staff is impeccably dressed. Perfection is everywhere. There is a gym, swimming pool, sauna, jogging track, basket ball court (half court), table tennis and what not! Sailors will have a complete life just like a factory worker.

Fourth, there is party atmosphere everywhere. And I believe so it must be even on cargo liners. I must say sailor life is something very organised and well planned and loads of fun! Two days definitely left me longing for more!! Maybe if I have a lot of it I will be bored, will I?

Of course there were sore points!!! The service at the restaurants leave a lot to be desired. The staff is very courteous but simple courtesy is not enough. We need GOOD food!!

I believe these people have created a problem for themselves. They have created a faulty system and they follow the system effectively. They are not empowered to circumvent the system for better results. I believe they need process consultant to work with them. Guys if you are reading this, please invest time and resources in TPM, 5S, 6 Sigma, Kaizen, Quality Circles etc. It will help you be perfect. If you want even I can help!

Friday, November 04, 2005

Advertising the "New Age"

Can you recall 10 ads that you saw on television yesterday? Ok can you recall 10 ads you saw today? No? It is reasonable to expect that I am part of the target market for a lot of companies for a lot of their products, yet I do not notice their communication on the television. As a marketer I guess its the worst problem. A 30 sec slot at prime time costs a bomb and no one notices!! Today advertising is facing it worst crisis.

There are far many number of channels today than I can care to recollect. And there are absolutely no programs that can make me watch through the commercials till the program begins again. Invariably I switch the channel and find something more interesting. I wanted to see the channels of similar profile co-ordinating the timing of the ad-spots so that even if I switch to other channel of the same profile I should see the same ad. Not so yet! I think channels should sit together and set-out rules (for say coordinating ad-spot timing)so that they can assist the marketer to reach their targets.

If you have noticed, barring Cricket and Tennis there arent many games I know of wherein you get regular breaks to show your ads. Cricket is a marketers dream there is a break every 6 balls!! I think marketers / channel owners must make a co-ordinated effort to popularize this sport. They will get more bang for their buck. But even here some channels get greedy and show only 4 balls encroaching the ad space into first and last ball. Obviously, if the viewer has an option he switches to other viewer-friendly channel.

Broadcasting Technology is changing with launch of Microsoft Windows Media Center Edition that lets you pause "live" broadcast and play it back. Soon some geek will invent a program that will "catch" the commercial and elimiate it while recording to the hard-disk. So viewers will actually prefer the media center rather than "live" broadcast!

Advertising the future!
I believe, advertisers should also look at their business and really alter the mechanics. If I draw parallels between watching a program and driving a car then ads currently are like "Red Signals". Rather effective model will be the "window shopping" model. So ads come and go they do not hinder my driving / walking but they are attractive enough to entice me to stop and have a look. the "Red Signal" approach has killed the ads ability to woo the prospect. What say advertisers?