Ryanair, easyJet – What do the numbers mean?
06/09/2013
Yesterday Ryanair announced that their bookings over the summer were less than expectation and their forward bookings for September and October were not as strong as expected. Michael O’Leary was quoted as this being due to the weather, competition and the impact of austerity measures in the Euro-zone.
Today we have Easyjet reporting record numbers with load factors (their measure of how full the aircrafts are) increasing from 9.17% to 92.8%. So what do the numbers mean?
There is a great tendency in management to do two things. If things are going well it has to be down to the great management team we have and we should all take the credit! If things are going badly, then it must be something happening outside the organisation in the market, it can’t be our fault!
But the real question is “what are the numbers really telling us?” Sales are up, but are we gaining or losing market share? Or are sales up because the economy has picked up a bit? Ditto for when sales fall.
So absolute numbers are a guide to change as we have to react to an increase or fall in sales, but we should always be aware of what the wider market is doing. We need those comparison figures to tell us if we are becoming more or less successful. And we need to know about the prices per seat if we are to understand the financial impact on the bottom line and the movement in passenger numbers.
But all this is rather old fashioned and looking at what some would call “lagging indicators”. Those are the indicators that tell us what has already happened. Even forward bookings are lagging indicators as they tell us what has already been (or not been) booked.
What are the forward looking indicators? Do we understand how our service has an impact on our customers – their satisfaction and loyalty? Are we tracking traveller sentiment in big data and its impact on our business? If we do this then changes in income should be less of a surprise and we should also know what the causes are and so what we can do about it.
Mike
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Looks like Ryanair have finally realised that changes need to be made or sales suffer
Ryanair’s O’Leary to end ‘abrupt culture’
http://www.bbc.co.uk/news/business-24177834