The major US legacy airlines have gone to great lengths to destroy their brand this year. And not only because a United Airlines passenger was dragged down the aisle and bloodied back in April because he wanted to travel home on the ticket he purchased when he was already in hit seat.
The introduction of ‘basic economy’ fares were aimed at making the travel experience so bad many customers would refuse to buy them. The airlines hoped passengers would just spend more money with them and not book away onto another airline that offered better value (Southwest, jetBlue, and Alaska do not currently offer these restrictive fares). United lost about $100 million in its roll out because they bet wrong.
Airlines worked hard for the last 35 years building loyal relationships with their customers, turning what was essentially a commodity product (a seat that gets you from A to B) into a differentiated one where passengers had brand preferences and were willing to spend more to stick with ‘their’ airline, or to take less convenient flight times and routings to give their preferred airline the sale.
But airlines no longer treated even their absolute best customers well every time they stepped foot on a plane. Even the highest revenue customer buying premium cabin international fares for work couldn’t sit with their family on a weekend trip if they bought the least expensive fare offered. And airlines called those customers ‘basic’ which even Ione Skye knew in Say Anything was a sure fire way to risk a budding relationship.
You know that there are loyalty executives who regret the decision to break up with their customers. They’re torn because they’re afraid to speak out against conventional wisdom. Too often in companies you tell the boss what they want to hear, and you have to stick to the story that their strategy is working. Stick your neck out and you risk your job, and there’s little upside to give dissenting advice (even if it’s right) especially once a decision has been made.
But they lie awake at night wondering if their loyalty program is risking its revenue stream. If they made a mistake, as their customers stand outside their bedroom window with a boom box reminding them of the relationship they used to have. Those customers haven’t moved on yet, at least many of them haven’t. They’re still remembering how good it used to be.
Sure some of them went by the Gas ‘n Sip and took Jeremy Piven’s advice to just fly Southwest (“your only mistake is that you didn’t dump [the loyalty program] first”) and earn points from credit card spend with bank transferable programs like Chase Ultimate Rewards and American Express Membership Rewards.
But if they’d just go to the window and call down it isn’t too late…
If just one of these courageous executives sat up from their bed and shouted, “I really do value you. If you are a valuable customer (however I define it, meeting minimum spend requirements) I will treat you well each and every time you step onto one of my planes. I value your business and your loyalty, not just how much you spend on today’s trip” there could be a promising future.
Diane Court: No one thought we’d do this. No one thinks it will work do they?
Lloyd Dobler: (shakes his head no) You just described every great success story!