Tuesday, February 5, 2008

Nickel me, dime me...

Yesterday, I had one of those conversations that seemed pretty normal at the time, but an hour later seemed a little more prophetic.

As The Wife and I were driving to the airport, I was going over our travel agenda for next week, which includes a 4-hour flight on Southwest. I've never disliked Southwest, but my appreciation for their consistency and service levels has gradually increased over the past few years, to the point where now, I'm a big fan.

The Better Half, not so much.

So, The Wife complained that she'd much rather be flying American (one of the two programs in which she has status for 2008) or United (where I'm a 1K Million), and began to list the items which make Southwest wholly unsuitable for a non-stop flight from the West Coast to the Midwest. In particular, the two key complaints were A) no in-flight entertainment (Southwest's flight attendants notwithstanding), and B) no food service. I then pointed out that not only did American not have either, but that Southwest gives you (for free, versus $4 on AA) a boxed snack on flights of that length (1201+ miles), and flies 737s with decent seat pitch, rather than the abysmal MD-80s (redundant, I know) dominant on so many AA routes.

This time, my logic prevailed.

Shortly after this exchange, I received an e-mail from United informing me of their new baggage policy. In a nutshell, if you don't have status, you're looking at $25 to check a second bag, On the one hand, I give United credit for pointing out that only a quarter of their customers check a second bag. On the other hand, I look at this policy and question the $100 million in cost savings and revenue that UA claims this'll realize.

Frankly, I think they're looking at spending about $100 million in customer service time with confused travelers trying to figure out what happened to their ability to check two bags.

Now, I'm a realist...in fact, I'm pragmatic to a fault (as The Better Half has told me time and again). Running an airline has never been an easy task, but it's been particularly tough the last few years. And, while I wouldn't say I'm sympathetic to the guys (and yes, it's almost exclusively a boys-only club) in the major airlines' corner offices, I absolutely understand the need to drive revenue and cut or contain costs.

But, I question at what point have the majors thumbed their noses at the traveling public once too often? Setting a realistic customer expectation, then delivering on that expectation, is all most customers can ever hope for from their service providers. Underpromising and overdelivering is the holy grail.

However, the issue that the six majors (with the possible exception of Continental) seem to have forgotten is that the expectations of the traveling public are still well above the service provided today, even as service (and, correspondingly, customer satisfaction) levels continue to decline. I'm on an airplane pretty much every week, so I've seen the gradual service decline and the nickeling and diming so prevalent in the airline industry today, but the infrequent traveler hasn't.

Me? I'm the frog in the room temperature frying pan, slowly heating up, boiling to death without really reacting to the bad stuff that's going on. The infrequent traveler? They're the frog dropped into the boiling water, who immediately senses that something's wrong. Of course, in the latter case, at least the frog can jump out, unlike the poor traveler who gets to the airport and learns that for his family of 4 to each take their second bags to Disney World, they're looking at another $200 added on to their round-trip airfare. Sorry Walt...one fewer lunch inside the park for the Joneses.

Sure, we'll never go back to the service of the pre-9/11 days, but at some point, the airline industry is healthier for it. The terror attacks of 9/11 were a forcing function to get airlines in better shape from a financial standpoint. I'm certainly not qualified to debate the pluses and minuses of all the financing maneuvers that went on post-9/11, although I personally believe that the U.S. should've had at least one airline failure to remove capacity from the market. Darwin did not prevail over the past few years, at least among the majors. But I will say that when most people, particularly infrequent travelers, think of airlines like American or United, they think of the full-service carriers with which they grew up, particularly if they'd cut their flying teeth prior to the dawn of the new millennium. And, for better or worse, lots of folks still associate the names of the six majors with service levels they became used to back in the last quarter of the last century.

You can't unring a bell, but that's precisely what the majors are trying to do. In the case of Ryanair, easyJet, and now Skybus, customers have started off with a very, VERY low expectation of customer service, which those carriers make no bones about. Want to check a bag? Ka-ching. Oh, and you have to pay for airport check-in since you have a bag. Ka-ching. Want to check a heavy bag (anything over 33 pounds)? KA-CHING. Want a can of pop, which is what it's called where I'm from? Ka-ching. Don't believe me? Click on the Ryanair link above to try to decipher their charges. They're mind-boggling.

But, from the start, Ryanair passengers know what they're getting into. Most passengers on U.S. majors don't. I absolutely don't envy those running the airlines, in particular their PR departments (save for that knucklehead at Air Canada who doesn't deserve pity for his stupid comment last week). However, the devaluation of the once great brands of the U.S. majors almost seems like a systematic effort by the guys in the corner offices to destroy their little remaining brand equity.

Building up a brand by gradually improving quality is a magnificent approach...just take a look at what Samsung has done over the last 20 years, or what Vizio has done over the last 5. Unfortunately, tearing down a brand is much easier than building one up. As reference, witness the majors (save for Continental) over the last few years.

Are efforts such as United now charging for a second bag misguided? That answer will depend entirely on your perspective. Do you own United stock? Do you fly United? Two simple questions which are not discontiguous, but which will likely provide diametrically opposite answers.

Scott McCartney's column in this morning's Wall Street Journal may sum things up best, reinforcing that Southwest may end up as the ultimate victor in the U.S. commercial aviation market. The direction of the six majors seems to be to match the model of the healthcare industry. While certainly not representative of U.S. healthcare in general, asking a patient for a $5 co-pay being wheeled on a gurney while having a heart attack seems like it's beyond the reach of U.S. carrier policies.

Or not.

In the meantime, see you on Southwest.

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