Grounded: 4 Things to Learn from the Airline Industry’s Mistakes

Airline companies released first-quarter numbers last week, proving that the industry is struggling to make ends meet even in the midst of a growing stock market. Even Southwest Airlines, far and away the best faring airline, posted a 55 percent profit loss from last year alone. In total, the five major US airlines lost $1.08 billion in the first three months of 201. And, as fuel prices continue to climb and major-market destinations like Japan remain unreachable, airline companies have locked their structure in–and their customers out. Learning these throughput lessons will keep your company from losing its wings.

Don’t Punish the Customers: Airline companies maintain a volatile relationship with travelers, refusing to travel at the speed of need. At United, they’ve determined that the only customers that count are million-mile flyers, and their rewards programs and boarding structures show it – favoring only their extremely frequent travelers. This leaves moderate travelers disenfranchised and disrespected. Southwest, on the other hand, treats customers equally, establishing boarding procedures that flow. Perhaps one reason for Southwest’s above-market results?

Expand Incentives: Have you ever tried to book a flight last-minute? Airlines maintain a death-grip on flights until take-off, hoping to fill every seat with their highest paying travelers and/or those willing to go standby. As a result, seats go empty, as customers wait for a deal that will never come. Managing inventory to cater to real-time customer needs is a simple concept, so embrace it: it’s better than letting old stock go to waste.

Don’t Offer If You Can’t Deliver: It’s never profitable to make a promise you cannot keep. The government recently expanded a “Passengers Rights,” forcing airlines to offer luggage refunds when baggage is lost and providing reimbursements of up to $1300 when a passenger is bumped from a flight. When you create expectations in the minds customer, you better be able to match it with results. Business can no longer get away leaving a customer stuck in an inept system of service delivery. The backlash will catch up with you, and quickly. Bad news travels fast.

Never Abuse The Quick Fix: The surge in oil prices has left the airline industry scrambling to make a profit. As a result, airline tickets have risen to $10 per one-way flight and surcharges have soared. In the war between oil prices and airlines, the customer loses. Raising prices work as a quick fix, but without a counterbalanced service flow, results can’t last for long. Never lose sight of your company’s service structure, even when simple solutions look appealing. You may find that while your quick fix works in the short term, customers who are undervalued will walk away.

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