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Airline Fee Outrage is Just a Symptom of the Real Problem: The Brand

I’m sick and tired of people complaining about airline fees. You might think this means I’m going to defend the airlines and blame everyone else for being dumb. That’s not the case, at least not today. Today, I’m going to jump on the airlines for really screwing themselves here. But first, let’s go through some background.

As you’ve probably heard by now, US airlines collected $5.7 billion in bag and change fees during 2010. The media has jumped all over this saying how awful it is. Even Conan O’Brien put together a video with faux Delta execs rolling in the money. The problem is that it’s a completely warped view of things. The amount of fees an airline brings in doesn’t matter. People think they’re being gouged, but look at company net income to see if there are excess profits here. There aren’t.

Net Airline Margins Versus Most Admired Companies

I put net income of the airlines next to that of the most admired companies according to Fortune magazine. Those companies made silly amounts of money, yet how often do you hear about these companies gouging people? (Ok, maybe Microsoft . . . .) You’ll notice that Southwest is walled off. Why is that? Because it’s the one airline that has overlap between the two groups.

You might think that Southwest’s no-fee policy is contributing to this standing. There is likely some contribution, but Southwest’s standing versus the other big guys happened long before people were talking about fees. Why is that? I think it’s because Southwest really pays attention to its brand while most others (excluding JetBlue) don’t even know what a brand is.

If you look at those companies at the top of the admired list, they’re all very strong brand names (or stewards of strong brands, like Procter & Gamble). They have spent so much time and effort setting customer expectations and delivering upon them, that they rank highly, even if they make a ton of money with high-priced products. If you look at the airlines, you’ll see that most of them would have lost money in 2010 were it not for these fees. Why should people be so angry with airlines for finding a new business model that actually allows them to eke out a small profit? Because people just like to hate airlines anyway. This is just another thing for them to latch on to.

Part of this is certainly because people have a warped view of what air travel should be. Anyone expecting the lap of luxury while shooting across the country for $200 is crazy, but that’s exactly what happens. But like I said, this post isn’t about bashing passengers. It’s about bashing airlines. Both sides play an important part in this.

I started thinking about this more after reading PlaneBusiness last week. Holly wrote extensively about the power of the brand, and talked about not only the airlines, but Lebron James. (If you aren’t a subscriber, you should be.) I agree with her that brand matters. Unfortunately, most airlines don’t believe that to be true, or they have a warped sense of what a brand should be. Southwest, however, gets it right.

When you fly Southwest, what do you expect to get? You expect frequent, on time flights for a low price, right? Southwest has drilled this into our heads so well over the last forty years that even when the flights aren’t on time (the airline finished 10th out of 18 in 2010 with many months toward the bottom) and fares aren’t low (just do a comparison some time), the brand still stands. Of course, that can’t happen forever if Southwest doesn’t hold up its end up the bargain, but it shows the power of the brand.

What do the big guys do? They do crap like this:

Now I know that United got all kinds of accolades for this campaign during the mid-2000s, but it made my skin crawl. What does this tell travelers? It makes it look like every person you encounter at United will be smiling, you’ll have great wide seats, and excellent service making all your dreams come true. For how many travelers on United does this apply? None. Because it neglects dealing with traffic, delays, security lines, annoying seatmates, the occasional (at least) angry employee, and more. This is unrealistic and United is bound to fail with garbage like this.

Delta’s more recent attempts have been better, but they still don’t work for me.

At least Delta acknowledges that there are real problems here, and not everything will be perfect. But it puts an awfully large burden on the shoulders of its people to fix everything when that’s not always possible. Again, it sets expectations higher than they should be. This aspirational stuff just doesn’t make sense for airlines even though that’s how they’ve always sold themselves.

The funny thing is that aspirational brands can work in other industries. Look at Coke, for example. When Coke puts out an ad with polar bears sledding and drinking Coke, nobody actually thinks that will happen when they buy a Coke. But it creates a warm fuzzy feeling around the brand. Coke’s product is fairly straightforward and it can’t really get messed up that much. (If it does, it’s because someone put the wrong mix of syrup and soda water, and nobody blames Coke for that.) But in an industry as complex as airlines, where it’s considered a good thing when 1 in 5 flights is late, aspirational brands simply can’t survive.

On the flip side, we have US Airways which really doesn’t believe in branding at all. That’s not the right strategy either, especially since it already inherited a negative brand image from the old US Airways and its years of suck. So what’s the right way to do this?

If you look at the legacy airlines, which one has the best rep? It’s the one that will soon cease to exist in name – Continental. Its advertising was much more matter-of-fact with witty slogans like “There’s a term to describe old planes. Theirs.” These help build up Continental as a no-nonsense airline. Is it promising you’ll sleep on a cloud, as United has done in past ads (seriously)? No. If you live in New York, it’s all about saying that Continental has the most nonstops to the most places. It’s a convenience argument that doesn’t try to talk about how it will be a flawless experience.

I hope we see more of that from the new United, now that Continental has been taking over. But really what we need is airlines to stop pretending like flying is glamorous, because for the vast majority of people, it isn’t. Flying is an incredibly complicated business and instead of promising a perfect end-to-end experience, airlines should instead promise the little things and then over-deliver.

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