Recent Airline Mergers Indicate an Era of Moats

Vintage Logos of Airlines in the United States

The Delta-Northwest merger, the United-Continental merger, and Southwest-AirTran merger, and the American-US Airways merger have more or less concluded the consolidation era for the domestic airline industry.

Today, the top four carriers control rougly 70% of the domestic market, versus about the top nine airlines in 2000. But, does this substantial consolidation translate to a positive moat trend for the domestic airlines?

Flying on Airlines is a Commodity Product

To win in the marketplace, any airline would need to operate at the lowest cost to obtain a competitive advantage. Southwest was the first U.S. airline to earn a moat, thanks partly to it’s brilliant marketing strategy and its one-time favorable fuel hedge positions that gave it a distinct cost advantage over other airlines. Alas, No form of competitive advantage can deliver perpetual expansion. Even the Southwest ecosystem coundn’t curtail further encroachment and other airlies, primarily JetBlue, Spirit, Allegiant, and lately Frontier have further replicated and extended the Southwest low-cost operative model.

The frequent flyer miles that airlines have rewarded to consumers are not enough to create substantial customer-switching costs. I am not completely sure that the recent consolidation has resulted in renewed pricing power for the airlines.

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Posted in Airlines and Airliners Business and Strategy

The Hundred-Foot Journey

The Hundred-Foot Journey Movie

While working as a foreign correspondent, journalist Richard C. Morais, now editor of quarterly Penta magazine published by Barron’s, often rose in the early in the morning to sink your teeth into his interest fiction writing. His persistence paid off when his first novel, The Hundred-Foot Journey, was published in 2010 and became an international bestseller. The novel narrates a touching tale of a boy of meager means from India who navigates continents and traverses cultures to develop into a three-star chef in Paris.

'The Hundred-Foot Journey: A Novel' by Richard C Morais (ISBN 1439165653) American chef, author, and television personality Anthony Bourdain praised the book, “Outstanding! A completely engaging human story heavily larded with the lushest, most high-test food porn since Zola. Easily the best novel ever set in the world of cooking —and absolutely thrilling from beginning to end. I wished it went on for another three hundred pages.”

Four years later, the book was made into a movie with screenplay by Steven Knight and direction by Lasse Hallstrom. The movie was produced by Steven Spielberg, Oprah Winfrey, and Juliet Blake and features Helen Mirren, Manish Dayal, and Om Puri.

I endorse the book and the movie; they will move you and renew in you a respect for people who keep trying until they get it right.

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Posted in Music, Arts, and Culture Travels and Journeys

The Irish Cat : Poster and Poem

The Irish Cat : Poster and Poem

Broken whiskers,
dirty paws,
Always staying out of doors,
Stalking in and out the flowers,
Watching slimy slugs for hours,
Chasing dogs and climbing trees,
He loves heroics such as these-

And what is more,
He is sly and cunning
Just open the door
and he’ll come running
Through the kitchen,
Past the stairs
To sit upon your favorite chair.

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Posted in Music, Arts, and Culture

Carlos Slim Thinks We Should Work Less

The constant struggle to lead a balanced life is getting harder. As long as clocks have ticked, professionals have complained about overwork and lack of time. The way we live when we are not working affects what we accomplish when we are.

Carlos Slim, the Mexican billionaire recently called for a “radical overhaul in the way we work” at a business conference in Paraguay. Rather than the usual five-day workweek, he appealed that it we better put in three 11-hour days a week.

'The World's Richest Man: Carlos Slim In His Own Words ' by Tanni Haas (ISBN 1932841849) Carlos Slim expressed that having four days off a week would leave us invigorated and enthusiastic when we return for our three, albeit long, days of work and toil. Furthermore, that kind of schedule would help us to work until we are 70 or 75.

Slim also expressed his belief that this far-reaching change to work-life would provide younger workers more opportunity to enter the workforce and be a positive influence for the economy and financial markets. Overall, Slim believed that such a move would generate a healthier and more productive labor force, while tackling financial challenges linked to longevity.

Americans are the first to be censured for obsessive work habits and their fanatic sense of work-life. Many American professionals would love to consider the idea of working just five 11-hour days, let alone three, instead of the weekly 60, 70, or more hours that many workaholics put in. But then again, Parkinson’s Law famously states that work expands to fill the time allotted. So Carlos Slim might be right.

Recommended Reading: ‘The World’s Richest Man: Carlos Slim In His Own Words ‘ by Tanni Haas has an intensely rich, succinct compilation of insights as enunciated by one of the world’s greatest entrepreneurs.

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Posted in Health and Fitness Philosophy and Wisdom

Quotations on the Inner Scorecard

Inner Scorecard Some of the greatest thinkers in history have mentioned the importance of the inner scorecard.

  • “What the superior man seeks is in himself; what the small man seeks is in others.”
    Confucius
  • “This above all, to your own self be true, And it must follow, as the night the day, You cannot then be false to any man.”
    William Shakespeare, from Hamlet: Act 1, scene 3, 78—82
  • “Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma—which is living with the results of other people’s thinking.”
    Steve Jobs, Stanford Commencement address (2005)

Recommended Book: ‘How Will You Measure Your Life?’ by Clayton M. Christensen provides a business-like perspective of life, not in terms of reflecting on life in terms of profit or loss, but more in terms of ideals, ethics, integrity and brutal honesty about yourself, who you are and where you are going.

