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Thursday, December 1, 2011

Conflicting Business Models at Singapore’s Airport

Singapore’s Changi may be “the world’s most fabulous airport,” according to Scott McCartney of the Wall Street Journal. To be sure, the airport’s amenities are amazing. How they are operated, however, detracts in certain respects with the goal. “We wanted to transform the way travel is done and create a stress-free experience,” Foo Sek Min of the airport’s management said. This goal dovetails with the airport being “a key economic development element” for Singapore. Accordingly, the state-owned company that runs the airport receives “plenty of government support.” In line with these goals is a business model that is long-term oriented? Rather than trying to “nickel and dime” customers so as to minimize the funding from airlines and the government while maximizing revenue on a daily basis, resisting such urges in order to provide a truly stress-free experience is more consistent with the goals. To the extent that Changi provides such a business model, other industries (and airports) might follow suit—revolutionizing (or at least challenging) what had come to be the dominant business mentality by the second decade of the twenty-first century.

I contend that a stress-free experience in a pure (and realistic) sense does not include feeling manipulated or pressured to do or buy something. More concretely, paying for X and Y during one’s stay brings with it stress. Even the thought of one’s credit card or cash balance brings with it some stress. To be stress-free, an experience should not include even the thought of money—much less using it. This is where Changi falls short of its own mission: to attract more flyers to the airport and ultimately to (indirectly) add positively to Singapore’s economic development.

Not charging for the local bus tour that for immigration purposes is considered within the airport is perhaps the epitome of how the stress-free and economic development objectives dovetail with a business model. The lack of stress that comes with not having to do anything but get on the bus and take in the sights could lead to interest in investing in Singapore in some way. Indeed, potential business deals may even be negotiated during the tour as tourists chat. The lack of stress (i.e., lack of demands) on the people using the airport can thus benefit Singapore down the line, whereas charging for the tour, collecting the fare, and having the passengers go through immigration would hardly be conducive to a mood to invest or even visit Singapore.

In a general sense, charging for each service in order to (ideally) cover the airport’s operating costs on a daily basis is eons away from the business model that is oriented to long term investment even with regard to particular services. Having the roof-top pool free to customers who stay in one of the airport’s in-transit hotels while costing people going through the airport $11 not only adds to stress monetarily, but also insinuates an insider/outsider exclusivism that is not going to endear the travelling public to Singapore, whether to visit or invest in economically. Similarly, having a four-story amusement-park type slide “tied into retail” at the airport by requiring users to show a receipt from an airport merchant showing roughly $8 or more in purchases or else you can only ride the bottom one and a half stories of the slide evinces a pettiness that even in itself gives rise to stress in others—not to mention the stress involved making sure your receipt is “enough” as your kids pull at you demanding a FULL ride. Feeling manipulated to buy something at the airport’s “mall” would just add to the stress. Considering the limited cost of the slide and how eliminating the financial “rules” and price itself would make a huge difference in terms of stress (both for the employees and the public), one might wonder if the stated goals are authentic, or even known by the managers themselves. This is not rocket science, after all.

My favorite example of Changi’s management working at cross-purposes with its own mission unnecessarily would have to be the $17 for 20 minutes—are you ready for this?—“to put your feet in a tank with tiny fish that eat dead skin.” I must admit that having only the necessary amount of skin on my feet is enticing (I usually use a file, which never seems to do the job on the hardened skin . . . which we ALL have). Still, paying $17 for 20 minutes plus the inevitable worry—what if one of the fish likes live skin too?—is not likely to contribute much to a stress-free experience at the airport.

Similarly, charging $23 for three hours in a nap room would detract from one’s ability to sleep, let alone feel rested and comfortable. What if someone oversleeps? Are they charged more (and might they miss their respective flights?), or are they woken up by a loud “stress-reducing” horn or buzzer just after 2:59?  It is no wonder the bus tour of Singapore is free—people using the airport after having their dead skin eaten off and being woken up by some noise or demand for more money after having had to deal with a child unsympathetic to the $7.50 receipt are likely to want to get away from the damn place for an hour or so. Lest the butterfly garden seem like an alternative escape (it is free), it is also apparently a smoking garden, as smoking is not allowed "in doors." There are, however, two (smoke-free) complimentary movie theatres. Even so, given the apparent thoughtlessness that has gone into some of the payable amenities, I would not be surprised if an airplane crash movie were playing.

