This is a different kind of Ask Cranky. What started as a question about why American/US Airways keeps fares so high in the Pittsburgh-New York market turned into discussion about how the airline really dropped the ball in its response to the traveler.
I tend to think airlines actually do a lot of things right, as many of you know, but communicating clearly is not one of them. In fact, that’s one of the big reasons this blog came about in the first place. I was sick of seeing such terrible misinformation (or complete lack of information) out there regarding how things work. At the urging of friends, I started writing. 
So when I see an example of bad communication coming from an airline, it gets me going. This exchange was real opportunity for American/US Airways to explain it to him, but that didn’t happen. The airline just made him more angry.
Joseph lives in Pittsburgh and sent this note over to someone at American/US Airways:
When I first moved from NYC to Pittsburgh in 2007, a midweek, coach, advance purchase non-stop from Pittsburgh to LGA was $120 RT. Even booked more than a month in advance, this Fall, that fare has been starting at $650+. The same thing happened in 2013, as well, with only a modest, short-lived dip in fares come January. That’s a 500+% increase for a flight that lasts approximately 50 minutes, with no appreciable improvements included as part of that purchase price. And don’t tell me it’s the fuel prices. Most people think I’m joking when I ask them to guess how high your fares have gone.
Looking at tomorrow’s US Airways flight #3979 from PIT to LGA, a 50-seater, only 20% of the seats are currently occupied. So, you’ve sold 11 seats on that entire plane. Most of the other nonstops for tomorrow look the same, as well. What does that tell you about your present pricing strategy?
I am presently Gold Preferred. But I may just let you keep your lounge improvements, as I am considering giving up on your airline altogether, and perhaps stick to driving the Pennsylvania Turnpike when I need to go to New York for work. I wish US Airways/American all the best (I’ve had mostly great experiences with your employees at airports, on the phone, and in the air these last 7 years), but your company obviously doesn’t need my business very much right now, nor that of anyone else in Pittsburgh.
This is from a regular customer who is clearly angry and doesn’t understand how airline pricing works. It’s a perfect opportunity to help educate him about the business, right? Wrong. This was the response he got.
Thank you for contacting American Airlines Customer Relations. On behalf of American and US Airways we are pleased to respond to your inquiry.
We very much appreciate the time you took to send us your suggestion about our service. Your idea certainly has merit and it clearly reflects the thought that went into it.
It is always helpful for us to consider our service from our customers’ perspective. We try to be responsive to our customers and carefully analyze trend information based upon their reactions. In this way we can identify those service elements that are most appealing as well as improve those that produce a negative response.
Mr. xxxxxx, our aim is to suit the needs and wishes of the majority of our customers. As we determine the appropriate action in this regard, your preferences will be considered. Thank you for giving us the benefit of your observations.
NO NO NO NO NO. Opportunity wasted. Instead of putting together a coherent response, this clearly shows that nobody even bothered reading the letter. It’s so generic that it’s only going to piss him off further. (And it did, he took to social media to rally his friends.)
Of course airlines can’t talk about future pricing legally, but that doesn’t mean they can’t put together a generically useful response. Something like this would work.
Thank you for contacting American Airlines Customer Relations. On behalf of American and US Airways we are pleased to respond to your inquiry.
We understand that airline pricing is complex, so we’re glad we have the opportunity to explain. In each market we fly, we file dozens of different fares and then we use systems that help us to determine how many tickets to sell at each level. The process of setting the fares and determining how many we sell is all based on demand in each individual market.
In this particular case, fares may be higher than they have been in the past, but that’s because we’re responding to market conditions. In many markets, fares were lower than they should have been in the past. That’s why you’ve seen other airlines leave some of these markets entirely. In our case, we want to continue to serve the travelers in important markets like this, but for us to do that, our fares must be at a level to make the service sustainable.
For many of our customers, a frequent flight schedule is most important, and we do what we can to make that possible. For others, price is most important. If price is what matters most to you, then here are some tips to help find lower fares.
- Fly on days with lower demand. Peak travel days can vary in each market, but those days will likely have higher fares due to higher levels of demand.
- Fly on flights at off-peak times. In a business market, for example, morning and evening flights may have the highest demand. Look at flights during the middle of the day to see if it saves you money.
- Buy a roundtrip ticket. In some of our markets, you can save money by buying a roundtrip ticket instead of two separate one way tickets.
- Buy tickets further in advance. In many market, our fares are often lower when bought at least a couple weeks in advance.
- Stay over a Saturday night. In some of our markets, staying over a Saturday night at your destination can help you to save money.
Hopefully this is helpful information. Please know that we do want to make our fares as affordable as possible for our customers.
