Thursday, August 16, 2007

Wal-Mart Air: Lessons Joe Leonard could learn

When one considers the sorry state of the airline industry today -- especially if you happen to be old enough to remember when it was classy and even a little fun to fly -- it's easy to loosely categorize airline products by the department stores they best represent.

First, there's Bloomie's Air -- upscale, overpriced and limited.

Then Macy's Air -- a hint of upscale with something for everone.

Sears Air -- Solid, dependable, not terribly fancy but stays the course.

Target Air -- Cheaper than Macy's but a little more hip and tries to have something for most people.

K-Mart Air -- Older, dirtier, around the block and long in the tooth.

Wal-Mart Air -- Newer than K-Mart Air, slightly cheaper and not as trendy as Target Air, and wishes it was Sears Air.

Truth time: airlines may fit more than one definition, but it's a good start.

So we have AirTran, the carrier born of the ashes -- almost literally -- of ValuJet, acquiring new airplanes but flying with few amenities (such as no meals, even in business class) and perhaps most akin to Wal-Mart Air.

Now being Wal-Mart Air isn't such a bad rap. Sam Walton made his money the old fashioned way: he earned it. He started small, worked his butt off, aimed to give customers the lowest prices and believed in what he did. Nobody ever accused Sam Walton of being a fashion guru.

Air-Tran under Joe Leonard was kind of like that.

But sometimes people get too big for their britches.

Then we have Midwest Airlines.

Now I have hardly been their cheerleader. I've publicly criticized several recent management decisions.

For example, Midwest, which was more like a cross between Bloomie's and Macy's, earned a great reputation nationwide for excellent service. But they abandoned the name that got them there: Midwest Express. Not trendy enough, Tim Hoeksema said. Waste of money to repaint all those planes, I said.

Then, when the post 9/11 noose started to choke airlines, Tim started to cut corners, such as eliminating those fine meals on china. Duh.

That boneheaded idea was the worst mistake he ever made. That level of service -- which cost $10 a pop -- is what distinguished Midwest Express from the rest of the pack.

Truth is, they could have charged folks $10 for the meal and broke even. Would you rather pay $10 for a fine meal on china or $5 for a sick snack box full of enough preservaties to run a funeral home? I rest my case.

Straying from your roots can backfire. Just ask the folks at Sears who once had a crazy idea that they could become Sak's and didn't need to stock headlight bulbs.

Nonetheless, Midwest made its money the old fashioned way, too, by offering great service. They got sideswiped by 9/11 because the downturn came as Midwest was expanding its service to add a Kansas City hub and added service in Omaha.

Had 9/11 not happened, Tim would have been heralded as a genius. But the downturn hit Midwest hard in light of the budding expansion.

The proud airline -- which for many years was profitable (I seem to recall once it was only like $50,000 one year in the airline's early history) at a time other carriers were bleeding red ink -- had to suck it in.

But loyal followers helped restructure financing. Business came back and Midwest started turning profits again despite much higher fuel costs.

Now Joe Leonard was getting too big for his britches. He didn't want to earn money the old fashioned way. He figured he could just cough up some cash, write out some stock certificates and take over Midwest, gobbling up their equipment and gates. He didn't even want to pay full cash for the deal.

The prince of Wal-Mart Air didn't want to work for this business, no sir. He couldn't be bothered with selling the superiority of his product even though he was free to do so.

Now we all know Wal-Mart has both a lot of customers and a lot of detractors who blame it variously for killing off other businesses to entire cities. The "sour grapes" crowd forgot that Sam Walton started at a five-and-ten in a small town and built his empire from the ground up. Whatever he got he earned.

One other curious Wal-Mart thing: if a town or neighborhood says you're not welcome, Wal-Mart generally shakes the dust off its feet and moves on.

Joe Leonard's Wal-Mart Air would do neither. He didn't want to earn business. Nor did he shake the dust off his feet. In fact, when he was told no, he at first said good bye but then came back two days later with another deal almost as shaky as the first.

But when you live by the sword, you run the risk of dying by the sword.

Another suitor came along offering hard cash and promising to leave the core Midwest product intact. Even the three directors Joe forced onto the Midwest board agreed that it was a better deal -- twice.

Now I see nothing inherently wrong with Wal-Marts or even Wal-Mart Air. But Sam Walton made his fortune by starting small, building up and offering customers what they wanted at more reasonable prices. While competitors may have shuttered their doors in response, the fact is that it was their decision to do so. Sam never came in and bought out the grocery store, the hardware store and the drug store.

So, Joe, suck it up and be a man like Sam. Instead of cutting corners, build up your business in Milwaukee by offering a competitive product at a more reasonable price -- you have every right and opportunity to do so. If people like Wal-Mart Air like they do Wal-Mart Supercenters, you just might have the last laugh.

But if you don't want to earn your money the old fashioned way, you're not fit to spit shine Sam's shoes.

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