• Wed. Jun 22nd, 2022

What you can learn from the failure of the airline industry

The airline industry is hemorrhaging in the aftershock of the Covid-19 pandemic. Warren Buffett’s Berkshire Hathaway has sold its holdings to three major US airlines. Delta Airlines started 2020 by announcing that 2019 had been its most successful year yet, but four months later Delta had to cut 10 airports from its network, cut schedules and ask employees to take a drop in salary and early retirement. And, outside the United States, Latin American air networks have reduced capacity.

This gigantic industry is shaking in its boots. And it’s a cautionary tale for the small business owner about preparation and perspective. How do you tend to react in a crisis?

There are valuable lessons from the airline industry that every entrepreneur can learn from. My own experience advising leaders on prioritizing what really matters and applying foresight brought out the following three tips.

1. Practice foresight

Uncertainty is a given. So get into the habit of being super observant of your current state. Often when a business is in a legacy industry, like the airline industry, it becomes easy to become complacent and fall into a too-big-to-fail attitude. Foresight involves assessing what is happening now and identifying several possible future scenarios. It is important to organize foresight sessions regularly, and not only in times of panic.

Think of it as a type of preventative medicine, in the same way that getting your teeth cleaned twice a year can guarantee good health down the line.

2. Just say no

In 2007, one of Buffett’s warnings to the airline industry was that it needed to be “pushed back by growth.” A capital injection is not always the solution. So identify areas of your business that you could stop trying to grow.

“No” is a complete sentence. And when we say no to a request or an opportunity, we are saying yes to another stakeholder, yes to time, or yes to the seed of an idea that needs to be cultivated. Try to implement what Greg McKeown, author of Essentialism, calls it a “reverse prototype”. Test eliminating an expense of money or time for a period of a month and see if anyone notices. And, more importantly, see if it drives ingenuity in another area of ​​the business.

3. Reframe and optimize being the little guy

With changes among major airlines, there will be incredible opportunities for smaller players in the airline industry. Avi Meir, CEO and co-founder of TravelPerk, is optimistic that travel will gradually resume, but there will be many more barriers to entry: longer, more expensive lines and uneven quality. I believe the smaller, private airlines that voraciously sell to senior management will win. Their size and scope will allow them to be agile and to personalize their offers.

Within your own business, reframe using a systems design approach to zoom out with perspective and reframe your current situation. Using a “systems approach” means that you make decisions in context, anticipating the cascading effects of one choice on another. You see the interconnectedness and networked nature of your business as part of a larger whole. It’s reminiscent of Edward Lorenz’s “butterfly effect” in chaos theory, where the flapping of a butterfly’s wings in the Amazon jungle can cause a tsunami in Sri Lanka.

Be sure to pay attention to the macro environment. Identify areas in your sector where there is oversaturation and go in the opposite direction. Zig where everyone zags. Analyze and anticipate where your business sits in the network and identify the cascading effects of bad news up or down the supply chain.

Crisis cannot be avoided, but we can put practices in place to mitigate disruption.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.