UPDATE: This article originally ran a year ago on SERENDIPITY. Since then the airline I work for has reached about 30 percent passenger capacity. That is well short of last year’s projection. The effects of the pandemic linger on. Some 767s were sold to a company that will convert them to cargo freighters. The airline will lease some back as another step in reinventing its business model.
Reinventing Ourselves, by Rich Paschall
When I was much younger, perhaps late teens, and throughout my twenties, I used to like to go down to State Street, “That Great Street,” in Chicago. It was alive in much the same way as Time Square and Broadway in New York were. And yes, just like NYC, our downtown had a somewhat seedy period, but that came later.
“On State Street, that great street
I just want to say
They do things that they don’t do on Broadway, say…”
I particularly liked to go downtown in December to see all the Christmas decorations. Marshall Field’s, the giant department store, had Christmas windows filled with mechanical people, trains, cars, and all sorts of moving parts to marvel at. I was just like the children gathered around the windows to get a good look at the displays. Our fantasy world was mechanical back then. Today it is video, but I digress.
There was a time when I would plan to do my Christmas shopping, sometimes all of it, on Christmas Eve. I could arrive at the Red Line subway stop right in front of the historic Chicago Theater and go first to Field’s. I might not buy anything there because it was the most expensive stop, but if you went downtown, you had to go there.
After the visit to Field’s and perhaps a purchase of Frango Mints, off I would go to Carson Pirie Scott, Montgomery Ward’s, Sears, Wieboldt’s, Goldblatt’s, JC Penny. By the time I got to the last of the giant department stores, I would buy everything else I may have needed. Then I could go right out to a subway stop at the other end of State Street and head home. It was a marvelous adventure and has always brought happy memories of downtown at Christmas.
The stores are gone now. Every single one of them is gone. Marshall Field’s is now Macy’s. They have kept the Marshall Field’s plaque outside the building below the famous clock, so as not to upset the locals. They also have Frango Mints. These are the only throwbacks to those days. Except for that one grand store, the department stores of State Street have all been replaced by other businesses or torn down.
Times changed. They did not. Instead of transforming themselves for the future, they waited for the past to come back. It didn’t. I saw these great stores disappear one by one. Ward’s, Sears, Wieboldt’s, and Goldblatt’s all had large stores in our neighborhood. When Sears had the motto “Sears Has Everything,” they really did. From washing machines to stoves to clothes, that was our favorite store. Gone.
It is the same with many businesses. As motivational speaker Simon Sinek likes to point out, these are not unprecedented times. Major shifts in business have come before. This one is just “more sudden, absolutely. More shocking, absolutely.”
He gives several good examples we all know are true. The internet changed business. Some companies are surviving now because they have changed the way they work. In Chicago during a period of lockdown, one small clothing shop gave virtual tours of the store and video displays of the clothes. When delivery and pickup were available, people could tour the store online, pick out and pay for what they wanted, and drive to the business, where an employee would come to the curb to hand them their purchases.
Restaurants are gone for good after being out of business for months. Others survived by reinventing themselves as online products. They found their way to Yelp and partnered with Grubhub, Door Dash, Uber Eats. Reinvention saved them.
Sinek likes to note that Starbucks did not put the local coffee shops out of business. They offered a newer version, and the old-time shops refused to change. Why would I go to a shop with an old worn-out sofa and year-old magazines, when I could go to one with the latest newspapers, a variety of beverages, pastries, and sandwiches, and importantly for millennials, wifi?
I work for a major airline that is operating at 5 to 10 percent capacity on any given day. Most of its fleet is grounded. It has lost 20,000 people from its workforce. Facilities around the globe go unused. Business disruptions and government regulations eliminated many flight destinations.
The airline industry believed back in March that they could regain 90 percent of their pre-COVID business by December. Now the hope is 50 percent. As the novel coronavirus continues to surge in certain countries, the USA for example, so the hope to recover your business any time soon is fading.
In 2012 Air Canada had launched Rouge, a subsidiary to more effectively compete in the low-cost tourist/vacation travel industry. It was looking at other growth opportunities to serve the ever-growing luxury tourist trade. Their business model was built around these expanding travel markets. That dream has taken off as the last flight from the battleground.
So what is a passenger airline with no passengers to do? The Canadian government is not going to hand the airline billions of Canadian dollars to help it through to the time when business returns to “normal.” The new normal is right around the corner and it does not look like it did in January.
They have to reinvent themselves of course. The 767 Boeing aircraft are being retired early. Accelerating this process for an older part of the fleet only makes sense. They were not being used anyway. Some of the planes had the seats removed to put freight on top, but this is a stop-gap measure. The main deck has no cargo door so this is labor-intensive. Other planes fill the belly entirely for cargo runs, but the seats are not removed. Mail, e-commerce partnership, and cargo and business charter runs are added to the new business model.
What about underserved areas of Canada? The airline has entered into a drone partnership. The initial run was to indigenous people who live on an island. There are many far-flung communities that can be served through a combination airline, drone service.
Without adapting and changing, airlines will die. Some already have gone under while others stay afloat through government bailouts. There are those, including a prominent orange so-called politician, waiting for things to go back to the way they were. We have news for them. It is not going to happen.