I’m not suggesting this letter is perfect. That’s what legions of communications employees can perfect. But it shows that the airline is listening to the complaint, is giving a basic explanation, and finally, is trying to help solve the problem. It’s also generic enough that the airline could use this is a mass response to pricing inquiries that come in.
In the case of Pittsburgh – New York, it’s the last three points that do the trick. With a Saturday night stay and a 14 day advance purchase, I see fares as low as $214 roundtrip.
Will this response make him happy to pay $600+? Of course not, but it shows the airline is listening and that at least builds some respect.
So why can’t airlines do a better job in cases like these? I wish I knew the answer to that.
86 comments on “A Missed Opportunity: How American Should Have Responded to This Unhappy Traveler (Ask Cranky)”
You are assuming that the people in AA’s customer service department understand air pricing. :)
I remember AirTran offering PIT-LGA and PIT-PHL at one time, forcing US to lower fares. Thousands of fliers said thank you very much for the matching US fares, and boarding US planes to pile on their FF miles. Not surprisingly, AirTran pulled out on the markets.
If travellers want lower fares in monopoly hubs, they should give some support to the competitive LCC, else the benefit will be fleeting.
Doug Parker and US are great at fighting competition. They did the same to WN at PHL and took JetBlue off of JFK-PIT and hurt them on JFK-CLT (not offered on US before JB, I think) with 5+ frequencies each day.
Ultimately, fliers need to support the LCCs to keep the competition, but it is hard to fight the self interest of added miles and frequencies
I am not particularly impressed by the answer. The truth is that the letter writer has a point. On many routes fares over the last years went up by amounts that are certainly not able to be explained with ‘market conditions’ unless you this is meant this term to include mergers. As a matter of fact the only reason for a 500 percent fare increase can be the reduction of competition. Overall clearly the US government allowed (I think) too many airlines to merge. Good for the, bad for the consumer. Similarly, whole oil prices fell by 50 percent there seemingly was no drop in fares. Any economic model of competition would predict at least some pass through of the reduction in cost. As this has not happened all that remains to be said is that this should be proof enough for the lack of competiton among airlines.
I think we are seeing a great study on the role of competition in the marketplace. This will be a great study to see what happens with lower raw material costs and less/no competition (especially in some markets). Tough for this customer though in the short term. Turnpike it is.
As a matter of fact the only reason for a 500 percent fare increase can be the reduction of competition.
The “reduction of competition” is, in fact, a market condition.
Perhaps a bit too much of a reduction in competition.. But I’m not sure I’d want airlines back in the losing money consistently and unable to invest in their product.
That being said, if there were money on an LCC basis to be made in this market Jetblue and Spirit would be all over it.
Notimpressed – This has nothing to do with mergers in this case. There was tremendous low cost competition in the market several years ago and they all couldn’t make it work so they pulled out. Fares were too low and people weren’t flying them. So the baseline was never sustainable in the first place. But of course, AA can’t legally talk about those kinds of pricing actions so it has to be more vague under something like “market conditions.”
Perhaps that’s true in the specific PIT-NYC market, but as you’ve said elsewhere, this is intended to be a form letter that applies to the US aviation market in general. And the mergers have absolutely led to increased airfares across the market. It actually seems to me like PIT-NYC is a pretty good example of this: airfares are through the roof for weekday travel (even with significant advanced purchase, according to the letter writer) despite the fact that all three surviving nationwide legacy carriers are in the market — they no longer feel any need to compete with each other.
Alex Hill – Show me your proof that mergers have made fares go up. There
has been a lot of other noise around why fares would increase. If you want
to make that argument that with more airlines, we wouldn’t have the same
belief in capacity constraint we have, then that’s the closest you can
get. May or may not be true. But again, on this route, that’s not the
case at all. Fares have been like this for a long time.
Seems to me the author has answered his own question; “Looking at tomorrow’s US Airways flight #3979 from PIT to LGA, a 50-seater, only 20% of the seats are currently occupied. So, you’ve sold 11 seats on that entire plane. ”
You can possibly make money or break even at $650 if only 20% of the plane is filled. If the plane was consistently at 85% load capacity, they could lower the fares (not saying that that they would of course). The AA form letter response would have only been better if it had the United touch – Dear we apologize for . Please be assured we will take your comments seriously. .
i think that you re seeing a nice study on the role of competition in the marketplace
If this guy has lived in Pittsburgh since 2007, he should have flown Jetblue. At least they are still (barely) in that market.
Actually jetblue no longer serves NYC from PIT. Same reason as airtran left the same market and why WN left PHL. When competition comes, people stick with the same old instead of the competition.
All of the reasons stated in Cranky’s letter are true, but… is there any other (non-travel) related industry that operates that way? I’m sure it’s an economist’s wet dream, but for most people it just strikes them as insane and/or profiteeing.