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Posted in Philosophy and Wisdom

Harland Sanders’ Cafe and Museum Celebrates the Entrepreneurial Spirit of Col. Sanders, founder of KFC

Birthplace of Kentucky Fried Chicken - Harland Sanders Cafe and Museum

Logo of Kentucky Fried Chicken (KFC) with Col. Harland Sanders Col. Harland Sanders was a late bloomer. At age 40, he put his savings into a small gas station in Corbin, Kentucky. By age 65, Sanders’ fried chicken had developed a cult following. Then, a new highway came along and diverted most of the customers away. A few of them hung around, mostly to eat Sanders’ fried chicken. It was at this point that Sanders turned his cult into a franchise that eventually became the international fast food giant, Kentucky Fried Chicken (KFC.)

Harland Sanders liked to pressure-cook his chicken. He offered franchisees a handshake deal: he’d ship them his secret seasonings for fried chicken by train in return for a nickel for every bird cooked.

Harland Sanders Cafe and Museum Celebrates the Entrepreneurial Spirit of Col. Sanders, founder of KFC

Entrepreneurial Spirit of Col. Sanders, founder of KFC

Sentimentalists now flock to Col. Harland Sanders Cafe and Museum in Corbin, Kentucky, where Sanders’ original cafe has been restored, down to its battleship-gray floors. The museum features antique pieces furnishings from the home of Col. Sanders, glassware, old KFC boxes and bags, an old Cash Register, a unique Cigarette Machine—so many memories packed into one small museum!

Restoration of Col. Sanders' Original Kentucky Fried Chicken (KFC) Cafe

Getting to the Harland Sanders Cafe and Museum

Sight: Col. Harland Sanders Cafe and Museum
Location: Junction of US 25E and 25W
City: Corbin, KY [ map]
Phone: (606) 528-2163
Hours: Open Daily 10:00 AM to 10:00 PM

'Col. Harland Sanders: The Autobiography of the Original Celebrity Chef' by Colonel Harland Sanders (ISBN 0985543906)

Recommended Books about Kentucky Fried Chicken (KFC) and Col. Sanders

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Posted in Leaders and Innovators Travels and Journeys

Being Innovative: The Confidence to Reject Conventional Wisdom

The Confidence to Reject Conventional Wisdom

In innovation, saying no can get you ahead. If one of the keys to being a happy person is having the ability to say yes—to new people, ideas and experiences—one of the keys to being a stylish person is the ability to say no.

'Steal Like an Artist: 10 Things Nobody Told You About Being Creative' by Austin Kleon (ISBN 0761169253) Mastery of the art of refusal is something every person of great style I’ve ever come across shares: the confidence to reject trends or conventions that don’t feel uplifting or authentic—whether of living, dressing or decorating.

Success is often built on a reflexive habit of saying “yes” to opportunities that come your way. Iconoclasts have renounced bigger homes for smaller ones, modern comforts for more basic ones, a more illustrious career for a more meaningful one, a decorative embellishment for design clarity or simply more stuff for fewer, better, stuff. These people are not the least bit ascetic or anhedonic, but rather recognize value in the absence of too much.

Recommended Book: ‘Steal Like an Artist: 10 Things Nobody Told You About Being Creative’ by Austin Kleon demonstrates how anybody can use the idea of mixing what others have done to come up with great ideas that take the concepts to a level not envisioned before.

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Posted in Mental Models and Psychology

China’s Roller-Coaster Love Ride with the Oreo: Challenges for Marketers

Challenges for Marketers in China: Kraft Mondelez Oreo Cookies

While there are tremendous growth opportunities for global brands in the Chinese consumer marketplace, to be successful in China, global brands must align with local Chinese culture and tastes. It is essential that multinational corporations understand the promise, the potential, and the complexity of China’s markets

In 2013, the market size of the biscuit and cookies market segment in China was estimated to be about 50.4 billion Yuan, or USD 8.3 billion. With 16% market share, Mondelez International lead this market segment with Oreo established as the country’s most popular cookie brand.

Kraft Foods, then the parent of Mondelez, launched Oreo in China in 1996. In 2012, Kraft Foods split into two distinct publicly traded companies: snack-food giant Mondelez International and the North American grocery business Kraft Foods Group. For most of its 100-year existence, Oreo has been America’s best-loved cookie, and today it is a global brand.

'China's Super Consumers: What 1 Billion Customers Want and How to Sell it to Them' by Savio Chan, Michael Zakkour (ISBN 1118834747) In 2006, however, the Oreo cookies business was a tiny $30 million business that was losing money. This was largely because executives in Kraft’s headquarters, near Chicago, expected to just drop the American sandwich cookie into the Chinese market and watch it fly off shelves. The US-parent had assumed that what made Oreo cookies successful in its home market would be a winning formula in other markets as well. Kraft Foods CEO Irene Rosenfeld admitted, “It was too sweet, too big and cost too much.” The tradition of twisting open Oreo cookies, licking the cream inside and then dunking it in milk before enjoying Oreo cookies was considered a “strangely American habit.” Kraft’s local Chinese leaders developed a regional concept—a wafer format in subtler flavors such as green-tea ice cream.

