Wednesday, September 2, 2009

A Yeshiva Business Model?

I've been thinking about how Yeshivas can change the way they do business so as to effect cost-cutting measures. What popped into my mind was the airline industry, and in what ways yeshivas parallel that industry and in what ways they don't. Amazingly, there was a lot of congruence between these two seemingly disparate organizations. In no specific order, here's what came to mind.

1. Airlines come in all sizes. Some are quite small; some are quite large. Some of the smaller airlines provide niche services; they may get private executives and those with money to pay the huge fees to where they want to go in luxury and real comfort. Other of the small airlines provide a service in a geographic area that would otherwise not have air travel available. They may be "the only game in town," and they may either keep their prices low, needing the good will of the people they service, or they may keep their prices high, reasoning that their customers have no other options. Some smaller airlines clearly have less expenses than the larger airlines because they have less planes and less personnel; on the other hand, because they are smaller they may not qualify for the reductions in purchasing costs that a larger airline can negotiate through size alone. Obviously, some yeshivas are larger and some are smaller. Some serve niche purposes. Some charge more than others.

2. Frequent Flyer Miles: Some airlines offer points for traveling which can translate into reduced price tickets or free tickets. Parents with many children in a yeshiva get these types of frequent flyer miles in reduced or no tuition. Each airline has a different policy of how and when such miles are earned and how and when they may be used. Ditto the yeshivas. But one thing anyone trying to use those frequent flyer miles for free or reduced tickets knows is the airlines offer very few of these types of seats on any given flight. There may be only 2-4 of these seats on a flight, out of 300 available seats. Hey, the airlines aren't in business to lose money. The yeshivas shouldn't be either.

3. Free Travel to Personnel: Those who work for an airline can get free travel on that airline. They aren't traveling first class, nor is the free travel available on every flight. The free seats are limited in number and will depend on whether or not a flight is full. Nonetheless, that travel is available and is considered a perk of being in the airline business. Yeshiva personnel get the same "free travel" in that they may receive free tuition for their children. Some yeshivas will offer this perk to only some of their personnel; others are doing away with this or severely limiting it. About time. Airlines don't give that free travel to their employees in unlimited amounts, nor can they take all their family members with them for free, just themselves. And you don't hear the airline industry saying that it is making free travel available sometimes in lieu of higher salaries, or because their employees make such low salaries. If and when this free travel cuts into paying business or threatens the airline economically, it will be "gone with the wind." Most yeshivas can no longer afford to offer this perk to their employees.

4. Space Utilization: Specific classes of airplanes (a 747 for instance) all have the same outside dimensions; they may, however, differ in how the space is configured on the inside of the plane. Some of these planes have less seats, but this results in higher fares to make up for the lost revenue. Other airlines squeeze as many seats as is possible into this space, thus producing more revenue for the airlines. Sometimes the airlines may pass along some of their extra money to the customers by reducing fares; other times they don't. Some yeshivas have more students per class, some have less. The less students in a classroom, the lower the revenue produced, in general.

In addition, some airlines which are smaller have joined together with other smaller airlines, or even sometimes with larger airlines, to purchase or rent terminal space. The amount of money in overhead to maintain a terminal for their own, small usage is too prohibitive financially to make sense. Do we really need all the yeshiva buildings we presently have, with their duplicated expenses? Wouldn't one larger building hosting many smaller yeshivas make more sense?

5. Classes of Service: Many airlines have at least three levels of service on any given airplane: first class, business class and coach. Coach may be further divided into a whole alphabet soup of fare classes. Thus the same exact seat that you are sitting in may have cost you more or less than your neighbor in the next seat paid. Those in the higher fare classes are paying way more than those in the lowest coach seats; their payments help to subsidize the lower fares in coach. Airlines seem to have no problem in raising first class fares; they reason that those with the money to pay those fares aren't going to cavil about a "little" extra cost. Yeshivas also seem to have developed this kind of a "fare" policy. Some people with children in a yeshiva are paying a lot more than others are. Even in the yeshiva "coach" pricing there are many different variations. All children are sitting at the same exact desks, but not everyone is paying the same price for that privelege. And unlike the airlines, those parents who are paying the full first class fare don't get anything extra for doing so. Note: there are a few yeshivas in which all the seats are "first class," and parents pay accordingly.