Imagine if this was a restaurant. Client #1 reserved his table a month out, he pays $20 for his meak. Client #2 a week ago, so he pays $30. Client #3 is a walkup, so he pays $100 and can’t order the nice wine. A restaurant that did that would be pilloried, but it’s how the entire travel industry works. It’s something only an economist would love.
And people wonder why airlines are almost as beloved of people as, say, personal injury lawyers.
At some fancy restaurants, reserve a month in advance and you get a table. Reserve a week in advance and maybe you get a table by the bathrooms at an unpopular time. Walk up and the restaurant is full, but slip a Franklin to the host and presto, you have the best table in the house.
Best table in the house for an hour until they need you to clear out for the person with the reservation.
Have you seen Oracle’s pricing for their database software? Their CEO makes enough money to buy his own island, indigenous people and all.
Conglomerates like AIG and MetLife basically print money.
How about Microsoft? The Saudi Royal family? Celebrities? Pharma? Talk about insane money.
CF, call me a pessimist, in these instances, if you will, but the airlines have had more than a couple of decades with their revenue management systems to allow them to refine the communication. I simply do not think they are interested in communicating clearly. in a dysfunctional way, IMO, they relish on complexity and rules that only they think they can “understand”. I do not think that even some of their middle and lower management people understand the complexity and rules. They simply follow the directives from the “chosen geniuses” ones who “understand” and can set, play, and communicate the revenue management “game”.
I thank you for sharing the beginnings of your blog including writting-up on these subject continuously; I read both their and your suggested response, and find your thoughts communication appealing.
IO
IO – I think you’re right in many cases. Airlines have made things so complex that often the people in the company don’t understand it. That’s why they need to do a better job of hiring people who can understand and can put it into English. It’s complex but it can be explained. The right people simply need to be able to make that happen.
I’m a front line employee majoring in aviation administration, and still have a difficult time explaining fares in a clear manner. There certainly hasn’t been any direction by the company in this respect.
call me an imperfect grammatician :-) as well if you will, but i hope y’all get my point.
“CF, call me a pessimist, in these instances, if you will, but the airlines”
I’ve been flying DCA-JFK fairly frequently for the past 9 years. They’ve done this on that route too .. used to be able to do about $200 roundtrip if booking in advance. Now if you can find that you are lucky, and some of the roundtrips are upwards of $600. They’ve cut capacity and now AA has a handful a day and DL is down to two.
For that $600 you are likely to experience heavy delays and not even get a cup of water.
I’ve resorted to either flying on a whim (when you can snag a cheapie) or taking the the train. It’s really frustating but hopefully by talking with our wallets, AA will get the hint.
agree. I think there is a violation of a minimum requirement of a solid long-term business, and that is to provide the best product/service at the lowest possible price. That is value and by the comments thus far made it is not happening at AA or the other airlines.
I now feel like i’m nagging but nag away I will until I tire.
If you’re going up and down the northeast corridor, Amtrak is the way to go IMHO. Much more civilized than the air shuttles (even when not travelling on Acela).
Based on where I live and my destination in NY, DCA-JFK is by far quickest (even with the normal hour or so delay) …. train can be quite pricey if you don’t book enough in advance and even if you do during holiday time. Acela is wild pricey at near shuttle (DCA-LGA) prices of $200-$300 each way
Brian – DC to JFK is a pretty interesting market actually, but I’m not seeing what you’re seeing. The vast majority of travelers who don’t travel by train in that market are going to fly the hourly shuttles to LaGuardia. The people going to JFK are either those who live out on Long Island (or closer to it) or those who are connecting to international flights. Delta flies it only twice a day, both meant to connect into international banks. American flies it more often, but that’s more a function of the hub on both ends now. (It used to be that way because AA didn’t have a shuttle to LaGuardia but that’s not an issue anymore.)
So JFK is not preferred and American has to actually lower fares there to get local travelers. I can buy a ticket on the 610p flight tonight for only $118.10. So the reality today is actually pretty different than what you’ve been seeing.
Indeed, DCA-JFK is very often much cheaper than DCA-LGA: the Manhattan-bound business travelers who are willing to pay shuttle (or Acela) fares aren’t flying to JFK anyway. It’s one of the markets where the separation between fares targeted at business travelers (and others willing to pay high fares) and leisure travelers is most clear. Both DL and AA will happily reduce their fares as much as they need to fill all the seats that aren’t needed for international connections on DCA-JFK, but DCA-LGA shuttle fares rarely come down.
I’ve seen a similar thing happen with RIC. When JetBlue first started here, you could get a nonstop ticket to JFK for $49 each way. Now, they’ve pulled the nonstop JFK flights, and the cheapest way to get there is $450 RT connecting through BOS. It’s crazy, and the train isn’t as much cheaper as you would expect.
