Since I wrote Gods of Commerce in the early
1990s I have pointed out that many corporations are mixtures to two
different kinds of commerce.
There are three kinds of commerce: Trade, industry and clientry. The object of trade is to make each sale and have enough profit to stay in business for the next sale. Think your local flower or local coffee shop.
The object of industry is to reduce costs. Usually that means changing customer behavior, such as creating isles and restricted checkout stands and exits in department stores or achieving economies of scale and lowering prices. Think Starbucks and McDonald's.
The object of clientry is to maintain a lifetime relationship with the customer. Think lawyer, doctor and graphic designer.
Airline companies are industrial companies when it comes to airplanes. They seek economies of scale in volume, speed and capacity. But airlines also try to gain the loyalty of customers. In striving for loyalty they are clientric.
Industrial management and clientric management are different.
I have been recommending for years that airlines be split into the airplanes in one company and the customer contact in another. Air Canada did just that last year. Now United is thinking of spinning off its Mileage Plus business.
Good start in the right direction.
Hey, United management....wouldn't you like to know the theory behind the numbers you are seeing?