Airlines’ Failure: Selling to “Everybody.”
Lots is written about airlines - their horrible service, their financial woes, the rising costs of jet fuel, the problem of increasingly overweight passenger bodies reducing fuel efficiency, battles with the unions, safety issues, etc. etc. I’ve written several posts myself about airlines. And, there’s really no excuse for making it a policy to treat your customers badly.
All that said - here’s the root cause of their woes. Cheap-o travel. The airlines made tickets so affordable that “everybody” got into the habit of flying. And the airlines got used to having hordes flying. Basic economics and pricing methodologies (and marketing common sense) went out the window.
When I first started flying, over 30 years ago, travel was more civilized. Then, gradually, things changed. People that normally would have taken the bus or train or driven…started herding onto the planes, clutching bed pilows and whacking me in the head with leaking bags of goodies for the grandkids. Note: Before you think me an elitist snob - when I was a child, we did a lot of business with Greyhound and we drove many thousands of miles. Daddy loaded us in the car (no air conditioning) and we were lucky to get one bathroom break every 400 miles…
It couldn’t last - and now the airlines are (desperately) trying to keep “everybody” flying. The trend is to charge for everything - right down to those disgusting pillows. (I’d love to sit in on an airline financial meeting, “Yes, we project that we can make $250M on pillow rentals this year!”)
As Maureen Rogers notes in Air Fair, why don’t the airlines charge a price at which they can make a fair profit? They’re going through downsizing anyway - why not try a different business model? One that would enable them to make a profit and still provide good service.
Watching the entire airline industry struggle and crumble is a good lesson for all of us. You can’t be all things to all people - and “everybody” isn’t a sustainable market.
P.S. Maureen also gives a great example of marketing blah-blah spin…by an “industry analyst” no less. “Ultimately, they [the traveler] will be more satisfied because they will be in control of their travel experience,” said Henry Harteveldt, principal airline analyst for Forrester Research Inc. The folks at Forrester are usually smart…but they also make money selling research to industries, such as the airlines…so they’re going to sprinkle a little feel-good dust on their stuff.
Related Post: I Want Whatever United is Smoking.
Tags: emarketing, marketing, marketing troubleshooting, customer service, United, Airline problems, American Airlines customer service, American Airlines problems, Airline problems
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May 14th, 2008 at 12:45 pm
I think part of the problem is that customers never like seemingly random pricing. I realize that a plane trip has a huge fixed cost and it make sense to sell of seats to recoup that at almost any price, but… it just feels wrong, and people tend to dislike that. Add nickel-and-diming and you get resentment.
(it used to be that if you showed up early at the airport Continental’s kiosks would simply offer you an earlier flight, no charge. But if you called to make sure you could get on that flight, it cost $200. Now when you get there early, the kiosk offers you the flight for $25 or so. I’m sure it’s making them some money, but… why can’t it just be logical? Why does it cost 5x as much to fly to LaGuardia instead of JFK? (Answer: JetBlue.) And so on, and so on.)
May 14th, 2008 at 7:01 pm
John: Agreed. But the flip side: what choices do we have? Not excusing poor service, but if there is no… financial incentive to do better service why spend the extra.
My view is that the airlines (speaking more of here in Oz) have a captive, highly price sensitive market. So they focus on pure cost of the airfare to get the punters in, and then stick the hand in the punters pocket over and over.
The regular travellers know this and judge on other merits. But the “everyone” Mary spake to don’t know this and get bit.
And resentful.
But they don’t fly often enough for the Airlines to care and so the whole cynical circle continues.
http://ars.userfriendly.org/cartoons/?id=20080419&mode=classic
Sums it up pretty well…
Cheers!
- Steve
May 15th, 2008 at 7:41 am
My last trip to New Orleans, I flew Continental. I was pleasantly surprised - the planes were new(er), weren’t trashed out. The employees treated us like people. And, when we asked if we could catch an earlier flight back, they simply put us on it - no kanuffling about fees or added charges. So, it comes down to the people (duh-oh!)
Economics and business aside, I still think there should be some common decency. So, it doesn’t “pay” to give good service (I’d argue that it actually does if you consider all factors, but…) - what about self-respect? pride in a job well-done? Of course, this comes back to as badly as the airlines treat us, they treat their own employees just as poorly in many cases. (No, you don’t get a pension, but look at this nifty new uniform you get to wear for the next 18 hours!)
May 15th, 2008 at 2:31 pm
Only 18 hours in a uniform? You were *lucky*! In my day we used to have to get up 3 hours before we went to work; wear same uniform 37 hours a day AND pay airline owner privilege of wearing their uniform!
And you try and tell the youth of today that!
They won’t believe you!
With apologies to Monty Python…
In answer tho: Hear Hear! I see the exact thing RE treat employees well with IT Outsourcing. Employees are treated like cattle (well… worse actually. Cattle are valuable assets!) and correspondingly do an amazingly bad job. Things like: install new web servers and put them live in production… but without the actual web site active, such that 1 in 4 requests gets the default “Wow a website here!” page. Apparently that was our fault for not telling them it needed to be done.
Cause and Effect.
When I find myself writing a 3/4 page document for the edification of the IT Outsourcer on how to plug a blue network cable into a patch panel, I feel that something has gone very very wrong.
Cheers!
- Steve
May 24th, 2008 at 6:05 pm
Does the Airline Industry Need a New Business Model?…
The big news this past week was American Airline's announcement that they will start charging $15 for the first checked baggage in addition to raising fares up to $60. Of course, everyone is complaining about it. I found……