By Q1 2013, China is the second-largest Oreo market, a $600 million business growing 30% a year. Fortunes declined by Q4 in part because China’s appetite for the creme-filled sandwich cookie fell. Distributors had excess biscuit inventory and a general realization that cookies are not as healthier. Chinese consumers bore easily, so food makers need to innovate and introduce new brand to keep the market constantly hooked. Traditional techniques, such as changing the packaging often is not enough.

Recommended Reading: ‘China’s Super Consumers: What 1 Billion Customers Want and How to Sell it to Them’ by Savio Chan, Michael Zakkour narrates the underlying change in the nature of Chinese consumers and the way that they think about buying products and services.

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Posted in Business and Strategy Global Business

Outsider CEO v/s Insider CEO

Outsider CEO v/s Insider CEO Well-run companies like to promote from within. They view talent as a strategic asset and have robust succession planning and career development plans across the breadth of their organization.

Dysfunctional companies hire outsider CEOs to head off disaster. Sure, outsiders may bring a fresh perspective, but they have more risk. Onboarding to a new company and organizational culture takes time. This implies that outsider CEOs may not add full value for several months, or even years.

It’s rare for an internal candidate to fix complex messes that a company might be in. How could anyone, who tolerated the company’s strategic missteps and operational flaws for the past several years, quickly see the company with fresh eyes and pronounce, “Enough already! Let’s change course.”

One study concluded that insider CEOs tend to outperform outsider CEOs.

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Posted in Management and Leadership

Big week for the Airbus A380: Qantas, Emirates, British New Routes to USA

Big week for the Airbus A380 this past week. Emirates, Qantas, and British Airways operated their A380 aircrafts to new destinations in the United States this week.

First Flight of Qantas Airbus A380 to Dallas/Fort Worth (DFW)

Qantas Airbus A380 VH-OQL gets a water salute at Dallas-Fort Worth (DFW)

On 29-Sep-2014, Qantas made aviation history by starting the 1 beginning to operate the world’s longest non-stop trip between Sydney airport (SYD) and Dallas/Fort Worth (DFW.)

First flight of Qantas A380 VH-OQL arriving at gate in Dallas/Fort Worth (DFW) airport on the world's longest non-stop trip

The 8578 mi-long route takes 14 hours 50 minutes to get from Sydney to Dallas/Fort Worth and 15 hours 30 minutes to return. VH-OQL, sporting the iconic kangaroo logo with a cowboy hat and bandana and a special nose emblem reading “G’day Texas,” operated QF 7 departing Sydney at 13:27 and arriving at Dallas/Fort Worth at 13:21.

Qantas Airbus A380 VH-OQL sporting a cowboy hat and bandana for first flight of Qantas A380 to Dallas/Fort Worth (DFW)

Qantas “Ambassador,” certified pilot, and actor John Travolta greeted arriving passengers as they exited the A380 at DFW.

Qantas ambassador, certified pilot, and actor John Travolta after first flight of Qantas A380 to Dallas/Fort Worth (DFW)

First Flight of Emirates Airbus A380 to Dallas/Fort Worth (DFW)

Emirates Airbus A380 A6-EET arrives in Dallas-Forthworth (DFW) after first flight as EK 221

On 1-Oct-2014, two days after Qantas Airways flew the first Airbus A380 to Dallas/Fort Worth (DFW,) Emirates started operating its Airbus A380 aircraft to the Dallas/Fort Worth (DFW) airport. Operating as EK 221, A6-EET departed Dubai International (DXB) at 02:42 and landed on runway 18R just before arriving into gate at 09:21.

Emirates Airbus A380 A6-EET lands in Dallas-Forthworth (DFW) after first flight of A380 EK 221

At Dallas/Fort Worth (DFW,) the high-speed taxiways between 18L/36R and 18R/36L were widened and reinforced to support the A380 aircraft.

Emirates Airbus A380 A6-EET gets a water salute at Dallas-Forthworth (DFW) as EK 221

First Flight of British Airways Airbus A380 to Washington Dulles (IAD)

British Airways Airbus A380 G-XLEB first landing at Washington Dulles (IAD) as BA 217

On 2-Oct-2014, British Airways started operating its Airbus A380 aircraft to the Washington Dulles (IAD) airport.

British Airways Airbus A380 G-XLEB gets a water salute at Washington Dulles (IAD) as BA 217

IAD is the second airport after Los Angeles International (LAX) to receive the British Airways A380.

British Airways Airbus A380 G-XLEB at gate after first flight from London Heathrow (LHR) to Washington Dulles (IAD)

G-XLEB operated BA 217: it departed London Heathrow (LHR) at 09:21 and landed in Washington Dulles (IAD) at 16:41.

British Airways Airbus A380 first flight from London Heathrow (LHR) to Washington Dulles (IAD) as BA 217

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Posted in Airlines and Airliners