Wednesday, January 25, 2006

Should global shippers buy the struggling airline companies?

In previous posts I have written about how supply chain principles can be applied to managing a global labor force and how organizations are looking to managing skills and talent just like they do parts inventory. But now I'd like to take that strategy a step further and instead of managing employees, how about using a supply chain to manage your customers, which in the case of the airline industry are passengers. Think about it. Why couldn't UPS, FedEx or DHL buy an airline and manage it just as efficiently as it does packages? While I agree many differences could be pointed out, I think just as many similarities and synergies could also be made. Maybe UPS has already considered this since its website indicates that its fleet makes it the 9th largest airline in the world.

I'm in the platinum club for both American Airlines and Delta, so I fly quite often. I also ship plenty of packages using UPS, FedEx and DHL and if I compared how often I arrive late to a destination compared to how often I receive packages on time it would clearly indicate that the shipping companies are doing a much better job. So why couldn't they do the same for passengers? I'm sure this could be debated quite a bit, particularly since stockholders for the major shipping companies would not want to invest in the struggling airline industry. But the sheer savings from economies of scale for fuel, fleet maintenance and purchases and airport usage fees would be huge.

Click here for a chart that conducts a side by side comparison of flights per day, cargo/passenger tracking, destinations and fleet. And they are nearly mirror images. Let me know if I am off my rocker or if I should become an M&A banker.


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motosport said...

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@nkur said...

definitely a thougt provoking idea..