Earlier this week Emirates’ A380 landed for the first time on Amsterdam Schiphol airport. Excitement all around. The press paid a lot of attention for this huge airplane and the Schiphol airport gave them a warm welcome. It is of course a milestone in the history of the airline industry and especially Schiphol airport to have world’s largest passenger airplane land on Dutch soil. When the plan left later in the day for the flight from Amsterdam to Dubai it happened to fly straight over our neighbourhood and my wife snapped the picture in the top of this post.
Now besides all excitement there were also some people who are not as in favour of the A380 as most are. They see this huge plane, in current configuration setup to bring 500+ passengers away from Amsterdam, as a competitor. These people feel it to be a threat to Amsterdam and the carriers that have Amsterdam as their home base, or primary hub. And these people may very well be right. Emirates strategy is quite clear and in their strategy Dubai is not only their home-base, but also their main hub. The daily connection between Amsterdam and Dubai has with that in mind only one purpose: to feed people into Dubai’s hub and bring them across the world from there. In other words Emirates with the A380 is a new competitor to Amsterdam Schiphol airport and the airliners who have their home-base in Amsterdam.
So for these organisations it is time to consider how to deal with this new competition. And as it looks now it seems that these companies are applying yesterday’s strategy to face with Tomorrow’s (or even Today’s) competition. At the same day the A380 landed on Schiphol Arabian business.com made mention that Etihad and Air France-KLM are in conversation about a collaboration. Earlier articles in Dutch news-site “nu.nl” mentioned that with the potential collaboration with Etihad Air France-KLM would add another important hub to their network: Abu Dhabi. Now looking from a distance to this strategy, it seems that Air France-KLM is fighting one to one with Emirates in their own home ground; adding an alliance partner in the region and replacing the Dubai hub with a competitor hub in Abu Dhabi.
How much I am in favour of alliances I personally have my doubts if this is the way to fight the competition with more of the same. It feels to be a quite defensive strategy rather than a strategy that shows ones own strengths. Above all it may be a big question mark who will have the biggest financial strength in the long run to win this fight when competition is fighting on the same grounds. I do not believe in fighting financial strong competitors with yesterday’s strategy. Instead I feel it would be better for companies like Schiphol airport (who will after all be facing Dubai as a competing hub) and the airliners who have Schiphol as a home-base to look for a new value adding strategy that will allow them to operate in their own “blue ocean”, their own niche, and stay away from the dirty “red ocean” fights. Such a strategy will allow them to build a financial healthy future and of course alliances should be part of the execution of that strategy!
3 Responses to “Dealing with new competition”
Over on HBR Laurence Capron and Will Mitchell wrote an interesting, and related, article with the title “When to Change a Winning Strategy” see http://blogs.hbr.org/cs/2012/07/when_to_change_a_winning_strat.html
So what is the new “value added strategy”? You fail to give an indication as to what that should be, or for that matter you say an eventual collaboration between Air France-KLM and Etihad is “yesterday’s” strategy, but you fail to mention what today’s or tomorrow’s strategy should be.
Using the Marketing principles, fighting a (lower cost) carrier with Price is a losing proposition, while improving the Product – with the collaboration of a carrier like Etihad, could be the answer.
Alan, thanks for your comment. Within the context of this article it is not my intention to write a new strategy for Air France-KLM or Schiphol. The article indicates that companies should consider tomorrow’s strategy to be a blue ocean strategy or at least one that is based on out of the box thinking.