How to Make an Airline Customers Want to Fly

The major US airlines mostly follow the same business model, and there’s little disruption today in the industry. However while schedule and price were once the primary drivers of consumer behavior, even proponents of ‘schedule and price über alles like United President Scott Kirby learned years ago at US Airways that it was no longer the only thing that mattered to win business.

Since much of air travel is heavily regulated, the space in which airlines can differentiate themselves becomes more crucial than ever to attract customers.

Schedule and Price are No Longer All That Matter

There was a time when airlines could make money based on their schedule and price alone. Consumers didn’t know the difference between them. After travel agents stopped booking most simple airline tickets, and customers started doing it themselves, they were generally just shown an itinerary and a price.

That changed several years ago. In 2012 US Airways executives explained they decided to install wifi in their planes even though they weren’t going to make money selling wifi because they discovered they were losing ticket sales by not having it. The inflight product mattered to enough customers that mattered, who were choosing based on product not just schedule and price, and US Airways was losing money.

Now customers have a lot more information at their fingertips, and even presented to them during the booking process. Some of this is the airlines’ own fault, imposing restrictions like basic economy so booking engines had to get updated to better inform consumers and customers had to start paying attention. At the same time Google, Routehappy, and others are working to help people understand the difference in what they might be buying — to decide on more than schedule and price.

There’s Very Little Difference Between Most Airlines Today

There’s only a limited amount of things an airline can do to differentiate itself. Much of the overall travel experience is fixed.

  • Airports are owned almost exclusively by local government authorities
  • Security procedures are either carried out by government, or by private contractors following strict protocols
  • Once an aircraft pushes back its movements are dictated by government-provided air traffic control
  • There are a limited number of aircraft manufacturers, after consolidation, and even the smallest changes to inflight products can require lengthy government certification.
  • How airlines advertise, display prices, and implement customer service programs are overseen by a dedicated agency – the Department of Transportation (in contrast most products are merely regulated by broader guidelines from the Federal Trade Commission)

What’s more, while airlines haven’t achieved any sort of monopoly pricing power (the long run trend for airfares, inclusive of fees, is down) there are simply fewer airline choices than there used to be. There’s no longer a Northwest, Continental, TWA, US Airways, or AirTran looking to compete, to name just a few recent examples.

And entry into the market is fairly limited. The only new US airlines that have achieved any sort of scale in the past 20 years are JetBlue and Virgin America. Foreign ownership of US airlines is prohibited — former Delta President Fred Reid was even banned from running Virgin America over fears he was too close to UK decision-makers. What’s more government-run airports are often the victim of regulatory capture by their major airline tenants and keep out new entrants to the marketplace.

And so we get Delta, American and United all following the same strategy of squeezing more seats into planes, and United and American doing what they can to imitate Delta as best they can.

United’s strategy – that’s worked for their share price – has been to increase flying since so much of their domestic operation had been scaled back – and to offer enough of an improvement in international business class that customers don’t avoid the airline. They’ve had the lowest hanging fruit but will eventually exhaust the upside there.

American needs to pay more attention to the small things, like their domestic first class seats that don’t have proper under seat storage and have a bar protruding out the back.

Frequent Flyer Programs Used to Differentiate Product

Frequent flyer programs were the most successful marketing innovation in history. Most companies see marketing as a cost center, for airlines marketing is a profit center. However before the carriers were selling their currency to banks the idea was to take what was otherwise seen as a commodity product – an airline seat – and turn it into a differentiated product that consumers would prefer and indeed would take a slightly less convenient flight to stay loyal to.

A majority of miles though are no longer earned for flying, fewer miles are awarded per trip as carriers have moved to a revenue-based accrual model (where break-even earning compared to the distance-based model was set above the average fare). Award charts – where they still exist – have gotten more expensive.

In other words frequent flyer programs have become less rewarding on the earn and burn side, as airlines have done more to monetize their premium products so the primary benefit of elite status – upgrades – has become more rare.

It was common to choose American Airlines, for instance (as I did), because of the superiority of the AAdvantage program even though flights might be less convenient or less reliable. However the best frequent flyer programs have regressed towards the mean (copying Delta), giving up the edge they gave to airlines over their competitors.

Now It’s Small Differences That Matter

Since there’s only a limited window to truly differentiate product it becomes a game of inches, getting the little things right.

Japan Airlines, which shares revenue across the Pacific with American Airlines, has a new piece outlining how they go about focusing on the little things. (HT: The Flight Detective) They’re listening to customers and have even reduced the temperatures of their cabins inflight, and changed the texture of their towels.

