Involving: the awesomeness of mobile banking, and the opposite of awesomeness in the airline industry…

Good morning

The headlines/things I found interesting this morning:

  1. The future of banking.

    Link: maybe, even, the future of money.

    Some Kenyan statistics:

    – whether they own or share it, 85% of Kenyans use mobile phones.

    – but only about 19% of Kenyans have access to a bank account.

    Which means that “mobile-banking” and/or transacting in airtime credit is big African business. And you can even buy insurance and pay for groceries over your phone.

    The clichés are too obvious: “(air)time is money”, “seconds the best”, “Can I get a minute steak?”… And it sounds (suspiciously) like the premise of that sci-fi movie “In Time”.

    But the point is – we should remember that the bulk of the world’s population is developing, and without access to bank accounts. Which should be encouraging in some ways, because however bad a financial system collapse is, its impact on the poor will be negligible – the poor will still be poor, and their lives will still be subsistent.

    But using airtime as a monetary system is fascinating. It’s a bit impractical once you talk about larger amounts, and international trade, but at a base population level – it’s brilliant. And, more to the point, accessible.

  2. American Airlines.

    Link: fluff.

    In first world news, the CEO of American Airlines, Doug Parker, thinks that the airline industry still has room to be awesome. His achievement includes bringing AA back into profit in 2010. And hey, hats off, that’s an achievement.

    But honestly though, we must be serious. The economic fundamentals behind airlines are terrible. Shall we backtrack a moment, and consider what would make us optimistic about an industry doing well? Some factors:

    – a committed, and growing, customer base;

    – high margins; or, at the very least

    – consistently predictable costs of production;

    – little to no competition, or the ability to significantly differentiate your product;

    – little to no government regulation;

    – low or infrequent capital reinvestment requirements.

    And then let’s look at the airline industry:

    – a declining customer base (cheaper for the business folk to skype), and those who are left are willing to change airlines at the drop of weekend-special email;

    – low margins, as a result of customer access to or whatever;

    – shifting costs of jet fuel, to say nothing of airport taxes;

    – a market stocked with rival airlines, all offering the same sh**ty legroom deals;

    – completely regulated in almost every country they visit;

    – regular and high capital reinvestment required;

    – oh, and you sell your old aircraft to budget airlines, who then completely undercut your rates for a few years until they go under (at which point, no customer believes that you should actually up your rate to reasonable levels).

    So I’m not sure where Mr Parker’s optimism comes from, but in his own words:

    “I believe it, so it’s easy.”


  3. And on the topic of airlines…

    Link: Virgin Atlantic.

    They’re freezing salaries.

    Proof of point 2.

That’s all for now.

Have a good day.