This week’s featured link:
Interview: Air France-KLM CEO on Millennials and Unions of All Kinds – Skift
Ever wonder what runs through the mind of the person who runs Air France/KLM? Wonder no more.
Two for the road:
Former American CEO to airlines and passengers: Get real – Dallas Morning News
It must be nice to be an ex-CEO of an airline, because you can speak the truth and not have to worry about pushback. Former American CEO Bob Crandall never minces words, so when it comes to declining service, he’s his usual blunt self. In short, passengers don’t want to pay more so they get the experience they are willing to buy. It’s true, but if Doug Parker (current CEO) said it? Oh, the outrage!
Fokker – The Final Farewell – KLM Blog
It may not be something headline-grabbing like the 747, but last weekend KLM retired its last Fokker, a Fokker 70, to be exact. Fokker was Dutch and it was an important aircraft manufacturer for many years. You won’t be surprised to hear KLM has been celebrating its Dutch brother for months now. If you’re old enough, there’s a good chance you flew a Fokker 28/70/100 in the US. American and USAir each had a large fleet as did Midway (the second one). Horizon flew the old Fokker 28s in the Pacific Northwest and so did USAir/Piedmont.
Even America West had a pair of Mesa-operated Fokker 70s. There are still Fokkers flying, just not in KLM colors.
I checked out as captain for the first time at American on the FK-100. Not remotely a great airplane, but a real hoot to fly. More than once we had to shut it down completely at the gate and reboot the systems tp clear a screen full of bogus error messages.
Customers clearly don’t always buy the cheapest fare in a market; if they did, there wouldn’t be very obvious differences in the amount of revenue that airlines generate even in the same market. Instead of telling customers that they are to blame for crappy service because they also want low fares or for airlines to stop trying to compete on price, airlines should be competing with good service and giving airlines good reason to charge premiums for the service they offer. The entire low cost and ultra low cost segment in the US has been created out of consumer belief that current airlines – up and down the scale – have not provided the right value/quality balance that many customers continue to seek.
Airlines have tried many times to charge modest premiums for modest improvements in service or space. (More Room Throughout Coach!) They seldom succeed in making it profitable. Of course it’s possible, as you say, that they just haven’t found the magic combination. I think it’s more likely, though, that the simpler explanation is correct: there aren’t many people willing to pay for it.
Part of the problem is that, for many of us, we do not have much choice than to choose the lowest fare. For example, almost all of my air travel is business related. The company I work for has the policy that the airfare chosen must be within $50 each way of the lowest fare within the +/- 2 hour block searched provided the layover or total flight time of the cheapest flight is less than 2 hours greater than the flight you want. There are a few exceptions (such as if we’re visiting an airline customer and it makes sense to fly that airline). Thus if some airlines started trying to compete on service rather than price, I don’t have the option to make that choice. I can choose to buy an upgrade out of my own pocket after I bought the tickets, assuming one is offered, but I cannot purchase a more expensive fare and only expense the lowest fare.
ATL-ORD/MDW served by five airlines on a nonstop basis with multiple frequencies. Hubs for all of top four airlines on one end or another of the route; WN comes the closet to having “hubs” on both presence. Yet, according to DOT data for LOCAL ATL-Chicago passengers, DL has the highest average fare at 18% above the average, UA at 8% above average, AA 4% above average, and WN 18% below average but still well above NK.
Further, DOT’s consumer travel report shows that there is a significant different in customer service metrics including on-time, cancellation rates, baggage handling, and consumer complaints.
The majority of airline consumers in the US have multiple choices. Not only does the average fare paid in nearly all markets indeed vary significantly but so does the level of customer service given.
Airline customer service is not just measured by how many amenities provided but how well airlines deliver what they say they will – and the results are far from different in market after market and for each airline.
For the average length flight, I’m not sure there’s much demand for premium service at premium prices. For the first time in forever, I flew UA on a flight just under 3 hours in the back of the bus… and it was surprisingly tolerable. When I really think about it, there’s little that I would have been willing to pay for at a price the airline could make a reasonable profit from.
If the airlines ever tried to get to a “premium service” model, they’d need to convince passengers that they’re *consistently* getting something above and beyond the basics. I think that’s pretty hard.
