Five reasons the airlines don’t need to care about you

I’m getting on a plane next week, and I’m not looking forward to it. This will be yet another long, painful flight this year – and I’ve already had more than I have in a while. Though I’m getting used to this sort of business travel again, I can’t say that I like it. All the time spent in transit, quite frankly, blows.

It isn’t unusual at this point to lament the state of customer service in an industry that won’t even call us customers. How nice it would be to be treated well and given a product worth consuming, right? Well, we all know that isn’t going to happen. And the truth is that there’s no reason for it.

The airline industry really wouldn’t benefit from making our lives better, while the impact of the status quo on airline shareholders is as positive as it is evident. Let’s take a look at five reasons why it would be stupid for the airlines to start treating us better:
1. You get what you pay for: when I booked my flight to London (my upcoming trip), one thing mattered: price. I went with Delta, and it’s been years since I’ve had a good experience on that carrier. That didn’t matter to me, though. Price did.

Even if good service were a differentiator, it probably wouldn’t cause sales to surge. If you don’t pay extra for leg room or other forms of premium seating, then you definitely wouldn’t pay more for a ticket on an airline committed to customer service.

2. The current model seems to be working: a la carte pricing, extra fees and few (if any) amenities – along with route cuts and other operational changes – have taken the airlines out of the red and into the black. They’re making money, which really is the only reason they exist.

The fact that people gripe doesn’t mean they aren’t responding to the product. We’re spending a lot of money on extras … because we want them. Lower fares, net of amenities, provide travel consumers with the starting place they want. They can add (and pay) if they choose. In this market, service just isn’t a priority.

3. The right people are happy: the first thing you’ll learn in any business ethics course is that a company’s primary obligation is to its shareholders. So, if a company can create shareholder wealth while pissing off its customers, then it should probably stay the course. The airline industry, generally, has been doing this.

If shareholders are happy, we don’t have to be. If customer service becomes a problem for airlines to the point that it causes sales to drop, then the shareholders won’t be happy, and customer service becomes a priority.

4. Expectations are low and probably won’t change: let’s say you’re an airline executive, and you want to rehabilitate your company’s image. What would you have to do? The answer is pretty simple: spend a lot of money. You’d have to invest in equipment, operations, training and (after that) marketing. You’d have to change the business fundamentally, and it would cost a fortune. Would you do all this just to keep your customers happy? In all likelihood, you’d do it only if the financial upside were sufficient to justify the hefty investment. The outcome you’d need, however, doesn’t seem likely in this market.

It’s not impossible. JetBlue did turn itself around a few years ago, becoming an efficient and customer-friendly organization. It’s a smaller airline, though, which made the process easier. Also, there were issues beyond customer service that made such a bold change necessary.

5. You wouldn’t appreciate it anyway: why? Let’s face it – we buy on price. It keeps coming back to that. We want cheap, and airlines want profit. The airlines have found a way to deliver the former in a way that enables the latter. The travel industry and its consumers appear to have found some degree of balance in this regard. Ultimately, we really don’t care much about service … so why should the airlines?

[photo by Refracted Moments via Flickr]

Airline fuel costs up almost a third since last year

So, how expensive is fuel for the airline industry? Brace yourself: the situation is pretty ugly. In April 2011, airlines in the United States dropped an average of $2.99 a gallon on fuel. That number sounds a lot better than what you’re seeing at the pump, right? How can it be that bad?

Well, this is yet another month-over-month increase. In March, the airlines spent an average of only $2.80 a gallon on get fuel, according to the latest data from the U.S Department of Transportation‘s Bureau of Transportation Statistics. In 30 days, we’re looking at a 6.8 percent spike. Look back even further, and the numbers don’t get any prettier. In April 2010, the U.S. airline industry spent an average of $2.29 on fuel. In one year, the average cost has surged an incredible 31 percent!

If you thought driving was too expensive because of gas prices, you’ll find the skies decidedly unfriendly.

[photo by octal via Flickr]

Airline fees are worth more than Facebook

Outside the travel world, everyone’s marveling at the prospect of a Facebook IPO, which could be valued at as much as $100 billion. So, what are we missing while we fawn over Mark Zuckerberg’s creation? How about the slow, stodgy, ugly airline industry. Known for a painful user experience and a steady decline of free features, the likes of Delta and American Airlines are outdoing the hottest online property in the world simply by annoying their customers.

According to data from the U.S. Department of Transportation‘s Bureau of Transportation Statistics, baggage and reservation change fees brought the U.S. airline industry a whopping $5.7 billion last year. Delta picked up close to a billion dollars on baggage fees alone, which doesn’t include what they yanked from the wallets of soldiers returning home from combat. The largest airline in the country also brought in approximately $700 million from reservation change fees.

American Airlines, the fourth largest airline in the United States, came in second in both categories, with $580.7 million in baggage fees and $471.4 million in reservation change fees.The particular beauty of these fees is that they are basically found money. Some passengers need to check bags, and the airlines have to invest in the overhead required to meet this demand. It’s an expense that can’t be avoided. With this fee, they monetized what they’d have to pay anyway. The same is the case for reservation change fees.

