Stratagem 25:Shed Your Skin Like the Golden Cicada
“Make your front array appear as if you are still holding your position so that the allied force will not suspect your intention and the enemy troops will not dare to attack rashly. Then withdraw your main forces secretly.”
—From The Thirty-Six Stratagems
The charter airline business is ruthless. It punishes with losses any airline that fails to achieve 70 percent utilization (an airline that achieves 70 percent utilization keeps its planes, on average, 70 percent full on flights). Keeping planes full, however, is a challenge. Charter airlines have few means, other than price, by which to differentiate their services and maintain high utilization rates. Passengers rarely can choose which particular charter airline to fly. Rather, institutions, such as tour operators and corporations, make buying decisions. They do not care about the airline’s name or the details of its frequent flyer program, but they do care about safety. Regulations ensure airlines’ records for safety remain similar, making it almost impossible for airlines to differentiate along this dimension. As a result, airlines are relegated to competing on price alone. Performance, to a great extent, depends on factors outside their control, such as macroeconomic trends.
The payoff for filling planes, however, is attractive. Revenue from each passenger above minimum utilization represents pure profit because carrying that additional passenger requires no meaningful additional cost. While growing profits in most industries usually involves increasing price, the way to expand the profit of an airline is to increase utilization.
The Thomson Travel Group of the United Kingdom has pieced together a system to improve the odds of its charter airline gamble. It beats the system by applying a clever stratagem to practically ensure full planes.
Thomson operates three related businesses. Its retail business, Lunn Poly, sells consumers travel services, such as hotel rooms, flights, and tour packages. Its tour operator, Thomson Holidays, packages and manages tours. Thomson’s third business is a charter airline, Britannia.
While the three businesses are independent, they can coordinate their efforts to achieve an advantage that competitors cannot. For example, Lunn Poly does not exclusively sell Thomson Holidays’ tour packages, but it sends a lot of business to this sister company. Thomson Holidays, in turn, sends much of its business to Britannia, which, in turn, benefits from well-utilized planes.
The impact of this structure is compelling. Thomson’s retail and tour businesses make little profit. Indeed, few companies in these markets do. In forgoing retail and tour profits, Thomson benefits
in two ways. First, it wards off travel retail and tour competitors with low prices and low profitability that diminish would-be competitors’ appetites. Second, by ushering customers into Britannia planes, ensuring high utilization, the company can generate abnormally high charter airline profits. Thomson’s retail and tour businesses not only serve as a conduit for the air charter business but also act as a façade that discourages the competition while the real action takes place elsewhere: Britannia earns unusually high profits.
The False King
Xiang Yu, who collaborated with his uncle, Xiang Liang, to apply he stratagem Exchange the role of guest for that of host and take control of Wu (see Stratagem Twenty-Three), continued his quest to take down the Han empire. He and his uncle successfully took control of their home state of Chu. Xiang Liang died later during a mission to expand the revolution, and Xiang Yu became warlord of Wu. In this position, Xiang Yu led many successful battles against the king of Han, Gaozu.
After one such battle in the early second century BC, Gaozu retreated with a diminished army to regroup in a fortified city. However, Xiang Yu followed, surrounded the city, and prepared to finally defeat his archrival.
Gaozu’s situation looked dire. But one of his generals proposed a maneuver to allow Gaozu to escape. The general proposed that he pose as the king, focus their adversary’s attention on him by
feigning a surrender, while the real king, Gaozu, escaped through a side exit of the city. The general was offering his life to save his king. The king accepted.
The general had 2,000 women dress as soldiers. Just before dawn, these women exited the main gate and took up battle formation. Xiang Yu’s army reacted quickly. They assembled in formation and prepared for what they hoped would be the final confrontation. But just before daybreak, when the fighting would commence, the general appeared from within the city walls disguised as the king and signaled surrender. His people had run out of food, he explained.
Xiang Yu’s soldiers celebrated their long-awaited victory in a joyous uproar. They did not yet realize that the man they thought was the king was actually a general, and the figures they thought were solders were actually women in disguise. Under the cover of this façade, with thirty horsemen, Gaozu quietly exited the city through the West gate.
The general’s carriage slowly moved toward Xiang Yu. The king was to surrender in person. When Xiang Yu recognized the general and realized he had been tricked, he grew furious. When he learned that a group of horsemen had snuck out of the city and escaped, he had the general burned to death. Gaozu, the king of Han, was saved.