Five-second search on Google flights shows nonstop flights DCA-JFK around $120 a week out, $100 about two weeks out, and most days around $70-$80 farther out. And this is for a decent choice of times, not just one flight a day. Basically same prices in the reverse direction. So if you’re consistently facing $600 roundtrip fares then you need to search differently.
Thanks, Cranky, for sharing this note with your readers. Very timely question! I have seen a lot of articles recently asking when airfares will be going down due to gas price drastically reduced. And, over and over again, they say that the airfares will not be reduced due to supply and demand. Airlines feel that the consumer will pay the price regardless. That may be for now, but if gas prices stay low, as they are suppose to, at least for this year…Maybe consumers will start driving those longer distances.
spo – That’s right, fares will always be priced based on demand. But there are some hints that demand is softening, at least in some places. So fares may start coming down if demand drops. But oil prices alone won’t get it to drop.
The problem with your proposed response is that it shows virtually as little care for the customer as the real response. The way I read Joseph’s complaint, he’s already talking about buying a round trip ticket and has been looking more than a month in advance. As such, if I received your response, I would have been just as upset because it shows you still aren’t actually paying attention to my complaint and are just sending a generic response.
But paying attention and giving what your “real response” would require, likely runs into anti-trust law.
Although, what if it included sample itineraries that were cheaper? Would that be better?
Patrick – Well, if he does a Saturday night stay, he’ll get a much cheaper fare. The reality is that airlines like American are going to get thousands of complaints about pricing every single month. While it does make sense to read them all to make sure it’s understood what the issue is, it makes a lot of sense to have generic responses that can answer the question. This might not have answered perfectly but it does get an answer across. And if he responds again, then it can be escalated further. But as Nick says, you can’t give specific pricing details without running into legal issues. So it has to be somewhat vague.
Sample itineraries don’t make since and could be a legal violation. Pricing changes all the time, so you can’t put that out there and then have them look it up and find it’s no longer available. Not worth it.
You should also mention min stay requirements. The really low fares tend to require a 3-day min stay.
CF — A suggestion for a future post: as many of your readers and clients are unfortunately well-acquainted with how often many US airlines are tone-deaf, patronizing, and have an amazing ability to shoot themselves in foot on Twitter and in the blogosphere, how about a look at how foreign airlines (besides the usual Jackass winners), handle complaints? Especially vaunted carriers as Singapore, Cathay, Emirates? As I will probably have the chance to fly one of those carriers only once in my lifetime, I’d love to know more about their corporate cultures when it comes to handling disgruntled customers. What could US carriers learn from them for complaint resolution?
Wyodog – I don’t have as much experience dealing with many of the international carriers, though I can tell you that Singapore does a great job. I don’t think I have any examples of complaints with Cathay or Emirates. But I can tell you that the second tier carriers internationally are far worse than domestic counterparts. My nemesis in that regard is Copa, which I wrote about last year. But others are just as bad, like Ethiopian.
Hello Cranky! This was excellent. I had been a sales manager for one of the
largest airlines in the world and I found one of my constituents writing
horrific and non personal emails to our customers and was inflaming our
customer. Miscommunication can start wars, so miscommunication in business
can ruin it very quick. The employees in Customer Relations at what is now
known as AA may also be bored or completely uninterested in keeping
customers for AA. I can bet that the manager may also be overworked and
disillusioned. I cannot see any other reason for this total lack of care or
concern. I agree with you completely – and as you said your letter to this
angry customer may still have irritated him, but it showed that the agent
at the least, read his letter. Thanks for what you do, Mr. Cranky.
This the same response I get from United – a form letter which doesn’t solve the problem and says the airline doesn’t care!
I have run into a similar situation on MKE-DTW nonstops via DL. For business travel of less than 4 days stay, airfare is currently $835 with 2 week advance (non-refundable/penalty fare!) or $1055 with less than 2 weeks. If I bought at these prices consistently, I wouldn’t have my current job for long (and wouldn’t then have any need to fly to Michigan).
I have tried most every other way to get to Michigan (so close, yet so far away!): Amtrak, AA flights to Toledo or Detroit, Southwest MDW-DTW; Lake Michigan ferry (in season); and driving (except during snowbelt time of year ).
Now every time I utilize an alternate routing, I post to social media noting to Delta (@Delta) that I traveled on others as well as pitching to Southwest (@SouthwestAir) about demand for alternate MKE-DTW service. Perhaps I am just one lonely voice that won’t be heard, but I’m trying.
Speaking of fortress hub airfares–I wonder how much damage to Eastern Michigan’s economy is caused by Delta’s pricing for those who travel to DTW. I certainly find it hard to do business there with the transportation impediments caused by this pricing. It really should be an easy flight there. But it isn’t.