The top five earners of baggage fees in 2010 are:

1. Delta: $952.3 million

2. American: $580.7 million

3. US Airways: $513.6 million

4. Continental: $341.6 million

5. United: $313.2 million

Unsurprisingly, the top five earners of reservation change fees don’t look much different:

1. Delta: $698.6 million

2. American: $471.4 million

3. United: $321.5 million

4. US Airways: $253.1 million

5. Continental: $237.4 million

No doubt, activist groups will be up in arms shortly. And airline employees will lament the fact that their executives are so richly compensated while they have endured round after round of pay cuts and layoffs for years upon years.

Frankly, I offer my congratulations to the airline industry. Yes, they are soaking us. Passengers are a captive audience, particularly on routes with limited coverage, and we sometimes have no choice but to pay. The airlines are using this to generate profitable growth for their shareholders, which is their primary responsibility.

So, what about Facebook? The company is estimated to pull in revenues of somewhere above $4 billion this year, most of it from advertising. It is pretty interesting that the popular social network is annoying its customers as a way to generate revenue, just like the airlines!

Who knew that pissing off your target market was an awesome business model?

[photo by Tobin Black via Flickr]

Airline industry best and worst of April 2011

The most recent U.S. Department of Transportation data is out, and it’s time for the airlines to brace themselves. The good, the bad and the ugly can be discerned from the data, and numbers are notoriously poor at showing excuses (I mean, “underlying reasons”).

So, let’s start with what looks good. Hawaiian Airlines is most likely to get you to your destination on time, leading U.S. carriers with a 94.1 percent arrival rate. It’s followed by Alaska Airlines at 89.5 percent and AirTran Airways at 82 percent.

At the bottom of the barrel, for on-time arrivals, are ExpressJet Airlines (68 percent), JetBlue (68.4 percent) and Atlantic Southeast Airlines (68.5 percent). Think about it, a third of the time, these airlines won’t arrive on time.

Overall, the airline industry posted an average on-time arrival rate of 75.5 percent. This means that a quarter of the time, they miss the mark. It’s almost as easy as being a weather man!The dubious distinction of having the longest tarmac delay was United Airlines flight 19 from JFK to San Francisco. On April 24, 2011, it sat on the tarmac for a whopping 202 minutes. It was tied by Delta flight 1076 from Atlanta to Salt Lake City only three days later. On the same day that flight 1076’s passengers grew restless, Delta flight 1714 (Atlanta to Ontario, CA), sat on the tarmac for 200 minutes. Twins!

Delta owned three of the four longest tarmac delays of the month – and only four flights had delays of longer than three hours. The remaining flight was Delta flight 823 from Atlanta to Ft Lauderdale, also on April 27. It sat on the tarmac for 185 minutes.

According to Google Maps, it takes 10 hours to drive from Atlanta to Fort Lauderdale. Just sayin’.

If you flew American Eagle, your flight was most likely to get canceled: it posted a cancelation rate of 5.1 percent. Following were ExpressJet (3.8 percent) and Atlantic Southeast (3.7 percent). You were better off flying Hawaiian Airlines, which posted a tiny cancelation rate of 0.1 percent. Frontier (0.2 percent) and Continental (0.5 percent) also posted solid stats on this metric.

[photo by Brett L. via Flickr]

Airline tarmac delays: the first full year of results is in!

We’re now looking back on a full year of limited tarmac delays. In April 2010, the airline industry seemed like it was begging and pleading with the American public not to accept the insanity that the government was forcing upon them. Mayhem would rule, the industry claimed, as standards for performance would prevent everyone from getting anywhere. It would be ugly … far uglier than the service the airlines had provided so far.

Throughout the year, Gadling has checked in to let you know that the airline industry did not fall apart as a result of shorter tarmac delays. With airlines only able to sit out there for three hours before facing hefty fines, the result has been noticeable – and positive.

“On the one-year anniversary of the tarmac delay rule, it’s clear that we’ve accomplished our goal of virtually eliminating the number of aircraft leaving travelers stranded without access to food, water, or working lavatories for hours on end,” says U.S. Transportation Secretary Ray LaHood in a statement. “This is a giant step forward for the rights of air travelers.”
And indeed, it is. According to the U.S. Department of Transportation, only 20 tarmac delays of more than three hours were reported in the first 12 months the rule was in effect. For the year prior, the total reached an astounding – and severe – 693.

Meanwhile, the number of canceled flights with tarmac delays of at least two hours edged only a tad higher, from 336 in the May 2009-to-April 2010 period to 387 in the 12 months that followed. This indicator is used to gauge flights canceled to avoid the three-hour rule because the DOT believed it’s the most likely set of flights to be cut.

And, this is the metric where airline industry mayhem would be visible. A 15.2 percent increase – in light of a 97.1 percent decline in delays of three hours or longer – pretty much tells the story.

The numbers say it all: airlines can be held to higher standards. And, the threat of heavy fines is incredibly effective. Now, if only we could levy fines for substandard customer service