60 Minutes recently did a report on Allegiant Airlines and at first glance, it looks like the people in charge may have their heads in the clouds. On the other hand, once you delve further into the report you start to notice a dark cloud emerging overhead.
Before we get into the nitty-gritty, let me give a brief synopsis of what sets Allegiant Airlines apart from others. “Allegiant Air has some of the lowest fares, the least frills, and the oldest fleet in the business.”-Steve Kroft, 60 Mins.
That was briefer than you thought it would be huh (I used that word on briefer on purpose)? Well to keep things short and sweet, just the way us speed demons like it these days, that’s all you need to know for now.
According to the 60 Minutes report On Allegiant Air, “between January 1st, 2016 and the end of last October, we found more than 100 serious mechanical incidents, including mid-air engine failures, smoke and fumes in the cabin, rapid descents, flight control malfunctions, hydraulic leaks and aborted takeoffs.”
To the average person, we probably don’t know if that’s bad or good. I’ve figured this out for you… it’s not good.
So they interview this guy John Goglia who “has more than 40 years of experience in the aviation industry, including nine years as a presidential appointee to the National Transportation Safety Board”.
This dude basically says that for an airline of their size Allegiant shouldn’t have safety issues that reach those numbers.
“Very, very high for an airline of this size. I hate to make comparisons– but we’ve seen that before in airlines that are no longer with us that had experienced a number of accidents and killed a bunch of people. I don’t wanna repeat that. So I try to push on Allegiant to– to– clean up their operation.”- John Goglia
Allegiant Airlines spit out a public statement which concluded with a big up to their, “second lowest cancellation rate of all US carriers.” Well, when you’re getting a round trip to Las Vegas for $80 like passengers Mercedes Weller and Dan Mannheim did, and you don’t know much about the airline’s negligence, would you pass on that deal?
I guess you would if you knew the engine was going to blow right before your eyes. The report goes on to inform readers and viewers of what appears to be the FAA’s pattern of possibly turning a blind eye to what seems to be a very dangerous airline cutting cost to increase their bottom line. Oh, yea.
“Allegiant’s problems come from the confluence of its aggressive business model and a safety culture they find to be lagging. The business strategy which has produced 60 straight quarters of profits, occasionally with margins approaching 30 percent, requires the airline to keep costs down and “push the metal” – keep the planes flying as often as possible. But Allegiant’s aged fleet of MD-80s, which it is phasing out and is responsible for most of its problems, require a lot of maintenance and reliable parts are hard to come by.”
I don’t care how friendly their skies are, I am not getting on one of these planes. So, what does an apparent penny-pinching, negligent, aggressively goal oriented (to say the least) low-budget airline have to do with you?
You’re probably just saying to yourself, “I won’t be flying on that airline.” But, the point I’m going to make has little to do with the airline and more to do with its business model.
We write a lot about business here at Tizzime ladies and gentleman, and if your business plan consists of cutting corners to aggressively meet outrageous sales and profit goals then you may want to think twice. Okay, let’s slow down here.
Maybe you’re not involved with a business that puts the lives of millions in your hands every single day, but maybe you are and you just don’t know it.
Cut corners on that steel and the building might come tumbling down one day. Pay a little less for those glass bottles and they might just break in someone’s hand while attempting to take a sip of your high fructose laden cola.
Hire people off the streets, give them fake licenses and let them run your massage parlor and…well I think you get the picture. Not always a happy ending. 😉
This can be applied to just about any business’ products or services. Think about it, hot coffee at McDonalds ended in a multi-million dollar lawsuit. And coffee is supposed to be hot!
Yes, one of the reasons we start a business is to make money (let’s be honest, that’s the main reason), but you have to be aware that cutting corners will almost always end up costing you more money than you saved in the long run. Usually a lot more.
Yes, staying profitable is hard to do when you have the Tax Man, suppliers and competitors constantly keeping you on your toes, finding new and creative ways to get their hands in your pockets.
Unfortunately, this is something you just have to figure out a way around. A way that doesn’t put your customers or clients at risk.
My advice is, charge them extra. I know, I know…you’re afraid to g there, but the honest truth is sometimes your price is TOO LOW. If you have a great product and you’ve earned the public’s trust and respect you’ll be surprised how many people will pay extra just to buy from you.
How do you think the mom and pop shops in your neighborhood stay in business? Sure it’s hard to fight against the Big Machines like Walmart who buy cheap products in bulk and sell them at rock-bottom prices, but so far small businesses are still alive and kicking.
So to all those trying to come up with a business plan centered on low prices, make sure you don’t endanger any of your potential customers by doing so, and to those wondering why the prices are so much higher at the smaller stores, this is why. Cut them some slack.