Before I started writing a regular column, I would occasionally try out my viewpoint with a journalist. Only once did I receive a reply, from an arrogant Wall Street Journal travel writer who slammed me with a curt and offensive answer. When I started writing regular columns, I vowed that if someone took the time to comment, I would give a respectful reply. My last column tested this pledge when it generated more than 700 e-mails.
Not all the comments were polite. I was called "insane," "stupid" and some other words not fit for print. But others praised me as someone who "gets it." Either way, I've gotten a crash course in people's travel habits, and I've learned a great deal about people who work in the travel industry.
I see now that my last column took a narrow view of some labor issues. After hearing pilots' and mechanics' tales of long hours, missed holidays, salary cuts and lost pension benefits, I have definitely given the issue more thought.
In my last column, I expressed my gratitude for the major airlines. This time around, I want to personally thank all those dedicated airline employees who faithfully serve the American flying public. The airline industry employs great individuals who work hard to assure that every flight is safe and enjoyable. (If you doubt their dedication, just remember the pilot landing the JetBlue plane with the broken nose gear at LAX last week.)
I have heard many heartfelt stories, especially from striking Northwest Airlines employees, who are worried about their future pensions but are also struggling - right now -- to make ends meet. I remain philosophically opposed to labor unions, but I am not inhumane. In fact, I have started a relief fund with a personal donation of $1,000 for those Northwest mechanics who are struggling during the job action. Details are available on the NWA Fund Web site.
Readers had many suggestions for solving the current airline crisis. Some suggested letting the major carriers collapse, leaving Southwest and JetBlue to run the industry. Others suggested shooting the all the major airline executives (I heard this more than once).
It isn't that easy, folks. The industry's problems are deeply systemic. They include pilots' pay, labor unions, fuel costs, lack of pricing power, as well as poor business decisions, mismanagement and indifferent customer service. Executive compensation may also be a problem - many readers thought so. However you look at it, we have a big mess.
The business factors I know best are customer service and loyalty. As an industrial organizational psychologist, I have focused my work on factors that drive customer service, customer loyalty and employee retention. In its simplest form, the equation looks like this:
Satisfied employees = Happy customers --> Higher profits.
As I see it, much of the current problem lies in the commoditization of flying. This trend, which has focused executive attention on price rather than value, has disrupted the equation. Falling fares have forced airlines to institute cost-cutting measures, including pay cuts and cutbacks in service, which have caused dissatisfaction all down the line. This price competition created the tremendous dissonance we currently see in the industry.
Solution #1: Empower employees
The most profitable move a struggling airline can make is to give its employees more respect and more authority to make decisions. After all, as C. E. Woolman, the founder of Delta Air Lines, once said, "All airlines are the same. Only the people make them different."
Why are respect, authority and attitude so important? Not only because they directly increase employee satisfaction, but also because they increase employees' power to make customers happy. Customer-contact employees -- those who have direct contact with the public, such as pilots, reservation agents, ticket agents, gate agents and flight attendants - can be the difference between a customer having a memorable flight and a miserable one. So why not give them more latitude to succeed?
Here are three stories to show what I mean.
A friend of mine was flying the red-eye on a paid first-class ticket. He arrived on the East Coast at 6 a.m., two hours before his connecting flight. When he asked the gate agent for a pass to the airline's members-only club (so he could refresh and have a cup of coffee), she refused, saying she was afraid she'd lose her job for bending the rules. This inconsequential gesture would have made my friend happy and loyal to the airline. Instead, he now flies elsewhere.
A reader traveling with her infant daughter was greeted at the cabin door by a flight attendant who refused to allow her to bring the baby's car seat onboard, even though the baby had a paid ticket. When the mother pointed out that the car seat was approved by the FAA for airline use, the flight attendant said, "I don't care." This stressed-out employee cost her company the lifetime value of that customer.
The last story comes from a reader who will choose American Airlines every time she flies because of the kindness one a flight attendant. The reader was traveling with her 16-year-old cat, Nerm. When they changed planes in Chicago, the flight attendant asked to take a look at the cat.