6. It may not be much, but first class and business class passengers get lots of little perks that make the flying easier. They get wider, roomier seats with lots more leg room. Depending on the plane and the flight, these seats can recline into sleeping cots. They get free Internet connections in some cases. They get meals served to them with no extra charge. There is no charge for alcohol. They get wet, warm washclothes with their meals to cleanse their hands and faces with. They have a steward or two whose only job is to make the first class passengers comfortable and happy. They get to board first and deplane first. They have private lavatories that only they may use. Those first class and business class passengers in a yeshiva aren't accorded any special services; if anything, the yeshiva looks at them as cash cows and milks them accordingly.

7. Food Service: Domestic flights in the US have all but done away with regular meal service. Some airlines still serve free snacks to their passengers, mostly on longer flights. Some airlines will serve meals but only if you pay for them extra. Some airlines are even doing away with free beverage service; again, if you want a soda on these airlines, you have to pay for it. Airlines looked at meal service and saw where they could trim money from their operating budgets. Yeshivas might want to follow the airlines' example and either get rid of meal service altogether, or charge separately on a pay as you go basis for meals ordered.

A thought: airlines, for security reasons, don't allow you to bring onto a plane bottles of drinks purchased elsewhere. Only when you have gone through security and entered into the general boarding area may you purchase those drinks for sale there. And oh boy do they charge through the nose for those drinks. There are some yeshivas which have a similar policy. Students cannot bring in food from home: only that food purchased from the school is okay. They have kashrut "security" concerns. Either way, parents are being gouged. (Last January at Newark airport our flight was delayed and my husband and I went to get something to drink. I don't drink soda usually so I headed for the bottled water. A 20-ounce bottle of water was $3.15 for one bottle. My hubby's bottle of Coke was even more. Obscene? You bet! That same week I had purchased a 24-pack of 16 ounce bottles of that same brand for $2.99! The school where I teach has a drink machine where a 12 ounce bottle of water is "only" 75 cents, and they are actually cheaper than many of the stores right down the block.)

8. Customer Service Satisfaction: Almost all airlines send out surveys to their customers asking them about customer service. They ask to hear what they are doing right and what they are doing that could be improved. They ask their customers which services the airlines offer that the customers value. They ask for suggestions as to how to improve customer service. Any one here ever get such a survey from a yeshiva? Airlines look for customer input, but yeshivas seem to refuse to see parents as paying customers. The last thing they want is for parents to "mix in" to their business.

9. Routes: Airlines are in business to make a profit; at minimum, they have to cover their expenses. They take a look at all the routes they fly and the number of daily flights on that route. Sometimes they see that certain flights are underutilized and they cut that flight out of the schedule; it's just not cost affective to keep it. Sometimes they will find that they have too many flights on a given route per day, and they cut down the number of flights. Sometimes they even cut a day out of the flight schedule. We have yet to see yeshivas consider cutting out a period every day, or cutting out Sundays, both of which would cut expenses.

Maybe some of these suggestions would be easier to impliment than others. I'm not suggesting that everything an airline does could be utilized by yeshivas with exact correlation. But a whole lot of what airlines do could be utilized to good affect. People who fly may not be 100% happy with some of the cost cutting measures the airlines have put into affect, but those measures did what they were supposed to do: they controlled costs. We can't lose anything by giving some consideration to the airline model.


Mike S. said...

Considering how much money airlines lose, I am not sure it is a good model. Historically airlines have lost more money than they have made.

ProfK said...

Mike S.,
Yes, some airlines have historically lost money; however, those losing the most have gone out of business--Pan Am comes to mind. Those that remain find more economical ways of doing business, some of which are mentioned in the posting. Those airlines are responsible to their shareholders to reduce costs.

Until now, which Yeshivas that lost money went out of business? I'm not saying that airlines and yeshivas are exactly parallel, but there are some areas that they both share where the yeshivas could learn from the airlines.

tap into your local economic natural resource said...

"A 20-ounce bottle of water was $3.15 for one bottle. My hubby's bottle of Coke was even more. Obscene? You bet! That same week I had purchased a 24-pack of 16 ounce bottles of that same brand for $2.99! The school where I teach has a drink machine where a 12 ounce bottle of water is "only" 75 cents, and they are actually cheaper than many of the stores right down the block."