In short, while the innovative approach at Changi airport does warrant some praise (e.g., free wifi and movies, and in general for the extent of amenities), the major incongruences within the business model show how difficult it is to fly from the dominant model to one characterized more for its long-term investment orientation to eventual pay-offs. Given the government’s involvement in the state-owned corporation, the airport’s management company should have enough cushion from competitive pressures to be able to go all-out with the new model. Either amenities like the pool and nap rooms would be free, or everyone passing through the airport would pay a general airport fee that would cover all of the perks (other than in the merchants’ stores, of course). The fee would either be low enough that it is not stressful and inconvenient (given the sheer volume) or, more ideally in terms of the new model, money would be “recouped” in future tourism and foreign investment instead of any fee on air travelers. The government’s involvement in the operating company could effectively support the longer-term and less direct financial loop, as well as buffer any “pressures” from the old model for specific charges to be added during customers’ “experience.”

Imagine the stress-relief among the flying public just in knowing that for a few hours no employee will demand money for something or other. In knowing that one doesn’t have to worry about money—even from being reminded of it in being manipulated into using it—one can spend a few hours in an oasis of sorts where “real life” is put on hold. The butterfly garden (if smoke free) intimates such an atmosphere, which the airport itself could reflect, given a conducive business model. Besides endearing the travelling public (and the employees!) to the airport “experience,” Singapore itself would surely benefit in the long term, and not just economically. Unfortunately, this takes faith, which the extant business model does not allow for, at least in terms of the requisite patience.

So my verdict on the most fabulous airport in the world—which, admittedly, I have not seen in person—is: so close and yet so far. The sad thing is, the airport’s management need not be so far from their own objectives; we are not talking about rocket science here (and yet to business schools it probably is). Given the gravity of the “maximize daily revenue” business model that assumes that a constant focus on getting and an uncompromising rigidity are necessary in dealing with customers, a rocket—rather than merely a jet—is undoubtedly necessary to travel to the sort of business model that I have in mind, and not just for airports. If I am correct in this, then business schools are perpetuating the problem in their training rather than teaching alternative business paradigms. That dog is chasing its own tail.

Behind the new model hinted at (but not achieved) by the example of Changi airport is the basic feeling that life doesn’t have to be as hard as we make it. We don’t have to check receipt totals before letting a kid slide down a slide. It is as though managers set up jungle-gym bars right in front of themselves (and their customers) and then convince themselves (and others!) that the equipment must be navigated in order to get to the other side. Moreover, managers seem to have great difficulty simply in relaxing enough to play and enjoy other’s playing. Beyond the greed and urge to manipulate others (i.e., selfishness), the modern managerial mentality is too constricted, even as it paradoxically assumes that societal rules do not apply to it. So, for example, we have managers redefining words such as “guest” to suit a business interest; the rest of us are somehow obliged to recognize the validity of the misuse as a legitimate use, as in “customers are guests” (who must pay nonetheless). It is as though managers as so fixated on manipulating others without any limit or external constraint that the too-serious creatures cannot let themselves or other people simply enjoy something without required procedures and an immediate monetary exchange. The new model rejects the typical managerial mentality as too petty—too small.

I suspect that many elderly people on their death-beds shake their heads as if in achieving distance from us they have suddenly been freed in the awareness that the world is much more petty in what it takes as important and necessary that it knows. We moderns, complicit stewards of the hegemonic business model, micromanage ourselves right out of life experience itself, and we even impose our modern sickness on others. Then we act surprised when they get annoyed at us!

It is like the steward on the Titanic who (in Cameron’s film at least) shouts (little men do that), “You’ll have to pay for that!” to the young couple just after they have broken through a wall to escape the rapidly rising water. Everything must be paid for. No free ride, even on the Titanic on its way down to the darkness. This is the modern dogma that has been instilled in all of us, and we are utterly ignorant of the fact that it is exceedingly petty and narrow-minded even in its ideal. In the movie, the steward gets hit (justifiably) by the hero.  In cheering this, we, the audience, feel the hero’s natural reaction is our own, vicariously. We regard it as a valid verdict on the extant business model that stood for modernity itself back in 1912. A century later, that model had become the default—“the way the world is.” Even so, this need not have been so. Modernity could have developed differently than it did. The example of Changi airport hints at a better alternative in terms of business models. So in advertising a “stress-free experience” only to undercut it by demanding money for various “amenities” and making explicit (or creating) different classes of customers (which is also a theme in Titanic), the managers running Changi airport deserve annoyed customers and charges of insufficiency and even outright hypocrisy. Even so, we can take the Changi example as at least pointing to a different alternative.

Source:

Scott McCartney, “The World’s Best Airport?” The Wall Street Journal, December 1, 2011.