Daniel Danev's Profile
With its financial issues behind and operating as part of the Lufthansa Group, are there any obstacles preventing Swissair today to achieve its former glory of delivering superb customer service? Aren’t start aligned for Swissair to become a crown jewel within Lufthansa’s portfolio or it will take a back seat, giving priority to Lufthansa’s flagship brand and low cost germanwings product?
It was particularly interesting for me to read that scientists were left free to pursue research in any area that they desired. This reminds me of the practices at Google and Facebook to let people work on side projects that are completely unrelated to their day-to-day jobs. What do you think is the factor that makes such freedom to pursue your research interests good vs. bad?
The cost base of peers is different and several of them boast a much more superior cost structure primarily because of stronger efforts to reduce the cost base rather than because of idiosyncratic local market characteristics. Higher mail volume decline and local competition have caused PostNL (the Dutch postal company) to develop state of the art automatic sorting capabilities while Royal Mail still sorts a lot of its volume manually. Labor cost meanwhile is second highest within the peer group of other postal companies who have done a much better job at dealing with unionized staff.
There are currently no private postal service providers within the UK who offer end-2-end mail delivery, however, it is reasonable to expect that if they existed and had labor force that wasn’t unionized (similarly to Royal Mail competitors in parcels) they would have a much more optimal cost base.
Unfortunately, ability to reach everyone is not so unique in the UK which is very densely populated (excluding parts of Scotland).
The diversification point is an excellent one – this is the only way to emerge from declining mail volume and different models have been observed in Europe:
-Royal Mail (UK) – diversifies into parcel within the UK and Europe (no diversification outside of logistics)
-Deutsche Post DHL (Germany) – used to have a bank division (Postbank) that it spun off. Currently focuses on mail, parcel, express courier delivery worldwide through DHL Express division and global freight forwarding and contract logistics (through DHL)
-Poste Italiane (Italy) – perhaps close to Indian example, mail business is a small part of the business. Poste Italiane has leveraged the trust it has built over the years to develop its offering of financials services (mostly savings accounts) and sell insurance
-ctt and bpost (Portugal and Belgium) – banking services were an add-on to the IPO story but were still underdeveloped/starting a few years ago
-PostNL and Austrian Post (The Netherlands and Austria) – these 2 are focusing mostly on mail and parcel with limited diversification, focus is on operational improvements and managing volume decline