EdM – Milwaukee-Detroit is an interesting market too. It’s not a big market, and only Delta flies it nonstop. I just don’t know that there’s enough demand for a low cost carrier to do it at this point. But this is a very competitive market. Delta does require a Saturday night stay for lower fares. But American and United do not. I can buy a one way on United via Chicago for $216.60 for this afternoon. So it’s just a matter of whether it’s worth it to stop for you.
You raise excellent points, but really, is the lack of communication any different in ANY big corporate enterprise? I don’t know that I’ve heard any big corporation tell the truth that they charge the price that the market will bear (though Doug Parker, to his credit, did so when questioned about why fares weren’t going down in the face of lower fuel costs). Look at what happens anytime a merger is announced; you hear a lot of mealy-mouthed corporate speak about “synergies”, “enhancing the customer experience”, yada yada, but nobody comes out and says “we’re reducing competition so that market conditions support higher prices, because we’d go broke otherwise”. Of course, if anyone actually said that publicly, the pitchforks would be out and they’d be out in front of a Congressional committee faster than you can cry “uncle”.
With regard to airlines, I think the real issue is, as much complaining as people like to do about the prices that airlines charge and the lack of service, Joseph is really the exception to the rule – how many people stop flying, or switch carriers, to protest? From my armchair quarterback position, not many. Ultimately, we as fliers make plenty of excuses – “takes too much time to drive”, “Carrier X is the only one that offers nonstops and I don’t have time for connections”, “I value the perks of elite status on Carrier Y”, etc. – but we don’t really follow through on the threats of speaking with our wallets. If more people in PIT actually started taking the PA Turnpike instead of paying $600, you’d eventually see fares go back down. Of course, it’s easy for me to talk about the ease of switching, living in a market where we have two major carriers that can take you nonstop pretty much anywhere…
In 2015 why can’t there more computerized solutions and more creative thinking on how to fill a plane economically so both the passenger and airline are happy?
If a plane can fill only 11 seats on a scheduled flight why not turn the fixed schedule into a floating schedule where the times, and maybe the date can vary until there are enough
passengers to fill the plane? I realize that not everyone, the airline included, has total flexibility but come on people!
Or, offer a lower fare for a variable schedule which would give 24 or 48 hour notice via cell or email.
30 years ago we had the great 7-14, 14-21, 22-45 day ticket plans; total flexibility.
Whoever innovates will get my fare.
kl
in this particular case, for example (not real numbers), $600 from one person beats $200 from 3 as the costs to carry 3 people is more than it is to carry 1 (more weight, more servicing, more miles given out, more IROP recovery). And since planes are fixed costs, bought years in advance, and crew/plane schedules are made months in advance, it is all done to try and maximize profit. In the long run, maybe a larger plane can be used, and the $200 becomes more profitable than $600. No airline employee I know wants to “screw” customers, but they do try and make the most money, and many times that means fares like this that are frustrating and seemingly sub-optimal. But US has flown this route at all fares, they probably know what is best.
Hopefully in big data era, we can find new ways to price!
k.lang – Because the business travelers that make those flights possible can’t work on a variable schedule. Plus, it’s really hard to do that operationally, as Noah said. Think about trying to connect all those moving parts. It just doesn’t work out in a networked business especially.
That letter from AA/US looks like a form letter that when a human typed in the mans name & address the computer just grabbed his name and put it in the ‘blank’ spot for names and off it went.
And to answer your question (So why can’t airlines do a better job in cases like these?) simple, most workers don’t know what they are doing or they are not provided the answers/tools to help people. Add that airlines workers are not the happiest group of workers on planet Earth, so they may not care about someones problem/question.
You could call an airline five times and ask the same question to five different people and get five different answers, so no wonder you can never get a clear answer to anything. And from once working for an airline, I know this for a fact.
Two thoughts…
1. As my dad has said over the past few years, if you can drive it in less than eleven hours roughly – you don’t fly.
2. The AA response is all corporate doublespeak& reminds me of a recent song by Weird Al Yancovic entitled “Mission Statement,” in witch all the lyrics are corporate doublespeak set to Crosby Stills & Nash. As funny as it is, it’s also a bit frightening in that problem solving & truth have been replaced with buzzwords.
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That’s nice for leisure travelers and retired folks, but impractical for business travelers, weekend travelers, or anyone living out west where cities are far, far apart.
If you’re traveling to a large city (downtown) a car is often a liability and extra expense, and if you’re driving solo it’s impossible to make productive use of your time, save for catching up on podcasts and staring at corn and truck stops.
I love road trips and know how to do them right. But the oft repeated advice “Well I just drive everywhere…” won’t fly for many.
