Here's Why Airlines DON'T Care About Customer Service

[pibbem]

Here's Why Airlines DON'T Care About Customer Service

Interesting read:

Here's Why Airlines DON'T Care About Customer Service | CCW Digital | Customer Experience Tips, Research & News

 

[juddles]

It is written in an overall style that is just to appease the traveller, with no real amazing content. But it is overall a very good round up of pure truth. Which is that it is the customer's push for lowest prices that forces airlines to "race for the bottom" in service.

 

[MEL_Traveller]

Which is that it is the customer's push for lowest prices that forces airlines to "race for the bottom" in service.

Airlines are private enterprise out to make a profit. They are the ones offering the lower fares, not passenger demand.

Since when has an airline listened to the passenger to introduce anything that didn't give the airline a competitive edge? Let alone a lower fare?

They'd charge as high as they could if they didn't have competition.. and we'd still have tight seat pitch, long call centre hold times, overbooking, and penalties for changing dates...

We pay a significant 'Australia tax' on our airfares out of here and we don't get any better service than those buying overseas at lower prices.

 

[juddles]

Airlines are private enterprise out to make a profit. They are the ones offering the lower fares, not passenger demand.
.......

Do you see a slight logic problem in your sentences?

 

[MEL_Traveller]

Do you see a slight logic problem in your sentences?

The lower fares are only to take market share from other airlines, not for our benefit as customers.

If there was only one airline on a particular route it wouldn't matter how much we jumped up and down, the fares would be high. And the product just the same.

 

[eastwest101]

I thought that this sentence was pretty informative (my bolding):

Most companies may be tempted to ignore their lowest-margin patrons, but most don’t have that luxury - except airliners, that is. As customers, we should disabuse ourselves of the concept that bottom-tier tickets entitle us to bad service, but also be aware when purchasing that prices don’t lie. Buying from the lowest-cost airlines adds fuel to a race to the bottom between budget carriers to offer the lowest prices, but they can’t do so without making you pay for “perks” like carry-on baggage that middling airlines include with the price of a ticket.

 

[Forg]

The lower fares are only to take market share from other airlines, not for our benefit as customers.

Yes ... but the point being made is that a lower fare with poorer service will win more seats than a more expensive fare with better service. Hence it’s the consumer driving a reduced service level.

 

[juddles]

...... a lower fare with poorer service will win more seats than a more expensive fare with better service....

Thank you Forg, you have captured the entire reality of airline pricing and service in a scant dozen words. This is, IMHO, the extremely simple truth.

 

[MEL_Traveller]

Yes ... but the point being made is that a lower fare with poorer service will win more seats than a more expensive fare with better service. Hence it’s the consumer driving a reduced service level.

Perhaps it's a bit of a chicken and egg thing. I'm not convinced that it is the passenger driving this. Airlines want to make money and pay shareholder dividends, so the poorer service will come anyway (it's cheaper than expensive service). The airlines are then competing with each other to win market share. And they can offer lower prices with poorer service, and also new fuel efficient planes.

The airlines are setting the prices, not pax. If full service airlines could get away with high fares and poor service, they would.

Airlines aren't doing us a favour by flying cheaply. They're doing it to make money for themselves.

 

[Forg]

Oh I agree that airlines exist to make a profit, at least the vast majority (are there any state-owned ones left - apart from in 3rd-world dictatorships like the Middle East where they're intended to make money for the incumbent dictator?).

But you must admit that if consumers were willing to pay extra money for better service, and would then choose the airlines that offered the higher prices & better service, then the airlines would give better service & charge more & hence make more profit.

I think it's different at the pointy end of the 'plane, though. I think J+ is less price-sensitive, those airfares are more often deducted off company tax as an expense & if cost was a real issue they'd be back in Y instead. I reckon airlines that can offer better service to those up front can entice those people to pay the extra for the service.

And there's a double-whammy in that. I'm going to also state that the people up front are flying more often, and hence know which airlines are offering the better service & be able to choose on that basis; if you only fly to Bali every 3 years, the relative service-levels could easily appear pretty random.

So … I'm going to say my assertion a couple of posts above only applies to the vast majority of travellers; not necessarily the source of the majority of profit!

 

[dajop]

But you must admit that if consumers were willing to pay extra money for better service, and would then choose the airlines that offered the higher prices & better service, then the airlines would give better service & charge more & hence make more profit.

Actually I think you are oversimplifying things. Forgetting Y+, J and F, there are clearly different economy market segments that airlines are playing in. The lack of success of LCC's on long haul and even some medium haul routes suggests there is something going on that precludes the rockbottom fares and corresponding extremely low level of customer service you see on short haul.

