Could the Airline Industry be Saved by Beer Wars? Big Beer Offers Model for Airline Profitability

By Chad Pilbeam | July 23, 2012 | 0 Comments |
Bookmark and Share

The musician Frank Zappa once said, “You can't be a real country unless you have a beer and an airline. It helps if you have some kind of a football team, or some nuclear weapons, but at the very least you need a beer.”

A beer and an airline you say?  Well it’s been suggested that you don’t need either.  After all, there are global beers, why not global airlines?  When you consider the ongoing financial debacle of the airline industry and the inverse of what we see today in brewing, perhaps the solution for profitable airlines is found in a keg of beer.  

The founder of Airfarewatchdog.com, George Hobica, recently commented on the state of the airline industry, while making contrary observations of beer and brewing.  “Japan Airlines, struggling to emerge from bankruptcy after leaving shareholders and other creditors on the hook for (about $316 million) in debt.”  “Kingfisher Airlines, India’s second largest, has never made a profit and would have ceased flying long ago were it not for the fact that its owner and CEO Vijay Mallya”.  

Hobica’s observations then turn to the success of AB-InBev, who’ve made headline recently with their acquisitions, further increasing their global dominance.  One cannot argue with the proven success of “big fish swallowing up the small”.  Some might even say it’s the basis for capitalism and the inevitable consequence of a free market.  With the success from these barons of beer there are ancillary benefits; we see also the success of micro and nanobreweries both domestically and globally.  And while past performance is not always indicative of future results, both airlines and breweries just might be an example of “if you do what you’ve always done, you’re going to get what you’ve always got”. 

Hobica raises questions about why Japan would need more than one national airline or why every country needs an airline.  He asks, why do billionaires continue to sink their riches into a product that not only underperforms, but loses money.  Who does this?  The vain?  The insane?  Surely these profiteers have greater interest in a tax write off and their name on the side of a 747. 

The brewing industry should be flattered with Hobica’s realization through beer.  Throughout history brewers have seen more than their share of failures, but it’s their success that may offer the airline industry’s envy. 

The barons of beer have taken what was once only a local product – beer brewed for almost immediate consumption – to that of a global and very profitable business.  Unfortunately, the airline industry is strapped with archaic laws which limit the possibility of global success (i.e. no foreign carrier may own more than 49% of a U.S. airline).  Beer too has struggled with outdated legislation, but “Viva la Revolution!”  The repeal of prohibition goes without saying, but other successes offer hope to those whose grace the side of an airline (and their stockholders too).  The brewing industry (and their patrons) have challenged state legislatures that limited the distribution of beers based on labels, alcohol content, even product names and package size, and won. 

Meanwhile, the financially floundering airline industry has made flying as uncomfortable as ever.  Fees for changes, conveniences, and even luggage have been implemented for their incompetence.  Who would have ever thought you would have to pay additional for a suitcase?  If beer followed this model, you’d be expected to pay extra for the bottle caps, and then pay a service charge to open them.  And while much credit for beer innovation and current enthusiasm is given to smaller craft brewers, the Beer Wars of the big barons cannot be overlooked.  Love or hate what they brew, the balance sheets raise eyebrows and it is that which the airline industry needs.  Unfortunately, airlines seem to be competing in a race for the bottom.  

Hobica points out that with global airlines we would see lower fares, a more stable industry, fewer bankruptcies, fewer stranded passengers, and fewer creditors and employee pension plans eliminated by what he calls “untenable business plans.”  “It would put an end to airlines losing billions decade after decade, eking out profit margins that other industries laugh at (0.5% this year)”.

So what do you think; could Beer Wars offer the inspiration for Fare Wars in the airline industry?  Is Big Beer the solution for Big Air?  One thing is certain; with half percent profits and customer satisfaction at an all-time low, airline CEOs and stockholders could use one of those $6.00 beers right now.

Your Choice. Your Beer. Drink Up.
- Beer Universe

Chad Pilbeam is a staff writer for Beer Universe, you can follow him @beernbullcbo.



0 Comments · Could the Airline Industry be Saved by Beer Wars? ...

  • There are no comments on this article yet. Leave one and be the first!

Leave a Comment

Log in to leave a comment!

Log In | Register

What's Hot on Beer Universe