Archive for September, 2013

A tale of two airlines … and a tale of two cultures?

Tuesday, September 24th, 2013

One aspect of organisational culture that interests me is how two companies in what is ostensibly the same line of business have such different ways of operating. I have had a recent personal experience of this phenomenon.

In October 2012, my wife Peta and I were in Florida and due to fly to New York for a few days prior to returning to the UK. Hurricane Sandy had other ideas.  As you may recall, Hurricane Sandy caused considerable devastation – particularly around New York. We had already experienced the weaker aspects of Sandy in Florida, and then received an email stating that our internal flight to from Florida to New York had been cancelled.

We looked at getting to New York by train or car, or getting a flight to an airport slightly inland that wasn’t closed … but at the end of the day, we had no way of knowing whether our flight out of New York would leave – it was due to leave on 31st and the storm was supposed to have passed by then, but we couldn’t be sure.

Our flight out of New York was with Virgin Atlantic. I decided that a trip to Orlando Airport for a chat with Virgin would be the best plan. Could they fly us out of Orlando, perhaps?  No, they couldn’t – all flights were full (understandably, I suppose, as it was the UK half term holidays). In fact, all their flights on the eastern seaboard were full for the next three days.

The best they could offer us was a flight back from Las Vegas – which is about 3,000 miles west of Orlando. It was our best option. But as our New York flight had not yet been cancelled, and we did not yet have a way of getting to Las Vegas, should we change flights?

Virgin said that they would reserve us two seats on the Las Vegas flight and also keep our seats open on the New York flight. Also, they wouldn’t charge us any additional cost (even though the Las Vegas flights are considerably more expensive than the New York flights), nor would they charge us an alteration fee. They couldn’t have been more helpful and it meant we had multiple options. We did eventually take the Las Vegas option having managed to source other flights to get us there. Great customer service.

I wrote a letter to Virgin expressing my genuine delight and satisfaction at the way we had been treated and the assistance we had been given.

Shortly after this, in January 2013, I booked further flights with Virgin to return to the US for later in the year – on this occasion, however, we were taking my mum for part of the holiday, and she would fly back after 10 days (she has never been to the US, and has always wanted to visit the Grand Canyon – so we thought we would make it a reality for her).

Having booked those flights, I needed a flight to get my mum back from Heathrow to the north of England. I booked a flight with British Airways to Leeds-Bradford.

Less than 2 weeks later, BA contacted me to say that they had altered the flight time by about an hour and a half – which meant that my mum couldn’t make the flight due to the reduced time connecting time.

I spoke with and wrote to various people at BA in an attempt to get a full refund. They refused saying that they could change the times if they wished – I retorted that they were reducing the number of flights a day to Leeds-Bradford which was more than changing times.

Their email communications to me included, “… but I do hope your mother has a pleasant flight with us in October”. That was my point, she couldn’t make the flight – I wasn’t being listened to!

The flight cost around £65. BA said that they would refund me the tax (about £40) with a £15 administration fee deducted. I thought it was time for some negotiation. I offered to have my mum fly into Manchester as a compromise – even though this was less convenient for her. BA said this was fine – but they would charge me a £60 fee for cancelling the original flight – thus making this more expensive than accepting the refund and booking afresh!

That was the last straw. The ticket wasn’t expensive, but companies should listen to customers and they should not ignore legitimate representations.  I asked for a full refund or I would take the matter to the Small Claims Court. No response from BA. Consequently I issued a Claim through the County Court.  BA have now sent me a complete refund. They had no grounds to support their position and were, I presume, hoping I would not challenge them on it.

In the airline industry, there aren’t too many differentiators – the costs of flying across the Atlantic are generally similar, they fly from similar airports, the seats are much the same (in the respective cabins), so one of the few remaining differentiators is customer service – so doesn’t that make it even more important?

Or is it more serious than that? It is now 20 years since BA apologised “unreservedly” at the High Court for their infamous “Dirty Tricks” campaign against Virgin, and now they have again been financially penalised again for their practices. Whilst there is a considerable difference between the two penalties, the issues are potentially similar – a big company thinking it can do what it wants.  Is BA adopting a Covert Dishonourable Culture Strategy?

