Airlines & Curry Houses
Airlines share legacies & challenges in common with the Indian restaurant sector – what can airlines learn?
The great city of Athens has been closely associated with western philosophy for thousands of years. Around those many steps and columns, Socrates, Plato and Aristotle laid the foundations of how we see the world – in the words of great gentlemen Bill & Ted, it would have been most tranquil.
It was in Athens too that fabulous BBC journalist and news presenter Kasia Madera explained to me why people love to have BBC celebs hosting their events. Apparently the London-based broadcaster’s reputation for unbiased reporting is unparalleled, so the audience can be sure that what the speakers have to say will be accurate. No doubt Socrates, Pythagoras and the rest would have approved.
Kasia and I were in Athens for the 2019 edition of GAPS, a conference covering airports and passenger experience organised by airline trade association IATA. And it turned out that earlier this week I attended another event hosted by Kasia too – the Channel S Catering Circle fifth annual business awards and gala dinner. Sadly she did not remember me, but never mind.
Catering Circle is a serious programme addressing the interests of the British curry industry and is produced by the largest broadcaster to the British Bangladeshi community.
Now you might be wondering why your favourite airline revenue economist was attending the annual jamboree for Indian restaurant owners. I do like a curry (like those of Taj Rasoi Doha above, pictured) but it turns out that among members of the audience I am a bit of a celebrity. Apparently they like what I have had to say about menu pricing on the programme – something I use my experience pricing airline tickets to figure out.
It is not just Kasia Madera that airlines and curry houses share. As the evening progressed through various drinks, speeches and awards it struck me just how much the two sectors have in common. But I think that the world’s great airlines have a thing or two to learn from the caterers about how to raise revenue in the 21st century. Read on to find out why…
Common legacy #1 – the 1960s lives on
These days we all know our chicken balti from our beef madras and our pork vindaloo from our rogan josh. But that was not always the case. Chicken tikka masala was apparently created in Britain in the 1960s, a time when Indian restaurants were new, exciting and a little bit exotic.
At about the same time, airlines were installing the first computer reservation systems (CRS) like Pan Am’s PANAMAC and Delta’s DATAS. These helped store bookings and sell tickets.
Sixty years later diners are still enjoying chicken tikka masala and airlines are still using CRS. Today’s restaurant menus are influenced by the 1960s legacy and today’s airline booking, reservation and revenue generating mechanics are too.
Common legacy #2 – a family business & a career for life
Many Indian restaurants are operated by children of the original owners. Go to an airline’s technical building and it will not be hard to find a pilot whose father was an aviator too, often with the same airline. For this reason my social media feed sometimes seems full of people saying ‘jet fuel runs in my veins’ or similar.
Certainly airlines and oriental kitchens both require specialist knowledge and training, rarely recruiting from outside. Frequently people join the industry for life. It takes a significant amount of effort and emotional attachment to master either the chicken jalfrezi or the Passenger Air Tariff.
Common legacy #3 – paper documents
Menus, bills and tickets were traditionally printed on paper. Electronic versions are now available but they have the same fundamental structure. While these are surely adequate records for meals, airlines need to move on to a blockchain environment (see article) with non-fungible tokens (see article) and airline coins (see article).
Common challenge #1 – a cost focus
Due to issues associated with COVID and the war in Ukraine the cost of food is increasing rapidly. British chickens may not be grown in the war-torn country but they do eat feed grown in the breadbasket’s fields. According to restaurant suppliers I met last week the cost of chicken has increased by 30%.
Both airlines and restaurants keep a close eye on their costs. In the catering trade the cost tends to feed directly into pricing more than it does at airlines, who depending on how whizzy their algorithms are price more on the basis of either passenger willingness to pay or whatever a competitor is charging.
Common challenge #2 – a homogeneous product in a crowded marketplace
Enjoying a King Cobra lager with a rogan josh is one of life’s pleasures. But unfortunately for Indian restaurant owners it is a pleasure that is not particularly scarce and so does not command a highly profitable price. Airlines are the same – by-and-large they sell seats in a tube and passengers find it hard to tell the difference between brands.
Both businesses can address this challenge by finding ways to focus on value rather than product alone – any salesman will tell you that focusing on features rather than benefits is a sure-fire way to failure.
A few weeks ago I arranged for my family to enjoy a takeaway from the Valley Junction in Jesmond, a suburb of my home city Newcastle upon Tyne – check out their menu here and notice how they have a large selection of specials that you do not normally see.