What is wrong with tap water? So much cheaper, more environmentally friendly....

G6 said...

I have to think about this post a bit more.
Thanks for the food for thought.
I'm not sure how I feel about the Business Class vs. Economy Class Yeshiva education. Separate lounges for parents at PTA conferences? Priority appointments? hmmmm.....

ProfK said...

First, I was referring to water to drink on the airplane and purchased after the security check. There are no water fountains to drink from in the airport and no way am I going to attempt to drink water from the bathroom sinks on the airplane.

Re the bottles purchased for home use, NYC as a whole is reputed to have decent tap drinking water, but not all parts of the city have good water. Strangely enough, given the amount of taxes that they pay, the water from the taps in the 5 Towns area of Nassau has water so bad you can smell it 10 feet away. Also, as a city, we don't have all that many public water fountains so bringing water with you, particularly in the heat, is a necessity.

Why I don't drink water from the fountain on every floor in my college? Let's just say that they don't clean it often enough or well enough for my standards, and that I've observed enough people and how they drink from that fountain. I'm not looking to catch the flu or worse.

Offwinger said...

All three airports in the NY area have water fountains, as do most airports in general.

You can bring an empty bottle through security. (It's better if you remove the bottle from your carry-on and put it in the bin to show it is empty.) Then fill it up at the fountain on the other side of security. Voila! Water for free.

I do this all the time. The only time I've been prohibited from doing so is with heightened security on international flights (particularly from/to Israel or the UK). In those cases, though, they don't allow you to bring ANY water bottles on the plane, even those that were purchased at the airport. [In those situations, if you bring an empty bottle on the plane, I've found that you can often ask the flight attendants for water well before take-off, and as long you're not interfering with boarding, they will fill your bottle for you right then.]

As for the analogy between airlines & yeshivahs, I notice that you haven't mentioned:

- government bailouts of airlines

- airline bankruptcies, employee strikes, and "re-working" of contracts/salaries/pensions

- airline costs as a function of a more volatile market (fuel) vs. yeshivah costs being more fixed

Orthonomics said...

"Those first class and business class passengers in a yeshiva aren't accorded any special services; if anything, the yeshiva looks at them as cash cows and milks them accordingly."

I beg to differ. Yeshivot are beholden to parents and certain kids most certainly can get away with more than others. Sometimes it isn't because of money, but status. But, nonetheless, all are not equal.

I know of a certain act of vandalism that took place involving certain students. If it happened at my own public high school, I can practically guarantee the police would have been called. These kids hardly got a slap on the wrist. From what I heard, the parents are donors and pay in full.

Also, lunch programs can be money makers in certain schools. I'm sure other schools have lost money, so serving food can go either way. Some schools require all parents to pay for lunch.

Besides that, an interesting post which seems to boil down to free and reduced tuitions have to be limited to the amount of weight the school can bear.

ProfK said...

Thanks for that last line about how much weight the yeshiva can bear. This is one area where the airlines and the yeshivas proceed oppositely. Yeshivas make you pay for the first piece of "baggage" and then reduce the amount or eliminate it altogether as you add baggage after baggage. They seem to believe that they have unlimited space for that baggage, and if they are already carrying 100 pieces 200 pieces won't cost them any more.

Airlines today do the opposite. A few of them will still let you have one piece of luggage for no charge; a lot start charging from the first piece on. A second piece of luggage costs X. A third piece costs 2X. The container hold of an airplane will only hold so much baggage. And the baggage now has to pay for its transport.

Lion of Zion said...

"Free Travel to Personnel . . ."

this is something i've been meaning to post about. i am convinced that free/reduced tuition for employees is a major contributor to the tuition "crisis." i recently met someone who has 5 kids getting free tuition as a perk. assuming an average of 10k per kid (and in my world that's way on the low side), that's 50k extra that parents have to cough up every year. and then multiply that 50k by all the other employees with kids in the school.

Orthonomics said...

I agree with LOZ's assessment. Add to that those going for free or nearly free.

I see no way to solve the tuition crisis, if it can be solved, if the school policy is that the school will educate regardless of finances. It seems to me that a school needs a certain amount of income to operate and while you can provide some reduced seats, those seats have to be limited. Once you start opening additional classes regardless of ability to pay, you are endangering everyone.

But that is just my opinion.