Self Delusion

An article caught my eye the other day. Big headline – Consumers Actually Like Airline Fees, Analyst Contends. You can imagine my skepticism but you also know I’m a staunch advocate for keeping an open mind until we learn all the facts.  Turns out my instincts were pretty good but let’s see what you think.

Stewardess, circa 1949-50, American Overseas, ...

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An analyst from Wolfe Research named Hunter Keay wrote a report called Every Time a New Fee is Announced, a Fairy is Born.  In it he states the following:

Inconvenient truth: customers like fees. Maybe that sentence would be better received if we had said “customers like paying only for what they use.” Well, guess what…that’s the same thing.

He goes on to chide the airlines for not being more like Spirit Air (on whose planes you couldn’t pay me to fly) which charges relatively low base fares and then proceeds to layer on fee after fee.  Mr. Keay believes it’s a huge missed opportunity for airlines to improve their bottom lines.  As one report about this notion said

There is certainly some logic to the idea of saving consumers money on base airfares by stripping away everything but the seat you are required to sit in (though some carriers have discussed making passengers stand), but the problem with this a la carte approach is that the fees rarely match the savings.

In other words, we have yet another example of someone advising businesses to focus solely on their bottom lines rather than on their customers.  I think we’re all aware that fuel prices have dropped.  Anyone heard about an airline revoking the “fuel surcharges” they put in place when prices were sky high?  That’s because they haven’t.  Imagine how you’ll feel when you’re charged a fee to offset the costs of the pilot and flight attendants, much as a restaurant might charge a fee to help cover the costs of service.  Of course in the latter case the need to tip usually goes away.  You won’t see lower fares.

I hope some airline follows this analyst’s advice so we can see how well it works (or doesn’t).  His shining star – Spirit – is consistently rated as the worst US airline and is one of only two airlines flying in the US – Cubana being the other – with a two-star rating.  Profits over people has turned this analyst self delusional.  Customers don’t like fees.  They like excellent service at a reasonable price.  Value, in other words.

That’s my take.  Yours?

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Filed under Consulting, Reality checks

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