Since the very beginning of the airline industry, there has always been an ongoing discussion if outsourcing improves the customer experience or if it is just an inevitable evil to keep the carriers profitable. Local GSAs and handling agents have been a common practice for decades, but many new kinds of outsourcing activity have arisen more recently.
From multi-currency payment solutions, which may not be a core business of an airline but a significant revenue optimiser, to integrated end-to-end Customer Relationship Management, which is definitely a core activity, the number of outsourcing options is growing every day. But many object that only “real employees” can produce “the real customer experience”.
Is there a methodological framework that helps to take the right strategic and operational decisions on different outsourcing proposals and challenges?
It doesn’t make sense to start arguing if outsourcing is better or worse than using direct airline employees without putting the decision process into a context.
The first thing to keep in mind is the airline’s very own business model. This can be operationalised with strategic management methodologies like Customer Experience Management (CEM).
First, you need to know which value propositions you want to offer to which segments of customers, and then implement, communicate and overdeliver. Not vaguely “overdeliver” on targets that are meaningless for customers or unprofitable for the company, but those, which make strategical sense. Singapore Airline’s value proposition is not better or worse than Ryanair’s, they just have a different positioning, but both are very successful airlines.
Once you know where you are positioning yourself, you can start talking about outsourcing, not before knowing for every value-adding process its exact segmented value proposition.
But the problem of bad GSA service quality is not the GSA, it’s the airline’s selection process, the SLA and the supervision. There are many outsourced companies doing a much better job because of their specialisation.
Who would not prefer the inflight meals being prepared by a Michelin-Guide three star restaurant rather than by an internal catering department?
I know many GSAs and other subcontractors that are doing really brilliant jobs. At the end of the day, what really matters is passionate and knowledgeable management commitment with customer focus and quality. If your company sticks to the often meaningless standard IATA contracts without adding your own requirements and KPIs to your SLAs, requirements that must have been derived from your specific value proposition for this part of the service chain, probably the corporate culture of your company is not sufficiently customer centric to do a better job with in-company ressources either.
Of course, quality comes at a price, but that’s true both for internal and external service providers. Depending on your own goals, outsourcing can be used to…
- save money, accepting no service improvement
- improve service quality, accepting no cost savings
- improve service quality AND save costs
In summary: outsourcing per se is neither better nor worse than using your own employees. But for sure it is not a “black box” that you can just attach to your organization. You need to understand first where you want to go to, what you want to offer your customers, what a given provider can offer you and than, lead the initiative and manage the relationship to make sure you really get out of it what you want.