What Air Canada Needs To Do To Be Successful
One of the most compelling business stories of the last two years has been the fall
and rise of Air Canada. Certainly Air Canada is facing a better potential future than they
were before entering court protection April 1, 2003. A hugely reduced debt, a dramatic
reduction in the number of types of planes in their fleet, and a greatly reduced wage bill
are all positives. From a strategic viewpoint their international network, position in the
global Star Alliance, and frequent flyer program are all considerable assets which bode
well for their future. However, to my mind, the key issue upon which Air Canada’s
future hangs, is a marketing issue.
I believe that many Canadians are willing to give Air Canada yet another chance.
Sure, there are Canadians who are die hard WestJet fans or deeply loyal to CanJet.
However, for most of us who travel a lot on business, Air Canada with its’ frequent
flights, wide range of destinations, overseas business class and Aeroplan is a natural
choice. So for their strong position in Canada it is Air Canada’s to lose. I must admit
that when I bring Air Canada up in marketing executive programs I teach on the reaction
is quite mixed and it seems everyone has a story to tell. To a large part this is because
virtually all of us have ended up on Air Canada a great deal. The lost baggage so often
central to stories of airline woe are increasingly a thing of the past thanks largely to
technology and a focus on better quality. On several levels customer experience things
are simply better at Air Canada: check yourself in terminals, more destinations for
business travelers, simpler fare structures, 24 hour a day ticket purchase over the internet,
etc..
The gap which too often remains between WestJet and Air Canada is not in the
business model arena but in the way that we are treated at the essential points of human
contact, when we call Aeroplan, at the Maple Leaf lounge, by the flight attendants, the
ground service staff and even the pilots. These are called “moments of truth”, when the
marketing efforts of AC are seen as hype or true. Interestingly the expression “moments
of truth” was first widely used in the airline industry, by SAS. Based in Scandinavia,
among the least hierarchical countries on earth, SAS had a real problem because in those
type of societies service was not seen as a natural activity. It was only through a dint of
long and hard work did they make service part of their corporate culture.
On recent Air Canada flights I have experienced truly excellent service where I
was made to feel very much at home and I have also been left tight lipped with
suppressed upset. That is the problem. Many AC employees are quite capable of
competing neck-in-neck with WestJet at it most people pleasing. Sadly, some others are
not. What is at the heart of Air Canada’s ability to soar is no longer a renewed business
model, they have that, nor sorting out fares and routes to market, they have that, nor the
“right” assortment of planes, they have that, nor a lower cost of operation, they have that,
what they need is quite simple but very difficult. Simply put, can Air Canada
consistently deliver an excellent service experience?
For most frequent travelers, many Marketing readers, this will be the acid test of
whether Air Canada will retain them as continuing loyal customers or whether they will
succumb to the allure of AC’s competitors. This will not be easy! The legacy of the
last year and half of CCAA protection, of the to-and-fro of union and management
negotiations on wages, layoffs and other concessions is that of some rather hurt feelings.
Uncertainty about whether you would have a job in the face of massive layoffs is rather
off-putting! Prior to they had to wrestle with to other parts of their heritage, their
heritage as part of the old fashioned beaurocracy of when they were part of the Canadian
government and the residue of hard feelings from the merger with Canadian. Thankfully
the last two seemed to have finally receded into being part of history.
Air Canada’s business model is there or will be there shortly. I believe that it is
the focus on the customer which will be the tipping point for Canada’s airline. Let’s hope
Robert Milton and crew are up to it. We’ll all be the judge.