Is the MR Industry Headed the Airline Industry Way?

The fact is that the MR industry is very similar to the troubled airline industry. It is a difficult comparison to swallow. We have a high Fixed cost component like the airline industry – basically trained people whose salaries have to be paid, investments in systems, communication equipment etc. These Fixed cost component cannot be easily changed/reduced to reflect changes in business situation.

How about a comparison with the hotel industry? After all the hotel industry too has a high Fixed cost structure – but has been reasonably successful in consistently maintaining high margins.

I think the difference between the hotel industry and the airline industry is that the airline industry relies only on ticket fares for its revenue source i.e. it has only a single source of revenue. The hotel industry – in addition to its basic room tariff – also provides Value added service (such as food, laundry, business desk etc) and actually charge the clients for it. In other words it has multiple sources of revenue, and uses every opportunity to provide VAS and actually charge clients for it. That is the reason why the hotel industry has remained relatively profitable.

The MR industry too should start genuinely providing value added services on each project – and charge clients for that service (in addition to the usual project fee). Until the MR industry starts actually DOING this (rather than just talking about it), we are destined to go the same way as the airline industry.

Incidentally, the airline industry is now trying to emulate the hotel industry – witness the fact that on most airlines passengers now need to purchase food on the aircraft. But I wonder whether this model will work for airlines when they have tampered with the basic bread and butter revenue source i.e. the ticket fares. How can the airline make up for the lost revenue when it is selling seats at Indian Rupee 1 on certain sectors?