Ah ma na gunna take that thar iron horse cuz is too ‘spensive an highfallutin’. We is gunna run a wagon train fer three months to California, jus’ got to lookout for them maurading Injuns and the smallpox…
Hmmm. I am wary of ever trying to “educate” a customer as to how processes work, as generally the person email will
A. Not be receptive to a explanation
2. Will broadcast on social media to cause embarrassment or further his cause
iii. Really just wants a cheap price on a set date.
Admittedly I would have read and reread the email referred to here, as it does seem like a little more thought went into it.
However AAs reply was just awful.
To not even read the email is shoddy.
Isn’t the correct answer, “US Airways gave away a lot of value, and American Airlines has decided not to do that any more, just as people opposed to our merger predicted would happen when they tried to block it?”
Bgriff – No. Pricing has been like this in this market since long before the merger. It was a factor of competition in the market.
Back when airline deregulation was instituted, a prominent member of the government airline regulatory environment (sorry can’t remember his name … one of the other airline dorks here might) said: In XX years there will only be 3 major airlines … Okay so I don’t remember much of the quote (and yes I could research it to further edify you all … but you can do the same and edify yourselves) – except that the key piece was that because we will expand competition through deregulation we will ultimately eliminate competition through the consolidation of the market. While we are not at 3 airlines, we are pretty close – and it is evident that competition is diminished; especially for the business traveler. While fares are not yet comparable to the pre 1978 level, if we continue to consolidate the industry, fares will continue to rise. Ultimately if we are not careful we could have less competition than pre deregulation.
The really honest answer would be:
Market conditions have changed: because the US Department of Justice, despite first making a cogent case as to how allowing the merger between US Airways and American Airlines would remove US Airways as a competitor which generally kept downward competitive pressure on airfares, allowed the merger, the airline market in the US is now concentrated in too few major airlines to force us to keep our fares low in markets like PIT-NYC. Therefore, your choices are to pay the fares we ask, take the single daily Amtrak train, take a bus, drive, or simply not travel. We set our fares to maximize our revenue given that competitive environment. Sometimes, we maximize our revenue by charging the very high fares you see and flying with empty seats instead of allowing passengers who might be willing to pay more to fill those seats at low fares. For example, we earn more revenue with one passenger paying $650 round trip and four empty seats than we would with five passengers paying the $120 round trip fares you cite from the old days.
And the second part of the truly honest answer:
With fuel prices where they currently are, we could make a profit selling $120 round trip airfares on PIT-NYC. However, new corporate parent American Airlines’ revenue management algorithms have shown clearly that we earn more profit selling $650 round trips to fewer passengers than we would on $120 airfares, and our responsibility is to our shareholders, not our customers.
All corporations’ responsibilities are to their shareholders. It’s kind of the basis of capitalism. We’ve even gone so far as to make it a law. It’s called fiduciary responsibility and people who run the company can go to jail if they break it.
Of course. As I said, that would be the honest answer.
Corporations have no legal responsibility to maximize shareholder profits. The only time they must maximize shareholder profits is when they’re selling the company.
https://hbr.org/2010/04/the-myth-of-shareholder-capitalism
http://www.washingtonpost.com/business/economy/maximizing-shareholder-value-the-goal-that-changed-corporate-america/2013/08/26/26e9ca8e-ed74-11e2-9008-61e94a7ea20d_story.html
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/09/how-the-cult-of-shareholder-value-wrecked-american-business/
Airlines serve an important function to society, their responsibility is much more than just to make profits for their shareholders.
So I think the real question is if an airline can get customer service to the point where it is consistent enough and good enough its a valid differentiator that an airline can advertise and attract business on.
Developing good customer service departments requires money and dedication and sanity. Now that the airlines have gotten a bit more profitable they might consider doing this as one of their “capital” improvements.
JetBlue and Southwest both promise that differentiated service. Heck, even Spirit promises to make all fees clear, and they do (whether you agree with the a la carte model or not).
It is why Delta can stay strong despite gutting Skymiles and pissing off customers. The operation is still big enough and reliable enough that people don’t want to change airlines.
The question I would turn back to you, is even if this was communicated better, which it can and should be, the result is still an unhappy customer who isn’t buying the ticket. Investing in customer service wouldn’t make more money in this case. Airlines need an ROI or other metric to convince them to make these improvements, as Wall Street is all over airlines these days.
First, Noah please my apologies for my delayed response. Its been quite a week.
I’m of the opinion that most of the time customers just want to know that they are heard and their opinion is in the hands of the people who are able to take action on it.
