The Airline Industry: The Leader in Poor Service From the Industry That Invented Customer Loyalty

Would you pay extra to fly your “favorite” airline? I would not pay extra. Many years ago I would have paid extra, yet today I’m motivated by convenience and price. Why is this? It has to do with i) indistinguishable service,, all the airlines have the same poor service, except maybe Southwest where they love their jobs. ii) the fleets, have all caught up. in fact if anything, the new discount airlines have newer plains. Iv) flight attendants are equally nasty

Airlines Invented Customer Loyalty:

What was the first member rewards points program you joined? Was it a hotel chain or a food store? I doubt it. If your like millions of Americans, my guess is that it was an airline mileage program. These programs created widespread loyalty and were designed by very smart people. The airline loyalty programs have been the most successful customer bonding tools known to man, even more successful than MCI's friends and family.

To give you an idea of how influential these programs became, for years the number 1 credit card in Canada was the CIBC Aeroplan Card (s) ) . That was due to the fact that the card linked spending to points for free airline travel on Air Canada, Canada's largest airline. In the United States if you took a look in someone's wallet you would often see a United Mileage Credit Card or a Delta Amex Card., some kind of airline brand related card. Virtually everyone chased airline reward travel.

The beauty of the airline programs were that the both the Airline the consumer won. The airline often had their best customers fly exclusively on their fleet and the consumer received privileges like front of the line, free upgrades and more. I was as proud of my 1K United Status as I was of my Amex Platinum card. So were millions of others, it was a badge of honor.

So Why Don't I Care Any More?

Today, I don't care about my airline mileage program. I really don't and I still travel. I bet you do not care either. So why is that?

Will the level of service flying take off or crash and burn?

The reason I do not care is that my privileges and service promise have been hacked away at. This happened as the airlines were challenged to stay in business. I understood those decisions. Now that their cost base has been stabilized by reconfiguring their leases on capital equipment, hedging their gas costs, and controlling their employee cost bases (maintenance, flight service and pilots), the airlines are making money. Making money is good, and I can except the trade off they made for survival, but the service across the industry is the same. It is generally poor, whether you are flying a traditional or discount airline.

Have you ever tried to make a claim with rewards these days? Forget 25k points, forget freedom of travel, and forget hassle free bookings. You need to be really flexible and you have to hope that the other kids are still in school. Expect to stop a couple of times, to not get the date you would prefer, and expect to use more points. Even basic trips are now 40k-50k.

Have you ever seen that Capital One Rewards advertisement (www.capitalone.com). It was aired very heavily at the last winter Olympics. The basic message is use the Capital One card and you won't have the typical hassles that go with rewards!

It is a great campaign clearly well researched with the salient benefit being " More freedom—fly anytime, anywhere, with no blackout dates and if you have had a recent experience". Capital One is a great organization that knows how to hit the spot.

Now that the financials are beginning to suggest the Airlines can get back on their feet and offer better service, we are faced with the next “opportunity”

A Wave of Consolidation:

Have you read about the recent proposed consolidations with the airlines? For instance US Airways upon leaving bankruptcy, formerly Allegany Airlines was taken over by America West and named US Airways. Before the merger can be deemed completed from a service perspective, US Airways and its CEO (former CEO of America West) is making an unsolicited bid for Delta Airlines (/) , currently in Chapter 11. on top of that United is talking to Continental (Northwest may hold this up) and Air Tran is talking to Midwest. Finally, did you hear that Qantas was sold to an Australian and US Private Equity shops?

Will the consumer pay higher travel costs?

With Consolidation service should get even worse, but I do not believe prices will rise substantially. Clearly leading consumer groups would have you believe that the consumer will pay more. One could argue and a viewpoint I agree with is, there will always be another competitor and or discount airline that will crop up and seize the opportunity. So I think the price will remain pretty stable around today's levels. Read about Virgin Airlines / Richard Branson trying to get a foot hold in the USA market. They are a major influence on prices and service and if prices rise and the Government does not like it, all they have to do is relax USA ownership restrictions and the prices will get competitive again. Consolidation is a cycle and for whatever reason, unlike the auto industry, the airline business will always spawn new Airlines when the opportunity is right.

Will the level of service flying take off or crash and burn: Airline Service is invisible.

As I said the price of a ticket will remain stable but the service will reach all time lows.

The service is another matter. Consolidation means the merging of workforces and in the case of the airlines, it means a decrease in the service promise. You bet service decreases!

The Airline Employee hates their Company and hates their job:

Think about the person that is the face of your interaction with the Airline.

Have you ever sensed that an airline employee is disgruntled and does not care about your business? I have been confronted on an airline several times with provocation. And when I speak to other travelers, they share the same horror stories.

My guess is that in virtually every major airline but Southwest, the employees today have:
i. faced losing their job
ii. Retained their job over their peers because of seniority not their performance
iii. Had a drop in salary
iv. Lost their seniority
v. Work longer hours

Today, I find the airlines all the same. Nobody gives you food unless the flight is longer than 4 or 5 hours. Given the quality of the food from the “old days” that may not be so bad, but it is one less service quality and differentiator. All the airlines have a similar food policy so why differentiate? The truth being, I actually prefer paying 5 today and eating something I want then what they used to serve me before. Are you telling me the airlines cannot restore a menu and some selection and throw it in? Sounds to me like a winner! Is someone doing this?

So what happened?

In most industries when consolidation occurs the best employees the A grade one’s leave the industry and find new beginnings, the C' grade employees get fired and the B grade employees consolidate and stay with the Company This usually means at least operational improvements.

Survival of the Least Fit!

In the airline business. The older you are the more safe your job. The people that remain in the airline have gone thru so many ups and downs. They are nasty people that are confrontational. They hate their company and they distrust management. Given what these people have gone thru, it is impossible for them to be consistently pleasant. Your better off hiring a new staff. That cannot happen with these Airlines.

With the recent wave of consolidations now on the "horizon", the service will only get worse. It will be interesting to see if with all the consolidation an Airline will re- define their service as a method of separating themselves from their competition. If they do, will someone please tell me!