Swiss airline has gained a huge competitive advantage in the last four decades by providing its customers with a world class facility at very cost-effective premiums. From 1982 to 2001 its cost was just 4% per seat for each kilometre, half the cost of American airline. Swiss airline has combined both service as well as innovation to become a leader in the airline market. But balancing a boat and even for a longer duration is highly arduous. Also competition is high among trivial and providing epitome facility and meager price is itself a competition. Swiss Airline has successfully implemented its dual strategy in many Asian countries. Swiss airline has provided its customer highly differentiated yet customized services. No other country has executed dual strategy better than Swiss airlines with healthy returns.
Swiss airline was founded in 1978 and till now it has never posted any financial loss, no debt. Besides it has maintained a continuous growth through retained earnings.
Four parameter of Swiss airline to execute dual strategy by it are:
1. Excellent service at low cost
2. Both centralised and decentralised innovation
3. Technology leader and follower
4. Reaching standardise and personalize service.
a) Excellent service at low cost: Two important assets of Swiss airline are people and its plane. Swiss airlines make sure to avoid servicing and failure costs of planes by maintaining its fleet always young. For example Swiss airline fleets on average are 76 months old while other companies’ feet are 170 months. So there were less chances of technical failure. SA also invested heavily in providing training to its employees. For example it spends 5 month in providing training to its freshers while around the globe it is not more than 2 weeks. It also invests $ 90 million a year on retraining its employees. They are well trained to communicate with big elites from Japan, Korea and America. Training leads them to talk with eye open rather than just looking down. Reducing cost in everyday operation is also promising in the long run. For example Swiss airlines decide not to place pickles on breakfast trade because many people waste it. Also for leading caps companies in the global market SA attracted first class graduates in its and vicious projects.
b) Focusing both centralised and decentralised innovation: SA has earned the title of pioneer innovator in the field of airline. For example customised food service on the plane. It follows the rule of 5-3-2, 50% on training, 30% on revising and 20% on availing new products and services. SA has incorporated both centralised process and local process to develop customers for orientated products at low cost. Frontline workers are key in developing innovation like they put forward the idea of allowing passengers to order food and beverages online before boarding as they are not able to respond quickly to passengers when planes take off.
c) Galvanizing technology leader and innovation: Instead of focusing on every parameter of innovations SA focused primarily on improving functions that won’t affect customers in a bad way. SA has taken a big risk in innovation projects that require courage. In 1997, SA innervated a huge aircraft BI88 which can carry a small family in a single room. Although the project got delayed but it gained enormous popularity for this new idea. After its launch people bid seats at very high prices. However SA stops innovating further if customers like it or technology causes any problem.
d) Using standardization for personalization: SA services are highly standardized to cover all kinds of passengers. It leads to a high customer satisfaction ratio. Swiss airline has made sure to deliver wow experience at a discount value to delight its customers. It made customer experience good by extracting information like birthdays, their preference etc. For example passengers in need can request for personalized vegetarian food without booking it before the flight takes off. Cabin crews know how to make vegetarian food from available items.
SA strategies its practice on the basis of four principle:
a) Use efficiently and effectively power of your employees
b) Use technology precisely
c) Use the power of the business ecosystem.
d) Make investment decisions strategically.
Companies should train their employees to make decisions in the front line. Companies must reward and provide bonuses to their employees so that they can perform their job effectively and make strategy when a situation arises. Companies use technology to reach their aim. But companies should also shift their focus on making it cost effective. In the business ecosystem there are several companies who work together. For example SA has tied up with big hotels to provide discounts through their frequent customers by availing them rooms at cheap price. Investment strategies should be designed in a way so that it can give long term benefits. This thinking should also prevail when situations are difficult and rate of return is less.