Simplify: How the Best Businesses in the World Succeed by Richard Koch & Greg Lockwood

Author:Richard Koch & Greg Lockwood [Koch, Richard]
Language: eng
Format: epub
ISBN: 9781613083543
Publisher: Entrepreneur Press
Published: 2016-10-16T22:00:00+00:00

The system worked because low prices meant the planes were usually full and costs were pared to the bone.

But behind Kelleher’s product redesign lay something even more fundamental. He automated flying, just as Henry Ford automated car-making, Ingvar Kamprad automated the furniture industry, and the McDonald brothers automated hamburgers. We will discuss this in detail in the next chapter.

European budget airlines have further simplified Kelleher’s template by co-opting customers to do some of the work, such as checking in online, carrying their own bags to the plane, and ensuring they are ready to board promptly. This creates an efficiency saving that is shared between the customers themselves and the airline.

But how do customers benefit from this efficiency saving? The obvious answer is in the price they pay: on a per mile basis, a budget airline flight is typically less than half the price of a full-service economy (coach) equivalent, and sometimes as little as a tenth. Moreover, because of fast turnaround times and the use of smaller airports, customers may also benefit from substantial time savings.

What works for the customers also works for the budget carriers. For decades the airline industry was notorious for losses and bankruptcies, and poor returns even for the survivors. Yet the largest budget airlines — Southwest, EasyJet, and Ryanair — have all demonstrated dramatic growth in revenues, earnings per share and stock market value.

Much more important, however, is that airline simplifying has made it easier for a wide range of people to visit their friends and family. It has shrunk the globe, enhancing the experiences and increasing the sophistication of hundreds of million travelers. Finally, because flying is so much safer than driving, it may even be said that the budget airlines have saved thousands of lives.

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