About a year ago I watched Singapore Airlines teach flight attendants in training. They were plating meals in a mockup of an A380 business class cabin.

They start laying down servingware “inside out” — serving a window seat passenger that means placing items first by the window, placing one item precisely on the tray at a time and ensuring that Singapore logos face the passenger. Then they switched to a middle seat passenger in the same aisle which meant laying things down in the precise opposite direction. They practiced asking a passenger if they’d like bread and they practiced pouring champagne.

Everything was done precisely and intentionally. The trainees took this seriously and so did their instructor. They worked hard to remember the order of everything and not to forget anything. They needed to ask the passenger at the right time about their bread and their wine, and serve an appetizer correctly.

Singapore doesn’t just choose a wine based on what they know of how the palate changes at altitude. They have a pressurized tasting room on the ground to actually simulate inflight conditions in order to choose the right wines.

Six years ago Singapore ran a campaign called “Understanding Your Needs” and it’s touching — and only somewhat a stretch to imagine a Singapore Airlines flight attendant making a journey to find your favorite tea and then serving it just the way you like it. Here’s their ad, “The Lengths We Go”

In contrast the seat dividers on one of the many types of American Airlines business class seats have been broken, and they’re only now talking about fixing them eventually. Their CEO even thought they could live without offering seat power. They also offer only limited service training to crew.

So now they have a problem with premium revenue.

Product Isn’t All That Matters for All Airlines

Product alone isn’t enough to be profitable. It’s possible to spend to deliver things to customers that they aren’t willing to pay for.

A business can make money as the low cost provider of a service (Spirit, Frontier, Allegiant) or as a preferred provider that customers are willing to pay a premium for. If the business has high costs, it’s not going to succeed with the lowest price-only strategy. It’s also not going to succeed with higher prices and a product consumers don’t prefer.

An airline that wants to succeed, without the lowest costs, needs to find ways to attract customers. The space within which it can differentiate itself from competitors is limited. It can offer a better frequent flyer program. It can offer the most reliable operation — arriving on time, with the fewest cancelled flights. It can offer an overall experience that customers prefer.

To be an airline that passengers choose — not just because it happens to be the only one flying non-stop on a given route or is the cheapest — it’s crucial to pay attention to the details.

Operationally that means getting everything in place (from gate staffing to catering to cleaning to maintenance and IT) to be ready to take off on time and manage decisions not just until push back but until arrival.

In terms of product that means having a seat isn’t good enough, the details of the seat matter. It means paying attention to what’s being served, and how it’s plated, not just that there are meals. And it means holding employees accountable for performance – and for hospitality.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. How to Make an Airline Customers Want to Fly

    1. Offer customers a feedback mechanism, similar to Lyft or Uber ratings but for gate agents and flight attendants.
    2. Lavish your high performing employees with bonuses and promotions.
    3. Terminate your low performing employees quickly in response to customer complaints.
    4. Implement an extremely high standard of customer service. Subtleties matter, for example if a customer says “thank you” do not say “no problem” – always say “my pleasure.”
    5. Be honest with your customers. When you devalue miles, don’t call that an “enhancement.” Acknowledge (gracefully) that the airline is a for-profit enterprise, thus award prices must be adjusted every now and then, and thank your customers for the understanding. Express hope to see them on a future flight. Wish them well.
    6. Eliminate all lines, where possible, because customers hate waiting in line. Offer self bag tagging, extensive self-rebooking options in the app and website.
    7. Along the same lines as above: invest heavily in automation and modernization. Self-boarding gates (like United). Real-time boarding notifications (Southwest, Delta). Seatback drink and meal ordering (Virgin America). Meal reservations (AA). This makes your employees’ jobs easier and your customers’ experiences more modern and delightful.
    8. Tons of other stuff but I should get back to my day job.

  2. More airlines could differentiate by not charging change fees:
    **Southwest does this for all its customers, but they don’t have robust same day change options even for elites taking later flights;
    **American and Delta are terrible at this, even for top elites, they have burdensome rules;
    **Of the big 3, United is the leader. Mid tier elites get free same day changes, including change to the day before or after, and they seem to have good availability for rebooking flights. You can fully change routings and they don’t have lots of extra rules like American and Delta;
    **Alaska and JetBlue have great same day change programs for elites, but United even goes a little further allowing the change to the prior or next day. There are no change or cancel fees for JetBlue or Alaska elites including in some cases for companions booked on the same reservation.

