Another Messed Up Industry Makes Things Worse

A few days ago, I wrote about terrestial radio's forays to generate the kind of excitement and buzz that it needs to fend off the iPod and satellite radio. Now today comes this story in the New York Times (registration required) about the major airlines and their continued diminshment of services in the wake of their continued massive losses.

The topline is that established airlines such as Northwest, American and United are cutting out such frills as mini-bags of pretzels, they're charging for curbside bag service, and they're putting ads on tray tables and cocktail napkins in an effort to find every nickel hiding under every seat cushion (if anyone ever needed a floatation device right now, it's the airlines) to save themselves from ruin.

At this point, it's difficult to imagine things getting worse, but clearly they're trying. A trip to Chicago on United a few weeks ago made me think that the widely-held description of air travel resembling bus travel no longer cuts it. Ship steerage might be the better analogy.

We were treated no better than cattle at the security gate (while United employees opened up extra lanes for premium passengers, the unwashed masses like me were brusquely herded into a lane by a woman whose greeting was so perfunctory and lifeless that it's hard to know for sure if she was in fact human and not the latest innovation from the people who make those robot cleaning products. We were told that line would be faster, but of course, it wasn't.) Then there was an hour delay waiting for a flight attendant to show up, I sat in a middle seat in coach that I swear had the least legroom of any plane I've ever been on, the video service was broken, and the flight so awful that Bette Davis' signature line in All About Eve ("Fasten your seat belts, it's going to be a bumpy night") seems to have been the pilot's inspiration for the trip.

At the same time, though, these same chiseler airlines are adding services for first-class and business-class passengers: lie-flat beds, personal entertainment systems, better food, etc. (At least these muckety-mucks still have to suffer through turbulence, albeit it in more comfortable seats.)

So in the spirit of the strategic idea I posed re: radio, I have a modest proposal. Why don't the major airlines just get out of the business of serving poor schlubs that they make no money on? Go premium and go as over the top as possible. We've written about companies that have "fired" their worst customers (in the July issue, soon to be online, Don Peppers and Martha Rogers propose a way for businesses to measure their best customers. Look for it). Seems like the airlines have to face this option in some way, shape, or form.

Planes could look like the setup in the old Airport '77 movie, with the swank custom-built recreation areas and the piano bar and all that junk. (The somewhat troubled Airbus A380 does, in fact, offer just such a setup.) Play up a return to the glamour of air travel of the 1950s and 1960s (without the "coffee, tea, or me" misogyny naturally, while still capturing the spirit of an upscale lounge). Because even with all the upgrading going on for passengers in first or business, they still have to see the vulgarity of coach class people, heaven forfend.

Yes, others have tried this and it's failed (MGM Air, anyone? And on a very limited, super high-end basis, the Concorde), just as a lot of folks have tried discount carriers and failed. But Southwest and a href="http://www.fastcompany.com/magazine/82/jetblue.html">JetBlue have succeeded. So it's not that far-fetched to think it could be done. Maybe the era of air travel for the masses was a blip. Or at least the class struggle that plays out in each airplane every day isn't meant to be.

I'll say one thing, though, to the airlines, and I think this goes for any company that deals with customers every day. If you're going to cut out the last of the small niceties that you offer or charge for something that you've never before charged for, I wouldn't necessarily come right out and say it. Airlines would be better off just hiding that $2 per bag charge in the cost of a ticket than asking customers for it in a rude surprise.

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12 Comments

  • Stephen Downes

    Or, hey, may admit that airline deregulation was a bad mistake...

    One wonders why that isn't in the list of options.

  • Bob Watkins

    If these were still the heady dot-comm days, I'd be rushing off with my newly minted business model to register the domain name 3-4-2.com.

    The model? Simple. Buy three seats in coach, put two people in them, split the difference. First class armroom at a fraction of the price. And put the little armrests up, and you get hip room too.

    Ah, I can see the flood of money and instant market cap coming now. . .

    With tongue positioned squarely in cheek,
    BobW

  • Alan

    cancelled EVERY service to Paris on Valentine's weekend after keeping passengers waiting in the lounge 3 hours and then tried to refuse either new tickets or compensation for unspecified security reasons

    Heh.

  • dave

    The point I was trying to make on differentiation is actually punctuated by LP.

    Do the primary job that consumers hire you to do well and you win (apply true nimble marketing here). Better still, constantly innovate to deliver better service at lower cost.

    All the "nimble marketing" (called gimmicks) in the world won't overcome your inability to do what the consumer wants at a competitive price. That is a misdirection...adding value to hide an underlying inferior core business model.

    D

  • Mark Frisk

    Also, in response to a remark a couple of posts above, just because something is copyable doesn't mean it can't be a point of differentiation.

    Nimble marketers know that when others start copying them, it's time to innovate again and come up with another original proposition.

  • Mark Frisk

    David:

    If they hide the $2 per bag charge in the price of the ticket then even people not availing themselves of curbside check-in will be paying it. And how many bags would they charge for, anyway?

    It's no surprise that Seth Godin has indeed been on the airlines' case for awhile now. It's an industry that seems to be striving to perfect the fine art of customer alienation with every flight. Even with tight margins, I'm not sure it has to be like this.