What do I mean by a ‘Covert Dishonourable Culture Strategy’? This is where an organisation, usually a large one, knows that it has a particular culture or aspect to its culture, which it believes gives it a business advantage and which it would not be comfortable to make overt, but does little or nothing to address it so that it remains in place.

Let’s end on a positive though – exceptional customer service from Virgin, hence why we are flying with them again. We are rewarding outstanding performance and service.

Paul

 

Metro and Mail

Tuesday, September 10th, 2013

In the early 1970’s at the age of 13, I went on my first international holiday. It was a school trip to Paris. I still remember aspects of it with great fondness – I say ‘aspects of it’ because I have forgotten a lot of what we did. The most memorable part, without a doubt, was going off and playing on the Metro one afternoon. We had been due to go to some pre-arranged activity, but a friend and I didn’t want to go – we wanted to see how many Metro stations we could visit in one afternoon (although I think our story was that we wanted to go to Pere Lachaise Cemetery as my Grandma had asked me to get some post cards of it).

Looking back on it now, I am a little surprised that the teachers allowed us to disappear off around Paris for half a day, not knowing where we were going (and obviously pre-mobile phones!) – but we were young, excited and gave no thought to whatever dangers a 1970s Paris may hold for two 13 year old lads …

Anyway, we had a great time – but we were doing it on a budget. A budget that required us to buy as few Metro tickets as possible.  We soon discovered that it was possible to insert the same small yellow Metro ticket into the entry machines more than once and still gain access. The machine punched a small round hole in the ticket to show that it had been used, but it was apparent that the machine was unable to detect whether or not a ticket already had a hole in it.

We got to the point where we were playing with the machines to see how many holes we could get in a ticket before it rejected the ticket. I recall that I got to 26 holes … I still have the ticket somewhere, but not sure exactly where.

I have been back to Paris since then and, as you may be aware, the ticket machines are far more sophisticated now. Whilst there may well be some very elaborate frauds available to those keen enough to spend a lot of time on such matters, a couple of 13 year old boys are unlikely to be able to use a ticket more than once.

It is understandable why they sorted it out – in terms of funding operations, tube fares really are the Metro’s lifeline. Whilst the Metro will have other revenue streams such as refreshment kiosks and advertising, their primary funding stream is the passenger. All fairly straight forward?

I would say so, but it appears not to be for the UK’s Post Office and Royal Mail.

The Post Office’s ‘raison d’etre’ is to deliver letters. Selling cards, holiday insurance and travel money must surely be ‘add-ons’ – particularly when there are apparently around 60 million letters posted each day (based on a six day week).

So if this is the main funding stream, it needs to be managed effectively – but it is not. I never cease to be amazed at the number of letters that I receive where the stamps have not been franked (i.e. had an ink date stamped across the stamps). The picture at the top of the page are ones I have received in the past month where the stamps are as fresh and clean as they day they were bought. The total value of those stamps is £5.98.

At the risk of appearing very sad, for the past three year I have monitored this issue around Christmas time and have found that around 15% of letters I receive with stamps on are not franked. What does this add up to in financial terms?

Let’s say the average cost to send a letter is 65 pence. If half of these use stamps (as opposed to other forms of paying postage) this equates to 180 million being sent a week at a cost of £117m per week (180m letters x 65p).

Over the year, this equates to £6.1b. A significant sum. 15% of this figure is £912m – that’s the value of stamps that are not being marked as ‘used’. If customers were to re-use 50% of those stamps (which I am not advocating) it equates to an annual loss of around £456m. A significant loss.

How can a company afford to lose that amount of money on something which is their core business? Machines that frank letters effectively can’t be too difficult to create, can they?  And even if they are, a quick memo along the following lines from employer to employee could start to eradicate the problem:

Dear postal worker, when delivering letters where the stamps have not been franked, please put a pen stroke across the stamps. Thank you.

Potential saving – almost £0.5b.

If the Post Office is so inefficient, no wonder it is being sold off. Did it lose its focus? Did it take its eye off the ball.

Whatever the size of your business or operation, it is always worth taking some time out every now and then to check you have your priorities right. As Richard Branson said, “To me, business isn’t about wearing suits or pleasing stockholders. It’s about being true to yourself and focusing on the essentials”.

Paul