    For “normal” flyers who mmight take 0-5 trips a year, I wholeheartedly recommend they go with Southwest:
    **If they have to cancel unexpectedly, no fee, just use the credit next time;
    **Two free checked bags per person;
    **No games with seat assignments, the legacy carriers block off the whole first half of the aircraft and try to charge for a good seat, again, I’m talkikng non elites here.

    I would be hard pressed for anyone to say why Southwest wouldn’t be the best ddeal for a “normal person,” someone who doesn’t live in #AirWorld. I live in #AirWorld and I still fly Southwest and secondarily United. AA, forget it!

    Delta has some good features, but again, get rid of the same day change restrictions.

  3. I’m fairly convinced that the David Neeleman model for his new airline is going to be a huge winner if he can execute and finance it.

    He’s flying in and out of secondary airports in major metro areas, so for customers, they avoid the nightmares of O’Hare (instead by flying in/out of Gary), DFW (by flying in/out of Meacham), LaGuardia (by flying in/out of White Plains), LAX (by flying in/out of Burbank).

    As a former road warrior racking up hundreds of 1,000s of miles on United, American and Delta each, I’d absolutely pay a reasonable price premium for a convenient, but less congested airport.

    Airlines have engaged in a total race to the bottom (Hi, American!) and are all completely the same miserable experience, so instead of me blindly giving United 150,000 annual miles for example, I go the free agent route and just book the most convenient flights. Almost all travelers I talk to basically do the same thing now. Airline loyalty is gone, but I’m completely willing to offer loyalty to this new Azul airline if they get it off the ground.

  4. With so many things being equal — especially safety — the two factors that make the most difference to me are, in order, the onboard experience (comfort, service, entertainment, food) and frequent flyer program.

    The thing is, with credit card spend on Amex/Chase/Citi/Marriott, and now, Capital One, I can choose which airline I want my miles in, depending on my needs of the moment.

    So, that leaves onboard experience. American, my former preferred airline, once had the best combination of onboard experience and frequent flyer program. Therefore, I flew them enough to be an EP. Now, they are far below most everyone else in onboard service and their ff program offers little distinction (except for their refusal to have points be transferrable from ThankYou, or whomever, which further disincentivises me to give them my paid travel). With their seats barely tolerable, their IFE gone, and their FA’s and gate agents so stressed that customer service is harder for them, I rarely have any motivation to pay to fly AA (…and that makes me sad.)

    So, I fly jetBlue whenever possible, Delta as a backup, and foreign carriers when leaving the country. And that makes me sad. I want to want to fly American. I just can’t justify doing it much.

  5. When a high-safety operation record is achieved on an Airline, then this is the time to focus the attention on a service of excellence

    Hiring, training and supervising are all very important ways to favor a great service standard

    A cultural DNA is deeply embedded in any company

    Usually, some of the bests Airlines in the world have high incomes coming from solid business travelers passengers

    Not all Business Class cabins and not all Economy Class cabins are the same

    Not all airlines offer a calm-quiet, very clean and a comfortable seat aircraft

    Not all airlines customer service is focused on offering superb care to all passengers, paying special attention to families traveling with children, elders, passengers with any disabilities, pregnant women and so on

  6. “United’s strategy … has been … to offer enough of an improvement in international business class that customers don’t avoid the airline.”

    That certainly is the truth. Their reliability has improved the last few years, and the seat is okay, but too bad their F&B is at the bottom of the international carriers. I can’t imagine they are doing well at the high end of business travelers who pay full retail ($6K and up), though.

  7. Boy oh boy, do I miss TWA, PSA and Western Airlines. You never had a problem with getting in a flight, nor while in-board and you got your checked bag(s) in 20 minutes or less. Those were the days my friends.
    The comments offered by Jason, are all needed to be required by the FAA before an airline is allowed to fly anywhere anytime. I suppose it is to late to resurrect the old CAB (Civil Aeronautics Board) that killed off decades ago.

  8. I am held hostage by geography. United & Delta are secondary airlines in my market, so are rarely considered. I’m left with American and Southwest, both of whom hub here (PHX). I love the impact Southwest has on the industry, but just can’t get past the “flying bus” identification I have for them. So I’m left with American. I was Chairman (top) level with USAirways, enjoyed the benefits a lot. Just working my way back up since I travel a lot more again, I’m unimpressed with their new miles earning scheme. I have yet to attempt to redeem any miles, but the comments make it appear it’s not going to be fun.

  9. Raise the fares to 1960, get rid of the “Bus People”. Will bring back more leg room, meals, and of course lets bring back smoking! Really??
    The cost of air travel is so cheap compared to everything else that has risen with inflation, but people still think its too expensive….Really???

