Continental Cuts 3,000 Jobs as It Grounds Planes – NYTimes.com
Continental’s move, which equals a 16 percent reduction in its capacity, had been rumored in industry circles on Wednesday. The details came in a message to employees from Continental’s chief executive Lawrence W. Kellner and its president, Jeffrey A. Smisek.
“The airline industry is in a crisis,” the two executives said in the message to employees. “Its business model doesn’t work with the current price of fuel and the existing level of capacity in the marketplace. We need to make changes in response.”
It is about time that these airlines realize that charging for tickets is a horribly outdated business model. I’m looking forward to the airlines switching their business model to a pure CPC advertising model, where you click on a flight attendant when you see an ad you like, or perhaps a freemium model where you board the plane for free and can pay halfway through the flight if you like the service. If you choose not to pay, you must complete the rest of the flight while seated in the lavatory, or perhaps they eject you with a parachute (which is also sold onboard for a nominal additional charge).
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Wikipedia: “The term business model is used for a broad range of informal and formal descriptions that are used by enterprises to represent various aspects of its business, including its purpose, offerings, strategies, infrastructure, organizational structures, trading practices and operational processes and policies.”
I know, it was a surprise to me too. Working for web start-ups, it can be really easy to think of “business model” as being a code for “where can we get some cash to keep this insane company afloat until we’re purchased by Google, Yahoo, or Microsoft, or perhaps develop some product or service that customers actually want to pay for.”
It turns out that when you already know what your product or service is, there are other choices to be made, and the term “business model” is used in many industries to encompass these choices.
Who knew?
What about the run the airline at a loss by giving seats away for free, and hope that you get acquired model, so popular in the dot-com space?
“Getting more investor dough” is not actually a business model by anyone’s definition. It may be a business tactic for some businesses, certainly not restricted to technology. But when the airlines complain that their business model is being completely invalidated by high fuel prices, that doesn’t make sense either. What they really need to do is raise prices — or look into an alternative to petroleum based fuel as Virgin recently experimented with.
I look at virtually any statement of this kind on the part of the airlines as part of the kabuki theater that results in worker layoffs, reductions in wages and benefits, and convincing the government that they all should be allowed to merge into one crappy airborne version of Greyhound.
I wasn’t referring to investor cash, actually, I was referring to the various smoke-and-mirrors business models that web companies have historically employed to avoid actually charging their customers for services. (Mostly advertising, but there are others).
I get what you’re saying about the airlines. My point is that raising prices IS a change of business model. Other changes in business model that would be valid in the airline industry: rethinking plane layouts, loyalty programs, scheduling, routing, reservation systems, etc. All of this fits under the umbrella of business model, even if the fundamental revenue source is still customers paying for tickets.