Friday, April 14, 2006

Airline Service Drops are OK with Flyers So Long as Fares Stay Low

Did you know that airline passengers are generally satisfied with their flying experience in a survey released this week?

75% of the 529 adult flyers who have used the airlines in the last year said that they were satisfied with the job major airlines are doing.

What a shot in the arm for United, American, Continental, Delta, and US Air!

There's no denying that service and amenities have fallen, the USA Today/CNN/Gallup poll acknowledges. As customers, we've decided that the trade-offs are worth the lower fare and air travel still beats the alternatives.

Let's look at three of the underlying messages and see how they apply to your business:

1. When you provide less value, lower your fees.

The airlines had to lower their cost structure after 9/11 to stay in business. But with fewer staff and fewer flights, lines became longer and patience grew thinner. Pressures from carriers like Jet Blue and Southwest Airlines also contributed to lower fares all around.

If appropriate, how has your business passed along cost savings recently?

In tense situations, such as flyer-airline operator relationships, savings go a long way towards maintaining relationships.

2. Re-examine what your customer is buying

You've heard the expression that people don't buy a drill, but they buy a device to make holes.

In the airline industry, they pared back the relationship to the bone. Flyers pay to be transported from city to city, safely and swiftly. Everything else is negotiable, such as the meals, the snacks, the pillows.

What's the core benefit your customers are buying?

3. If your customers are satisfied when you remove parts of your solution that were previously 'bundled' maybe that's a good thing.

Airline executives who thought that their stale peanuts and pretzels were added bonuses for flyers were deluding themselves.

More than likely, they were part of the unchallenged assumption of what constituted a satisfying "flying experience."

What assumptions could you challenge and test about your customer experiences that simply might be unappreciated expense on your part?

Competing on cost typically has detrimental (oftentimes fatal) impact on a business. Learn from the airline industry example, but do all that you can to avoid emulating it.

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