Original post date October 27, 2008
Last week I took a flight to Orlando. I fly a good bit and have reached a preferred status (whatever that means) on USAir, so I got bumped up to first class. Big deal! No meal, a 30-year-old plane, a terminal and jet port that looked out of a third-world country. I know I sound like a whiner, but hang on, I have a point.
The industry that led the way on defining the customer experience in the glory days of “jetting” and customer loyalty with reward cards has lost its way. In particular, the U.S. carriers are lost in a forest of bankruptcy. As the rest of the world moves towards enhancing customer experiences and building customer advocacy, the airline industry seems to be doing everything it can to move in the opposite direction.
For example, the airline I mentioned above now charges $15 dollars for the first (yes, the first) bag checked. As a result of that brilliant money making idea, we now have flights delayed because everyone is trying to jam their bag into an overhead. Or how about charging for water, tea or coffee? Yes, on this same airline coffee and sodas will now cost you two dollars. On the flight down the price of beer and wine was $6; two days later on the return it was $7. It’s probably close to $10 by now.
Maybe you’re saying that they have to do that because of fuel cost, labor cost, etc. Well then, how is it that Virgin Airlines, in particular Virgin Atlantic in the States is able to make money in this industry despite its new planes, expansion of routes, etc. Because Sir Richard knows it’s about the Customer Experience!
Southwest Airlines has turned this into a whole campaign. The strong, well managed will make the weak pay for this approach. The bottom line is that “nickel and diming” your passengers/customers isn’t going to make the airline profitable again. In fact, it will probably do the opposite.
What will help restore profitability to the airlines? Well I’ve a got a few ideas: how about we start with Innovation…then good management practices…and a decent labor contracts, etc.! BusinessWeek ran an piece on the performance of innovative companies in its September 22, 2008 edition. Companies known for delivering innovative customer experiences have an average stock return of 2.5% and revenue growth of 5.1% from 2004-07. Those with innovative business models were more impressive with a 16.6% return and 7.2% growth.
So I say to the airlines, to get flying again…innovate yourself out of this nosedive…and give me back my free coffee!