Telephone companies are almost as reviled as airlines, so this came immediately to mind:
So I’d do two things:
1. State that their opinion has been given to the team at American Airlines which determines pricing.
2. I’d make this email an “almost” form response. I’d have the representatives customize the response based on market. So instead of “Stay over a Saturday night. In some of our markets, staying over a Saturday night at your destination can help you to save money.” They’d say “Stay over a Saturday night. For flights between Pittsburgh, PA and New York, NY staying over a Saturday night at your destination will save you money on most days.” If there weren’t fares requiring a Saturday night stay, the rep would take this phrase out.
I’d also be curious if having an interview type guide (A la TurboTax) to find cheaper flights would help. (e.g. “Do you have to fly on June 23rd? I can save you money if you fly a few days earlier.”)
Err.. That quote comes from this blog entry: http://marshall2law.com/2014/10/29/why-i-hate-arbitration/
IMO, I agree on your first point, and i’d like to add that southwest had done this. They used to state that they were not for everyone (specially, the “over-entitled”, as stated by the UA CFO, few who flew/fly the legacies), but they were a solid contender that the DOT stated the existence of the “southwest effect”, market stimulation as a result of its competitive value. Then GK became CEO as the airline hit their 30s and into their 40s and he put more emphasis on attracting the “over-entitled” few to pay for higher costs and lower costs at the legacies as they went through the BK court washateria.
I do not see the airlines doing this “capital” improvements as you call it because they’ve not shown this in good times, such as during the late 90s .com stock run.
Nobody has commented about the seat map for the following day flight only showing 20% full. This has always mystified me. Often I’ll book a flight and the plane is showing +95% full, literally only a couple middle seats open, nothing in first class, etc. Then when I get on the flight it can be damn near empty. I totally get the no-shows and last minute cancellations but 25% of available seats? Same thing has happened going the other way too thinking the flight will be empty but instead it’s oversold. What I especially love is when the website won’t even show a flight because it’s sold out yet I can jump on standby and notice dozens of empty seats.
As a consumer I think airlines need to have a lot more transparency in their pricing. Of course I don’t expect them to give away all their secrets but the only other service that has such a complex pricing structure is medical and we all know how much bad press that gets. While Cranky’s sample response is better it still doesn’t explain in much detail.
IMO, the self-preservation at all costs throughout all levels of management and labor and prevalent in the airline industry will probably result in the status-quo; you wishing, them dishing rules and obscurity.
AA blocks out the seats next to Platinum & Exec Platinum.
That is a ridiculous statement. I have been EP for years now and I have never had a seat next to me empty when in main cabin.
Seating varies wildly based on no-shows, same day changes, IROPS, and blocked seats. The market also makes a big difference – shuttles have huge variability. A lot of airlines block a few rows to accomodate familes not together, elite members, etc. Some people also dont choose seats at time of booking. And if its about pricing, remember, seats sold does not equal price. Anyone can fill seats at $30 on almost any route like JB did a few weeks ago.
It’s hard to provide much more detail on pricing. The algorithms are based on so many factors – strategic importance, competition, competition price, competition capacity, available seats on flight, day of week, time of day, customer segmentation, one way or round trip, weekend stay, minimum stay, advance purchase, etc. There isn’t necessarily some easy formula you can use to determine. In addition, some companies have changing priorities based on time of year – more traffic, more revenue, more profit. So even if they listed all of these, it doesn’t mean every price is transparent or that it provides a meaningful answer to the complaint. I liked that AirTran used to show all their prices on a flight by bucket so you had a better idea of what you are paying relative to what was available, but I also know that confused a lot of people since there were many fares on one flight with no difference in service.
A few thoughts. First off, Delta also flies PIT-LGA, and United flies PIT-EWR. They have the exact same fares. So it’s not like it’s AA gouging people on their route.
New York is just a very different market. Some business travelers going there are willing to pay very high fares. So the airlines take a 50-seat plane, get 10-15 business travelers at $650…and they make much more money than filling it with leisure travelers at $250. As long as those travelers pay the freight, the airline will do it this way.
Dear customer,
I highly recommend that you collect BA Avios points, as you can just book award trips for 4,500 points each way with no stupid advance purchase, round-trip, or Saturday night stay requirements. Oh, and award space is wide open on US Airways non-stops! Heck, you could even purchase enough Avios directly from BA for round-trip flight for only $273!
Good luck, and please don’t give us any money!
AA
Cranky,
I love your blog, but I hate this post. To me, it is the equivalent of a silver status flier berating a gate agent over a tiny issue while screaming “Don’t you know who I am!!???”
In an ideal world, airlines would be able to hire highly educated and skilled writers to respond to every complaint with a unique message and the perfect touch of customer service. But, nobody is willing to pay for that kind of service. As a result, airline contact centers are often outsourced. Outsourced or not, the airline provides form letters to address the majority of the correspondence that comes in. This helps ensure that the letters are grammatically correct and that the message is consistent irrespective of the agent handling the correspondence. It also helps speed throughput. They receive thousands upon thousands of emails/letters daily with a wide range of issues. They have form letters to address the most common correspondence that comes up.
