Today's Airline "management" - naievete in the extreme!

[Kaptin M]

After reading the reports of the supposed projected financial status of some airlines, I am absolutely amazed at what can only be desribed as an "agrarian, basal understanding" of how airline aircraft ACTUALLY operate vs the PERCEIVED understanding.

Having read/ heard-seen these (what can only be described as) abstract calculations, it isn't too difficult to understand WHY accountant-run airline companies are finding themselves "suddenly" uncompetitive and more suddenly bankrupt!
The US NTSB provides a direct link in respect to this subject!

"Glorified 'bus drivers"......therein lies the secret to the FAILURE of many a would-be airline!!

[Celtic Frog]

Not sure that I fully understood exactly what you were trying to say or base it on...but I'll add my penny's worth anyway.
My experience of working for small airlines as far back as 10 years ago and more is that they seem to employ accountants who have only been trained to look at numbers on paper.

If the numbers look right, there is no convincing them that other (human) problems exist...for example...just how much is the passenger going to be chased away by schedule changes, dirty aircraft, grumpy crew due to bad moral caused by lack of pay rise, expenses and other working conditions etc.

I've seen so many airline ,management apply knee jerk reactions to save a few hundred pounds on a maintenance bill, causing flights to be diverted or cancelled at the cost of losing a plane load of passengers who promise never to return.

Perhaps its time when new airline management should be forced to pass some sort of exam in related CRM / human factors versus counting pennies??

[Caractacus]

- Perhaps its time when new airline management should be forced to pass some sort of exam in related CRM / human factors versus counting pennies?? -

Well, of course it is. such courses are available. City University do an MSc in Air Transport Manafement and Air Safety Management.
Cranfield had airline management courses too.

The trouble is, in an era whhere the bean counters rule why should 'best practice' get in the way of a good balance sheet?

[Re-Heat]

As a chartered accountant in the UK, I can assure you that accountants are certainly trained to look at far more than the numbers, and business management courses nowadays teach far more than 'easy' policies to run companies.

The analysts in banks who help to drive the share price are however known to use purely financial ratios in many cases to judge the worth of companies. Management often then respond to that to make companies look good and it is this that should be blamed, rather than accountants.

Of course it is rather easy to manipulate many ratios, simply by banning expenses such as taxis, lowering hotel standards and banning overtime; these of course never make any long-term benefits - hence why companies are in such a mess.

[Chimbu chuckles]

Well re heat I was going to post an example of the most bizarre beancounter lunacy I have experienced in 20 years of aviation and get you to expain to me why it was so clever from a beancounters perspective...but having described it to a relative who spent his entire adult life running businesses and teaching business management I will refrain...his reaction? I have never heard someone so pious (he sings in church choir) use so many expletives in one sentence.

His opinion of beancounters and modern business manager's practices is lower than Kaptin M's and my own...which really says something.

His opinion is that modern business managers essentially operate in contavention of most everything the learn in a MBA course due primarily to greed.

Chuck.

[Kaptin M]

Perhaps we need to look at precisely what airline specific training "beanies" receive.
Aviation is clumped collectively into the "transportation" arena, thereby determining that - from the outset - accountants will now assume that trucks, 'busses, trains, planes, ships, and taxis work from a common fixed base cost structure.
Basic operating cost per available mile vs available seat/space revenue income potential.

Is it any wonder so many airlines are being SENT broke by their very own management/accounting staff?!!

[Avman]

It's not only airline management which are naive. Tragically, it's a condition of epidemic proportions engulfing many industries. But how can we get rid of these idiots?

[Caractacus]

>>how can we get rid of these idiots?<<

Well, you can't basically. A better management culture will only happen when there are widespread business failures that are proven to be the result of the beancounter mentality.

I.e. look at the railways.

In my view Britain has become a country where we know the price of everything and the value of nothing.

[Re-Heat]

It is the fault of the banks that such poor culture takes effect - nothing is long-term, since managers are not motivated to think more than 2 years in the future, and the analysis of companies is exceedingly poor to encourage this behaviuor.

Accountants do ACA/ACCA/CIMA to qualify

MBAs are not worth much considering that people like George W Bush effectively paid to get into Harvard business school - they are worth a lot to people who need them, as opposed to people who are aquiring ever greater qualification.

The firm I work for, and many like it, although being focussed upon broad areas in structure, have many people who know much of the requirements of an airline audit. Managers, I would hazard a guess, know much about where they have worked, but little of a broad overview, unlike ourselves in my firm, and us as pilots.

Chimbu - I would be very happy to take a look at your example - I doubt it is acceountants who caused it however.

[fireflybob]

I think that if you look at any business enterprise which has been operating successfully for a long time you will often find an "entrepreneur" at the reins - witness, for example, Richard Branson. They don't always get it right but their track record is better than many with "formal" business qualifications. Business is about taking evaluated risks and if the only thing you keep looking at is the bottom line then you will not progress and expand as a business.

Far too much power has been handed over to the "beancounters" who only seem to understand the cost of everything and the value of nothing.
There is far too much short sighted thinking in much of UK airline management.

[PAXboy]

I suggest that you lookat Re-Heat's posting (above). The City of London (and Frankfurt and New York) call the tune.

Most of the things that CEOs and CFO's do is to please the city and keep the share price high.

The fact that shares earn best when held in the longer term (years) and the people who run them base most of their decisions on the short term (hours), is ignored.

The share price is the public index of a plc and everyone references it every day. They should do so once a month at most but it is too late.

Private companies see the things that plcs do and just follow suit, as they think that is how you get to be big.

It's like those books/lectures "The Daily Habits of the World's Most Successful Men", which are pointless because they have different personalities, backgrounds, experiences and desires. Trying to do what someone else does is not (usually) the path to success.