Also, at the end of the day, schedule matters most. I fly WN to see my family because they’re the only nonstop in the market. It would be really hard for me to justify a connection on another airline, no matter how much better the “service.”
I have a few fond memories of flying F-100s (as a passenger) between ORD and a couple of smaller cities in the Northeast (on AA), as well as between CLE and PIT once or twice (on USAir) … speaking of short trips. What I remember most is the sense of having less metal between me and the sky, and of almost hearing TA DA when we popped out a heavy cloud layer and into the bright morning sunshine. Not quite the difference in feeling of a sports car — more like the feeling of a VW Beetle when you’re used to riding a Ford.
To the best of my knowledge, I never met the Fokkers in person.
“In short, passengers don’t want to pay more so they get the experience they are willing to buy. It’s true, but if Doug Parker (current CEO) said it? Oh, the outrage!”
Where the outrage comes from is when CEOs like Parker, Munoz, et. al. use their corporate doublespeak to spin their penny pinching and service cuts as “enhancements” and “changes we think you’ll like”. Yes, we get what we’re willing to pay for. No, 30-inch seat pitch, 10-abreast seating in 777s, Basic Economy, and the almost complete removal of low-level award space aren’t “enhancements”. If a current CEO did come out and bluntly say “you want $199 transcons, this is what you get”, I think they’d actually earn a good deal of respect for being straight with people.
MeanMeosh – That’s certainly additional outrage, but I think you’d find plenty of outrage at straight talk too.
There was something cool about boarding through the built-in airstair in busy Schiphol (AMS–EDI on KLM Cityhopper; not sure if it was a 70 or 100).
1) It seems more difficult to do business in Europe than in the US. If it was the US, AF would have gone into Chapter 11 and would have been able to redo contracts. Not so in the EU.
2) Was Crandall always that plain spoken? He certainly doesn’t shy away from his opinions.
3) I remember flying in an F100 back in 1995 when I was in college from ALB – ORD. It was a trip of four plane new plane types for me (ORD – CMI was an ATR, CMI – DTW was a SF3, and DTW – ALB was a DC9 ). I really don’t remember much about the Fokker other than I was on one.
southbay – On #2, yep, he’s long been known to not mince words.
I think the airlines bear a lot of responsibility for customer frustration over cheap fares = cheap service. For too many years, airline ad campaigns have touted every flight and every plane as flying Rolls Royce experiences. They’ve been selling bologna packaged as prime rib.
In few other retail situations do customers expect exponentially more than they pay for, because they’re given honest info about what they’re buying. Buy the cheapest stadium tickets and you get bleachers in the nose bleed section. Buy the cheapest theater seat and you get the back of the balcony behind a pole. Even cruise lines warn you that the cheapest cruise tickets get you a room the size of a closet with no windows in the belly of the ship.
Airlines would have fewer disappointed customers if they simply marketed cheap classes of fares as just that. Cheap, when all you want to do is get there. When low cost carriers first started up, they billed themselves as “no-frills” airlines. Their whole schtick was based on “you don’t pay much, you don’t get much.” You knew from the outset that your ticket, like a bus fare, bought you a seat and nothing else. I think airlines could solve customer disappoint problems by lowering expectations to honest levels.
Whether we like it or not, the presence of ultra low cost carriers worsens the flying experience for everyone — as competitors have to “strip down” their service to compete, and try to also collect ancillary revenue. It’s the same as if you’re a hotelier and your competitor starts adding a “resort fee.” You may think resort fees are outrageous and wrong (they generally are), but if your competitor is tricking your customers into booking with him because his prices look lower, you’re probably going to start adding a resort fee, too!
That said, the presence of ULCCs does lower the cost of air travel. And, honestly, most travellers don’t need the frills. Do you really need the free snack with your flight? And while everyone prefers more legroom than less, as long as your legs fit in front of your seat, do you really want to pay for more legroom. And if all you usually need is a single rollerboard, do you want to subsidize other people who somehow feel the need to travel with all their worldly possessions?
So travellers generally do get the crappy product they’re willing to pay for. But maybe that’s not such a bad thing, even if it’s not a “fun” thing.