These people are as far from revenue management and network planning as they can be. There is no way they know the details behind pricing for PIT-LGA. To expect an airline contact center to answer this question is unreasonable. It is unreasonable just like it would be unreasonable to call Hilton Hotels reservations and have them explain pricing for their properties in LA and stating that you know the hotels aren’t full because at night you can count the number of room lights that are on. Or, maybe you could call Hertz and do the same for rental cars. Too many cars in the LAX parking lot must mean they are charging too much. Nobody on the other end of that request is going to be able to answer the question.
Just like everywhere else in the world, you have to talk to the right people at an airline. If Joseph is traveling for work, he should contact his travel department and have them work with the account manager at the airline for help. Or, he could try and work through a travel agent. These people can speak intelligently about pricing. Otherwise, vote with your wallet. If it makes more economic sense to drive, then do it. The airlines will adjust pricing if demand goes down. If it still makes sense to fly, then you have just learned why the airline is charging so much.
JuliaZ – I think you’re misunderstanding. This IS a form letter. It’s a
generic response that could be given to all kinds of people complaining
about air travel. Of course, it requires the revenue management team to
help craft it in the first place, but that shouldn’t be an issue. Nowhere
does this directly address the Pittsburgh-LaGuardia market at all.
Cranky,
If that’s the point, I guess I see limited value in an entire post about adding another form letter to the airline’s catalog of form letters. In the end, I’m sure whatever form letter is devised will to too generic to satisfy a lot of people anyway. This goes to my point that people need to be reasonable in what they expect.
Again, thanks for the blog! I don’t mean to insult in any way. I just wanted to add a different perspective to the conversation.
Jamzz – Whoops. Now I look like a form letter writer. I meant Jamzz, not JuliaZ in my response. Sorry about that!
LOL – A victim of your own success?
Hi Cranky,
You were responding to a post by Jamzz, not by me, but thanks for thinking of me. :-)
Julia
JuliaZ – I know! I corrected myself down below. I just saw the J at the
beginning and Z at the end…
Heard a long time ago that the purpose of an airline is NOT to serve the public, but to drive the other airlines out of business.
Another alternative:
Thank you for contacting American Airlines Customer Relations. On behalf of American and US Airways we are pleased to respond to your inquiry.
Since American Airlines reads and issues personal responses to each of the thousands correspondences it receives daily, cost have increased. These added costs, as well as demands of the marketplace, contribute to increased fares.
We hope this letter address your concerns and we look forward being included in your your future travel plans.
It’s an auto response, you know no one at AA actually reads this stuff.I’ve gotten canned responses from utilities and various other companies, why do people fly over the handlebars about this? Vote with your wallet, that says more than an email.
I’ve always felt that if a company/store/whatever was doing me a favor by taking my money, I relieved them of the burden of having to take my money in the future.
OMG! Half way through, I shared your thought; did anyone READ the fellow’s letter? American’s response seems to be nothing more than a series of boilerplate phrases strung together with the odd period. But that’s OK: I don’t fly them either.
-CG
Thanks for the review of AA’s response. Although, it does not surprise me. I have encountered similar responses from others. Your suggested response would be better because it does show that they have read the letter. I believe that most airlines would respond with similar remarks and thereby showing that they did not read the letter.
I think it’s fair to say the people who answer emails don’t know (and likely don’t care about) airline pricing and why it is the way it is.
As you said yourself, communication is not one of airlines’ strong points. Perhaps this is a buisiness oportunity for someone?
I am disapointed for the customer. Just reading his first letter had me annoyed. Quite rediculous situation.
I haven’t read every answer, but what is the cost of a flight?
Not the loss leader to fill seats that would otherwise go empty, or the full fare where you are paying for flexibility, but the cost of flying x number of people from A to B.
I ask because in some ways people became accustomed to a certain price being ‘how much this route costs’, and then get shocked when the price ‘goes up’.
Well.. that amount is likely proprietary when you’re looking at the specific fleet type or route type.
That being said, you can find out an airline’s CASM (Cost per Available Seat Mile) in their financial reports, and multiply that by the seats on the plane and then the miles that plane flies. It won’t be exact as there are many pieces that affect that, but it’d give you some information in that direction.
CF,this brings up an interesting question: Are the miles in CASM based on planned route miles or actually flown miles? I’m guessing given the age of that figure its planned route miles.
Nick – To the best of my knowledge, ASMs included only flights that operated but for the planned number of miles. I don’t know of an airline that calculates the exact number of miles each flight takes.