I tried the chicken shat kora delight, a lemony confection unlike any curry I had enjoyed before. It was delicious – and quite different to the standard balti-jalfrezi-madras. We will go back again soon to try some of the other interesting options. Because the Valley Junction offers shat kora they might be able to charge a little more for the rogan josh too, even if the guest does not choose the shat kora.
Airlines need to do the same, surprising and delighting their passengers. For example London-based BA offer Magnums, a large British ice cream bar, halfway through daytime flights in their World Traveller economy cabin. Something a little different that excites the customer can make them feel positive about their experience, increasing demand (and so revenue) as they recommend the airline to their friends or buying their next tickets with that airline even if the price is higher.
The basic option for airlines trying value-based pricing is to concentrate on schedule – the more options there are and the shorter the total travel time is the better. More advanced value-based pricing considers the value of time that an airline helps a passenger save, particularly in premium cabins (see article).
Common challenge #3 – multi-source suppliers are unable to solve all the problems
IT vendors like Amadeus, Sabre and PROS (see article) power airline revenue management and restaurants have their own tech stack too (like Purple I Technologies, who sponsored the Catering Circle’s shindig). Unfortunately for both industries there is no one supplier who can wave a magic wand and solve all the issues – managing a business is hard and there are no right or wrong answers.
Different approaches #1 – centralised vs siloised approaches
One area where airlines can learn from restaurants is in the decision-making structure. Since restaurants are small family businesses it is extremely clear who takes the decisions – normally the business owner. Airlines however often have disjointed and highly siloised organisations with no clear decision-making process.
Ricardo has written about how enterprise-level artificial intelligence can be used to design better organisations (see article) but regardless of how sophisticated an organisation’s design is, if staff are not enabled to make decisions nothing will ever get done.
This is not to say that the top-down micro-management style which Qatar Airways is famous for is required. Simple things like allowing any Vice President, who should be senior enough to be trusted, to spend $1,000 (£760) no questions asked to solve a problem can make a big difference.
This approach is not unknown in hospitality. At Ritz Carlton ANY employee can spend up to $2,000 (£1,520) to solve a guest’s problem.
When I recommended such a strategy as part of my review of the procurement policy at Qatar Airways (my last piece of work for the airline, assigned after I resigned – nobody else was brave enough to do it…), this created a bit of a hoo-hah when it really should not have done.
Different approaches #2 – agility & a sense of urgency
The same is not true in the curry business. As small enterprises their cash position is dependent on their sales and they frequently do not have significant assets to borrow against. This means that at the Catering Circle’s event you could sense the urgency in the air. The same is not true at IATA GAPS or other airline events, but it should be.
Some airlines take years to make decisions, if they ever make them at all. I have been warned of some airlines who take more than a year to settle invoices – with that in mind I will not be working with those carriers any time soon, even if they asked…
Different approaches #3 – a personal stakeholding
A key reason why some curry houses innovate and try new things is that their managers have a personal stakeholding. If they fail the business fails and vice-versa.
The same is not true at airlines and you can tell this when you go to industry events. Of course airlines are full of talented staff who want to do a good job, but since there is often no reward for exceptional vs average performance that good job is often only good enough.
In revenue generating departments there are two paths to exceptional performance. First is a bonus culture like in the financial services industry. This approach is known to facilitate high revenue growth but often comes with high personal costs to employees in terms of their wellbeing from long hours at work and high pressure to perform. It may also be vulnerable to nepotism and corruption.
A second approach is to establish new career paths for talented analysts and mangers that entail high analytical competence and leadership-level pay grades but do not involve managing people (see article). I call these jobs “revenue engineering”. Building these career paths means that although the potential rewards are not as stellar as under the bonus system employees have an incentive to go the extra mile and work-life balance is retained.
My favourite Indian restaurants
As well as The Valley Junction, I would also recommend their sister restaurant The Valley at Corbridge, an ancient market town between Newcastle and Carlisle. They have a fun service called the curry train – if you give them a call beforehand their representative will meet you at Newcastle Central Station, serve drinks on the train and take your order en route. The food is then ready on arrival. Best done in a large-ish group.
For those preferring to reach their curry house by air, here I am at Doha’s Chingari which is arguably even better than Taj Rasoi (see article) in 2010. My dinner companion is Xia Cai, the design genius behind the award-winning Qsuite (see article) and later head of branding at Oman Air. At the time she was wooing me to join her team.
oliver AT ransonpricing DOT com
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