    Management needs to think seriously out of the box (out of the fuselage?) on this one. Seth himself offers a wealth of ways to do so in Free Prize Inside, a book that execs in just about any field who want to differentiate their companies and do better by their customers would do well to read.

  • LP

    To be honest, I've had worse experiences on regularly scheduled airlines than I have had on any budget flight.

    Thus far, budget airlines have not:
    - lost my luggage
    - delivered my luggage ahead of schedule and left it unattended sitting for two hours by a carousel waiting to be blown up by security
    - claimed to have lost my luggage when in fact it had been loaded unmarked on the correct flight, causing it to be nearly blown up by security
    - kept me waiting in line for four hours just to check in
    - batted me back and forth between queues because queue handlers don't want to deal with you (try being a domestic passenger transferring to an international flight and see what chaos you cause)
    - charged me $10 for a $1 pair of headphones
    - cancelled a flight without issuing an immediate replacement ticket
    - loaded only 50% of the food required for a flight and then chucked the lot rather than serving any (eg: the mother and baby in the row in front)
    - cancelled EVERY service to Paris on Valentine's weekend after keeping passengers waiting in the lounge 3 hours and then tried to refuse either new tickets or compensation for unspecified security reasons

    These things have, strangely, all happened on full-price airlines - 90% of them on a certain American Airline and the rest on a certain British Airline.

    I wonder if they're not hungry for my business?

  • dave

    Airline travel has gone from specialty to commodity business. I can fly to some cities for less than the price of cab fare from the airport to downtown. Face it, the fundamental product of moving me from point A to point B is generic. The cost is comparable to a bus ticket, but I arrive in a fraction of the time.

    People buy on price and schedule. This is why a premium-only line cannot sustain... there are too many alternative players who eliminate the point of difference using the first 30 feet of their plane and price competition.

    I have nearly a million miles on one carrier... I will never make it to that mark. I will fly Southwest. They have a pleasant crew an abundance of convenient schedules, they push back on time and their prices cannot be beaten. If you pick your flights right, you are not in a cattle car...there is plenty of elbow room.

    What will happen is that the old systems with their bloated fixed costs and high variable cost structure will go belly-up (government bail-out avoided). The assets will be purchased cheaply by a budget-oriented upstart who will structure the lowest possible cost per mile for their routes and schedule...they might fly into underutilized gates from midnite until 6am and shift a whole new audience of super budget fliers to a secondary route structure. Variable cost plus one dollar as a pricing structure on this daypart will attract a new customer class.

    Adding poker games, advertising and all the rest of the suggestions cannot undo the fundamental difference in cost per route mile. They can be adopted by any airline, thus they are not true points of differentiation.

    D

  • Alan Nelson

    This makes me recall what Gordon Bethune said when he took over Continental: "How much cheese can you take off a pizza before nobody wants to buy?"

    As someone who flies 50 weeks a year, I can tell you: There's very little cheese left. I've been turning the "over the top" idea around in my head for some time. Economically, I don't think they can pull it off ... the fixed costs in the system create a playing field with margins that are just too tight. But you're on to something in the airlines creating a bit more experience in the whole thing.

    Midwest Express is a good example: Not flashy; indeed, they're a low cost carrier with smaller planes etc. But the seats are 2x2, the size of first class seats, they leave on time, and the crew brings hot chocolate chip cookies, rather than pretzels, down the isle mid-flight.

    Now for me -- someone who almost requires a first class seat to sleep or work given the enormous amount of travel I do -- I'd fly Midwest every day if I could, not because it's luxurious, but because it makes travel humane and comfortable.

    Which, BTW, is something nearly every other airline fails to do.

    Don Peppers & Martha Rogers are smart folks, and they have a lot to say about adding more "experience" to service. I look forward to the article.

  • Chris Busch

    Glad to see others join the rag against the ailing airlines. Seth Godin has chipped in on his blog. On my blog, www.chrisbusch.com, I've given NWA some ideas to go along with their recent decision to no longer distribute the 1/2 ounce bags of nuts. One of my colleagues has referred to the coach cabin as steerage in recent weeks. Perhaps that's a moniker that will catch one.

    With all the vacationing families now traveling in steerage, it's going to be a long summer for the rest of us shmucks.

  • Tom Shaw

    Dave,

    You're right on the money. My wife and I had a recent roundtrip to Vegas on one of these flying cattle carriers. I think I now hate Las Vegas due to the flight experience.

    Maybe they can put straps on the bottom of the plane like a subway car. Then we coach folks can either hold on for our lives or end the airline experience with less pain!

  • STEVE OKEEFE

    Health,

    You have to wonder what took the airlines so long to get on the merchandising bandwagon. Every day, they have a captive audience comprised primarily of business people with high levels of disposable income. Everything in the darn plane should be a product placement, from the toilet paper to the swizzle sticks. What a great place to test market. And why don't we have a "seminar section" on planes, where you can learn while you fly? Or poker games? Or fashion shows? Flying could be far more fun and educational than it is now, and product placement can pay the freight.

    STEVE