(I wrote most of this post last June but never completed it. Today’s announcement that JetBlue will offer, at no additional charge to all passengers, XM satellite radio — in addition to satellite TV which they already offer — reminded me that my original post was still topical.)
A while ago I bought a cheap wallet from a retailer of modestly priced leather goods. Ten bucks on sale at one of the company’s airport shops. When the wallet’s money clip broke, I went to the company’s website, found a 24/7 phone number, called and was directed to a local store. I dropped by and they cheerfully replaced the clip and refused payment. That’s great service: not only is it pleasant to shop in their stores, but I can do so without risk because they stand behind their products.
Contrast the leather store’s attitude with that of the typical airport concessionaire. He has you by the short hairs, especially if he sells food and you are hungry. You get charged $3 for a stale pretzel or a multiple of that for a crummy sandwich. And why not? Repeat business isn’t a factor, there’s little or no competition at the airport and you can’t go elsewhere. You pay up.
National chains that don’t operate exclusively in airports, like Starbucks and the aforementioned leather shop, tend not to follow this pattern. Perhaps they realize that charging what the market will bear can in some circumstances alienate customers, and isn’t always worth it in the long run. Or maybe these firms see opportunity in providing reasonably-priced service to customers who are accustomed to being overcharged at places like airports.
One of the problems with the major airlines — and I think it’s one of the reasons they are doing poorly — is that their attitude toward customers tends to resemble that of airport pretzel venders. They are willing to compete for business, up to a point, but want to treat customers as captives after tickets are purchased.
We’ve all heard stories about bad service and bad attitudes. Consider also the missed opportunities for airlines to sell tickets. For example, you can take your laptop on a flight, but often you can’t plug it into the airplane’s electrical system. Or you have to pay up for a higher-class ticket to be able to do so. It’s generally not worth it unless you are a time-pressed business traveler on an expense account. On the margin, an airline that made it cheap and easy for anybody to use his laptop might gain customers from airlines that didn’t.
Then there are the telephones that cost a buck or two per minute. I assume that these are used mainly by business travelers. But might airlines not do better to provide lower-priced communications equipment, to attract all kinds of customers?
United recently announced in-flight email service — at a minimum price of $15. But how many people will pay that much (especially since using the phone may actually be cheaper for short messages)? How many more travelers, especially nonbusiness travelers, would use these services (and how much more business would airlines get) if computer power and a certain amount of phone and email capability were provided at cost, perhaps bundled into ticket prices? I think a lot of us would prefer to fly on airlines that routinely provided such services for less than expense-account prices. JetBlue, which offers passengers free TV (and now satellite radio) seems to understand this. Delta’s Song quasi-spinoff promises to do something similar. These are promising signs.
Before deregulation, airlines weren’t allowed to compete on price, so they competed on marginalia like meals and the attractiveness of their stewardesses. After deregulation, fares became competitive but service was often neglected. This situation created opportunities for service-oriented companies like JetBlue.
But the old lines still don’t seem to get it. They are driving off business by trying to make money from overpriced services that are routine conveniences in the non-captive world. They might do better to learn from Starbucks and other successful retailers. Nickel-and-dimeing customers won’t generate enough revenue to overcome United’s bloated cost structure and make it profitable. Getting a lot more people to buy United (as opposed to Southwest or JetBlue) tickets might. One way to help make this happen might be to start treating customers better — for example, by providing modern entertainment and communications facilities at prices that encourage the traveling masses to use them. In other words: make people want to fly on your airline. A few airlines seem to understand this. Perhaps some of the others will wake up before they are lost in high-cost, customer squeezing, bad-attitude death spirals.