Working With Airlines - Part 1

Why do airlines and their suppliers struggle to work effectively together?

Airlines are some of the largest and most complex businesses in the world. A large supply chain offers everything that they might need, but because aviation is fiercely operations focused, low margin and the first priority is always safety it can be incredibly difficult to ensure projects bear fruit – airline procurement takes too long and outcomes are a lottery for both airline and supplier.

This article, the first of two, explains how airlines and their suppliers struggle to work effectively together. Next week’s article will explain in four prescriptions how they can work together to achieve better results, faster.

It is increasingly common that suppliers are being called upon to show how their product and service will grow revenue, not just save money on the cost side. See this article to learn about some of the basic revenue metrics that suppliers need to understand.

There are three structural problems with aviation that make getting projects moving tough:

Problem 1: Suppliers often do not really understand the priorities of the airline managers they speak with and those managers focus only on one area

As airlines are so complex, it is common for a certain project to cover a wide range of issues. For example, selecting a new coffee supplier clearly impacts catering, who deliver the coffee to the plane. But it is also requires involvement from procurement (issuing the tender), finance (offering the budget), menu development chefs (evaluating the taste) and perhaps others too.

Who is the buyer? It is not always clear. Typically one department will lead the process and it is not necessarily the same team at every airline. The stakeholder departments may have different priorities to the managing department and so the supplier’s meetings will not necessarily reflect what the airline really wants.

Suppliers need experienced business development managers who can cut through the fog. They must really understand how airlines work across multiple departments – rare beasts indeed – and be agile to adjust their sales approach depending on who exactly the airline’s project manager is.

Airline managers wishing their project success (bringing new coffee onboard in our example) must convince other stakeholders that this should be a priority too – a skill that must be learned but often has not been.

Problem 2: There is too much information transfer and too little discussion of value and fit

As airlines are operations and safety focused their managers tend to ask for technical information. Suppliers then hand over large appendices that nobody will ever read and are disappointed when their project does not succeed. A seating manufacturer for example might provide all kinds of supporting information like crash testing data, materials flammability studies and schematics of the seat’s actuators and electronics.

The problem with this is that such data does not actually help make a decision happen. Every supplier demonstrates compliance and vendors who spend too much time discussing technicalities will struggle to differentiate against their competitors. To stand a better chance of success, they need to demonstrate value to the airline.

Airline project managers for seating any anything else on the other hand should seek questions and insight from other stakeholders. Taking issues raised by designers, revenue managers, salespeople, airport staff and network planners among others to meetings with suppliers will help make the conversation vibrant and memorable, giving the supplier a chance to really demonstrate what they have to offer and help the purchase decision happen sooner rather than later.

In general an airline project will only be successful if the supplier’s meetings and messaging cover three things:

(i) information transfer – what the product or service is and it’s supporting technical appendices

(ii) insights that facilitate a discussion – like how much revenue will be created or why the airline’s unique network and fleet is the perfect fit for the product or service in question

(iii) calls to action that inspire a decision – reasons why the time to buy is now.

Suppliers should seek to ensure that all of these things are covered, but airline managers must play their part and actively lead discussion towards them too.

Problem 3: Airline managers are too busy – suppliers lose sales not to a competitor but to other projects

Imagine your to-do list having 1,000 things on – that’s the life of an airline manager. There are so many things for them to do that many things do not get looked at. If a supplier does a great job, beats 950 other projects and gets their project to number 50 on that list it will still never happen – when was the last time you did item 50 on your list?

For a project to succeed suppliers and airline managers must ensure that it gets to number two, three or four on that list (number one always being safety) and stays there long enough for action to be taken. Next week we will see how to make this happen.

oliver AT ransonpricing DOT com