The Airline Business in the 21st Century

Rating:
Summary: Interesting
Review: A good overall explanation of the airline industry as a whole. Very informative and interesting.

Rating:
Summary: Interesting
Review: A good overall explanation of the airline industry as a whole. Very informative and interesting.

Rating:
Summary: Very informative and comprehensive
Review: Outlines all the essentials that an airline executive should know in facing the challenge in the 21st century. It would be more perfect if more details can be raised under e-commerce and airport charges ie. direct and indirect costs.

Rating:
Summary: Excellent Overall, Though Troublesome In Places
Review: Rigas Doganis is a brilliant man, and I regard him very highly as an authority on the modern airline industry. This book was originally published in early 2001, and by virtue of predating the terrorist attacks of 9/11 some of the information presented here is a bit outdated. Of course nobody could have accurately predicted the effects of the 9/11 attacks, but there are several other inaccurate predictions in the book as well, most especially the forward looking prediction of fuel prices. There are also several simply incorrect statements presented as fact here. For instance on page 132, Doganis asserts that the key reason that Southwest Airlines is so successful is due to its "low cost, non-union labor." Actually Southwest has some of the highest paid workers in the industry (they are, however, more productive, on average, than those at legacy airlines) and virtually all groups at Southwest are unionized. What is true is that many other low cost carriers do in fact have poorly compensated non-union workers. He also (page 133) alleges that Southwest has three Flight Attendants on a 737-300, whereas most airlines use either five or six. I know of no airline that routinely staffs a 737-300 with that many Flight Attendants (the airplane doesn't even have than many Flight Attendant jumpseats), certainly not in the US.

Doganis comes out in favor of cabotage and total deregulation of the worldwide industry, which US carriers view as predatory inasmuch as the US domestic market is still the single largest aviation market in the world. The problem with his view is that the US government has for several decades now depended on CRAF (Civil Reserve Air Fleet) aircraft for the majority of its airlift in wartime as a budget cutting measure. By using CRAF for airlift, the USAF needs vastly fewer transport aircraft, saving the government billions of dollars annually. The issue to recognize (which Doganis doesn't even touch on) is that if major airlines come under foreign control, those CRAF aircraft can't be counted on to support the US military. Imagine if French interests controlled one or more major airlines during the latest Iraqi campaign. This is obviously a thorny area that can't be simplistically reduced to the level of analysis that Doganis has reduced it to.

Doganis has both good and bad moments in this book. In Chapter Five, his obvious pro-management bent (he is a former CEO of Olympic Airways of Greece) blames virtually all monetary problems on the cost of labor while sometimes discounting bad managerial decisions, although to his credit, in other parts of the book he does discuss the pitfalls of bad management. The book is illustrated with many charts, some of which are quite good, but many of which are irrelevant at best and confusing at worst. The section on e-commerce predates the development of Orbitz and is generally out of date, although many of his predictions have thus far been proven correct. In the plus column, he writes brilliantly on the effects of seat commoditization, and (page 174) brilliantly unmasks the whole Priceline.com issue for what it really is.

This book is a weighty and ponderous read, but I do recommend it to airline and management professionals, particularly those with background in the economics of commercial aviation. This book has its faults, but reading it is still time very well spent.