Yeoh Siew Hoon was at the IATA Summit in Singapore and wondered what her mother would have had to say about the discussions which revolved around the theme "Simplifying The Business".

What do grown men talk about when they gather? Well, grown men in the airline business, at least. Costs, costs, and costs.

For a moment there, I thought my mother was in the room. Growing up, I always remember my mother talking about money and the cost of living – don't spend too much, money doesn't grow on trees, wait till you make money then you will realize you can't spend more than you earn.

Pretty simple logic really – but you see, for these men in the airline business, it's taken them a few decades to realize that you shouldn't spend more than you earn. Otherwise, you end up in deep water without a paddle (or wing, in this case) or you end up in Chapter 11 and no, that doesn't come from a Harry Potter book.

I was attending the 60th annual general meeting of the International Air Transport Association (IATA) held in Singapore from June 6-8.

The air was pretty rarified. In the room were more than 200 airline executives, including big bosses of the world's major airlines from British Airways to Lufthansa to Air France to Air India to Cathay Pacific to United. You name them, they were here.

Uppermost on their agenda was, yes, costs. The theme, after all, was "Simplifying The Business – Reducing Costs".
As they were talking (for one-and-a-half days), I wondered what my mother would have thought about their discussions. After all, if airline men are the masters of complexity, then mothers are the mistresses of simplicity.

So here's my take on what my mother would have made of the IATA meeting.

1. She would have agreed wholeheartedly with Rod Eddington, boss of British Airways, when he said, "Either the senior executives of airlines are a bunch of Bozos or there is something structurally wrong with the industry …"He was referring to the conundrum as to why everyone else makes money in the airline-related industries but airlines don't. Or as IATA's director general Giovanni Bisignani said, "We do the flying, others make the money".
2. She would therefore tell the "partners in the value chain" – airports, air navigation providers, CRSs – to watch out because the airline axe is arriving to a service provider near you. As Bisignani said, "In commercial markets, competition determines price. Cost reduction delivers profitability. But, many of our monopoly partners still think of ‘cost plus' pricing. This approach is no longer acceptable for any business."
3. She would have wondered, how on earth did the airline business get so complex and complicated? It took outsiders to get insiders to take a deep, hard look at themselves. The low cost airlines are now seen as heroes because, fundamentally, they gave customers what they wanted and were prepared to pay for. The lesson here? Look outwards, not inwards.
4. And she would have applauded the honesty of Glenn Tilton, president & CEO of United Airlines, when he defended the network model, saying "it ain't broke, it's just that we have been poor stewards. We have accumulated legacy costs over time that we have to take out to compete."
5. She would also tell the low-cost airlines not to get too full of themselves, as the legacy airlines did in the old days. Yes, they are the darlings of aviation today but she would have reminded them of the dot.com boom, and look what happened to them. As CS Chew, managing director of Singapore Airlines, said, "The no frills, point to point, airlines are the flavour of the month right now. There is no lack of newcomers wanting to come in. This sector is here to stay, but they are playing in a different niche. Premium, traditional service airlines will still be the mainstay of the airline business – you can't fly 12-13 hours without food or entertainment."
6. She would also warn traditional airlines who have set up low cost subsidiaries to be aware that oil and water do not mix. As Eddington said, "It's never worked before. In my judgement, you confuse your staff. It's hard enough to run either one successfully, let alone two. The one who makes it deserves a Nobel Prize in economics."
7. She would also warn traditional airlines in Asia to watch out for the newcomers. Yes, as Eddington said, Asian airlines have always managed costs more efficiently than airlines in US or Europe, but if no frills airlines ramp up, "some will be in mortal danger".
8. She would have applauded at the statement, ‘it is easier to be a low fare airline than be a low cost carrier'. Anyone can sell cheap, but who can do it cheaper – that's the key.
9. She would remind the airline executives that the world is not a level playing field. While the more developed countries want deregulation and open skies, and no barriers to ownership of airlines, the less developed nations will still want to defend their state airlines. The global village is still pretty territorial, she would say.
10. Yet she would applaud the vision of champions and dreamers who dare to dream of a big, open and bright future for aviation – one free of regulations and protectionism. To quote Eddington, "We have a once in a lifetime opportunity to re-define our industry so that we can operate as a real business, not just in US and the EU, but in a genuine, liberal way, globally. History dictates consolidation will happen. In Asia, there is a greater reluctance to see consolidation, where governments want national icons. But if we don't do it, our industry will continue to limp along."

So limp or fly? The choice is simple.

The SHY Report
A regular column on news, trends and issues in the hospitality industry by one of Asia's most respected travel editors and commentators, Yeoh Siew Hoon.

Siew Hoon, who has covered the tourism industry in Asia/Pacific for the past 20 years, runs SHY Ventures Pte Ltd. Her company's mission is "Content, Communication, Connection". She is a writer, speaker, facilitator, trainer and events producer. She is also an author, having published "Around Asia In 1 Hr: Tales of Condoms, Chillies & Curries". Her motto is ‘free to do, and be'.

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