Thank God she did! Blood was coming out of his nose and his eyes were rolled back in his head. She grabbed the carrier and took off to the back of the plane, where there were three empty seats. She laid Nerm on the seats, put the air vent on him, took down the oxygen mask for him, got wet cloths and got a first aid book. Then she walked back up the aisle and came back with a doctor. Right then we flew into turbulence, but she let me kneel in front of the seats and put my arms around Nerm to keep him in place. She even let me remain kneeling during landing and got me off the plane before anyone else. I could not thank her or American [enough] for what they did.
This kindness cost American Airlines nothing but the price of a cat's worth of oxygen. Yet it cemented a relationship with a customer who will share this story with many other potential customers -- including you.
Solution #2: Create customer value
The big airlines' big mistake was to get into fare wars with airlines like Southwest and JetBlue. Competing on price is a no-win solution for the majors because their costs are higher. It pays to look closely at why this is true. In fact, the mechanics' strike at Northwest Airlines has exposed a dirty little secret about the popular budget carrier JetBlue: JetBlue achieves its low fares by using nonunion workers and by outsourcing its mechanics jobs to low-wage countries like El Salvador.
I call it the Wal-Martization of the airline industry. Those progressives who have a problem with Wal-Mart should be equally troubled by America's low-cost carriers. Those "bargain" fares come at a big price.
The big airlines cannot compete on fares, but they can offer better routes and better customer service. This is their real legacy and their continuing strength, and that's why I continue to fly them. For example, as a loyal customer of Delta, I can fly business class to Rio de Janeiro on October 1 for less than $1,300. Can I do that on Southwest? No way. Sure, I have more than 2 million frequent-flier miles with Delta, but anyone can build a loyal relationship with an airline and reap similar benefits -- even if they fly as little as two or three times a year.
Here's another story. One of my readers, an attorney from San Jose, CA says he can save $5 by flying Southwest on his regular route between San Jose and Los Angles, but he chooses to fly American Airlines. Why? Because he sees value in being greeted by name when he enters the Admiral's Club. He also sees value in such perks as avoiding lines and getting upgrades. This level of service is so important to him that he will make the horrendous drive from Los Angeles to his final destination, Burbank, just to maintain his loyalty to American Airlines - even though Southwest flies to Burbank direct.
Is he crazy?
No. In fact, he is typical of a rather large segment of the market that is willing to pay a premium for perceived value. This is the type of customer the major airlines should be seeking, not the customer who wants the lowest fare, no matter what.
My advice: Airlines should avoid the shortsighted mistake of fare matching and concentrate on services that discriminating travelers will pay for.
A cultural change
The game will go to the first major carrier that dares to say, "We are not JetBlue. We are not Southwest. We compete in a different realm." So long as the company can clearly outline its value-added services, it will win back value-oriented travelers.
Hotels have already proven that market segmentation is possible in the travel industry. Take the Starwood Hotel Group, which offers brands ranging from the bare-basics Four Points Sheraton Hotels, to the business-class Westin Hotels, to the ultra-deluxe St. Regis Hotels. All the properties find customers. In fact, luxury hotels have higher occupancy and growth rates than budget hotels. Clearly, travelers are willing to spend money if the value proposition is right.
The money is out there for airlines to capture higher fares that would keep them operating with a fair profit and the ability to pay their employees fairly. Of course, price is of concern to consumers; even a deluxe carrier can't charge the moon. But the fact is, American consumers are currently blessed with the lowest airfares in history. Airplane tickets are by far the best consumer buy in America today. This tells me that the legacy carriers have a fair amount of room to adjust their pricing. In my opinion, they should look up, not down.
To succeed in the current market, the legacy carriers must understand they are in a service business, and that means treating their employees -- and their customers - better. Showing this type of leadership will be hard to do in bankruptcy. The leader who does so will be hailed as the next Robert L. Crandall, the highly respected CEO of American Airlines. Remember the simple equation:
Satisfied employees = Happy customers --> Higher profits.
Treating employees and customers with respect will not solve all the woes of the industry, but it will certainly set a course in the right direction.
My thanks to the hundreds of readers who have praised me, blasted me - and made me think.