  10. As a former Braniff International flight attendant, I certainly see a big difference in what I was required to do and what flight attendants do now. Travelers need to remember the primary reason a flight attendant is on board the aircraft is for their SAFETY first and foremost!! While the airlines have increased the number of seats in their aircrafts and decreased the space between them, I feel that their crash safety procedures are inadequate. We all pray that a crash will not happen to us but if it does I would like to know that I would be safe and not receive a broken arm with how I would have to brace myself upon impact.

    As for pricing, I try my hardest to not fly anything but Southwest. I look at AA, UA and I shudder at the way they are pricing and charging customers. With less airlines I know the times we want to fly may be difficult and it takes forever to find a flight that works for me.

    Airlines do need to listen to customers and try and win them back. Customer service seems to be thing of the past. Let’s get back to basics and think of how we can make flying fun again instead of pain in the neck.

    I loved being a flight attendant and we had fun with our passengers. I love it when I fly Southwest and I find a crew that has fun doing their job. If you have a crew that enjoys what they do, they will do everything they can to make your flight the best it can be even with a delay.

  11. What makes me WANT to fly an airline? I fly maybe once a year international in Biz class. Here are some examples:

    ANA – I take my middle seat in a 2-1-2 layout on 767. Flight attendant comes to me prior to departure and says “Would you like to sit by a window? There will be no one seated beside you in that row.” WOW – nice lady!

    Austrian – On-Board Chef asks me how I would like my eggs for breakfast. Man! Won’t get that on UA.

    Lufthansa – Always sharply dressed, professional, polite, and attentive flight attendants. Served roast goose (and it was perfect and delicious) during advent season on flight originating in Germany – I LOVE YOU GUYS/GALS! Also served a special Christmas liqueur called “Pflumli”. Don’t even get me started on how great the Biz lounges for LH are with Arrivals lounge in FRA (fresh breakfast buffet, showers, self-serve liquor), and the food and beverage servings in the regular Biz lounges. I’m a United Club member and all foreign flag carriers have better lounges.

    Air Canada – chose this from USA to Hong Kong (connect YYV) over partner UA. Seating on 777 is 1-2-1 (instead of 2-4-2) and felt like First Class. Served top shelf scotch instead of discount store liquor for a seat costing $5500.

    Flight from SFO to SYD on UA. UA lounge in SFO was crowded, hot, muggy, served pre-packaged crackers and pre-packaged cheese. On arrival in SYD was allowed to use partner Air New Zealand Biz lounge. WOW! Full service breakfast buffet; recliners, showers, self-service bar. When I finally fly to New Zealand I will use ANZ.

    These are not big things but reflect a better attitude toward customers.

  12. Jason got it just right. I have flown over 4 million real seat miles on AA alone and the current AA management needs to read Jason’s email and implement the suggestions. They might find that their premium customers were coming back!

  13. In the end, air travel is a service and as with any other service the customer should know what they are purchasing and the provider should know their market. The problem with the price and schedule only business model is that it is applied to all flights and all passengers. I do recognize that the business or first class domestic model for the big three airlines does take a few steps towards delivering a service, the airlines are missing the mark. Any airline that wants to compete with the single class airlines will find that they do so at the peril of loosing the customers that are avoiding the single class airlines for a reason. I do believe that customers will buy more service on longer flights and for when they are taking a holiday. For instance American charges the same or close to the same for flights to Hawaii. However, many flights are on single aisle aircraft and the ones on wide bodies are coveted but once sold out they sell the regular non lie flat first class seats on the narrow body planes for the same as or more! I would suggest marketing the whole product and then delivering on the product. People would be willing to pay more for some products and less for others. I do believe US based airlines made a big mistake in not acquiring the A380 for the very long haul flights. This aircraft is so far superior due to its size for very long haul and the service that can be offered on that craft can’t be compared to a 777 or Dreamliner.

  14. AA totally lost my business domestic or international. The business class service is no better than the economy class. The Attendents hardly ever smile. They never help to put a small carry on to the overhead bin (I cannot reach it). My carry on is so small only for my medication and a sweater. The food in business class is so bad specially the breakfast. The airport lounges are a joke! I believe one has to pay to get something to eat. I remember having a coupon given to me for a drink! @$6,400 a ticket? Oh on one trip, the salad was so bad that I got sick. I wrote them about it when I got home, all I got was a message that said “we had forward it to the proper department “. I never heard from them again!
    I avoid AA as a plaque!
    Ps to Debbie- I love Braniff! I still remember the good memories flying on Braniff!

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