Also, some examples that suggest segmentation - we have seen QF abandon routes in favour of low cost Jetstar services, such as OOL-SYD/MEL, DPS-SYD/MEL, MCY-SYD, which have all been re-entered by QF, for example OOL-SYD up to 4x daily QF services. Now some of this is down to competitive pressures from VA, some due to lowering cost structure of QF, but some also due to premiums people pay for higher quality customer service. We have QF co-exist with JQ on HNL services. We see SQ co-existing with Scoot on MEL/SYD routes. It's not entirely a race to the bottom.

 

[Pleb Status]

One reason why LCC fail on medium/long haul services is because they are not really LCC at all, they are actually LSC (low service carriers).

On short haul services, you can get away with a tight seat pitch, no food, no baggage, no entertainment and no service in general to save money. On long haul services, it is a lot more difficult to avoid paying for for at least some of these. Once you pay for them, you can end up paying a similar amount as a FSC (full service carrier), eliminating the want or need to fly on the LSC (and there need to exist)....

 

[dajop]

The other comment, re the original article, which is the US context, is that by and large, US carriers are only competing tactically, not strategically. Conspiracy theorists would suggest that essentially they operate in a strategic monopoly tightly controlled by Wall St analysts who punish departure from their preferred direction for the companies. In our domestic duopoly, QF seems to have a bit more strategic freedom, as the competition has an unclear strategy due to its eclectic group of owners, and QF also lives under threat of foreigners coming in and setting up an airline domestically, a threat US carriers don't have.

 

[juddles]

Perhaps it's a bit of a chicken and egg thing. I'm not convinced that it is the passenger driving this. Airlines want to make money and pay shareholder dividends, so the poorer service will come anyway (it's cheaper than expensive service). The airlines are then competing with each other to win market share. And they can offer lower prices with poorer service, and also new fuel efficient planes.

The airlines are setting the prices, not pax. If full service airlines could get away with high fares and poor service, they would.

Airlines aren't doing us a favour by flying cheaply. They're doing it to make money for themselves.

I have quoted your whole post, but I will attempt to respond in parts:

"Airlines want to make money and pay shareholder dividends". I am sorry if I misunderstand your overall slant, but I perceive you as saying this as though that is a sin. ??? Any company that is not a not-for-profit exists specifically to do this. These are not government services. They are businesses. And as I have detailed before, the airline industry is a hard one, where the profits are very low. Most investors wont go near an airline as they can make far more money out of consumers in other services and products.

"The airlines are competing with each other to win market share". Yet again, this is a basic requirement of any business that wishes to stay alive. For an airline to compete with another, they are fighting for the pax. IE they need consumers to choose them over the competition. It has been proven incontrovertibly (through sheer trial and error) that the number one selection criteria that most pax use is lowest price.

"new fuel efficient planes" - the perpetual fight to stay alive means airlines have to reduce costs in every way they can. Because the margins are so amazingly slim that cost-cutting is the number one focus on every airline in the world. This has in itself brought wondrous benefits to travelers - this is why air travel is so amazingly cheap. Constant, eternal, struggles to make the whole thing less costly. In real dollar terms you can buy a flight in Business class now for the same cost as economy just a few years ago.....

"If full service airlines could get away with high fares and poor service, they would." That is true of essentially all businesses out there. They would like to make the most money that they can. They are not there for your benefit - they are there to make money. Everyone from your local supermarket to Jim's Mowing is in the same lot. That is how the economy works. I do not understand why you consider airlines to be special in this regard.

"I'm not convinced that it is the passenger driving this." If it is not the pax who have the power through choice, then who is driving this? Why would airlines want to drive down prices?? You express that if airlines could, they would charge more. Maybe you should be thankful that it is actually a very competitive market where the consumer does enjoy the power to freely choose.

"Airlines aren't doing us a favour by flying cheaply." Actually they are. Not intentionally of course, but are forced to because of competition. How many average working-class people could afford to travel to Bali if it cost several thousand dollars in economy? But your statement reveals I think the crux of your issue with airlines - you seem to think that they SHOULD be doing pax a favour......

IMHO the modern airline industry has evolved from many many years of difficulties to a point it caters to every taste. Anyone can choose to fly from A to B at the cheapest possible price, in economy, or pay for higher levels of comfort and service in a broad range of options from PE through to opulent F. LCC's are the pinnacle of the cheap-as-chips options. But as Dajop points out, some markets are not succesful with LCC's, so in those the airlines offer slightly better base products, but at a cost increase.

Last comment in this post, airlines suffer so much competition, and price pressure from pax, that they now resort to other areas to try to stay profitable. Hence the rise of frequent flyer programs. This is, in my opinion, a great illustration of just how hard it is to stay afloat, let alone make a profit, in running airline services.

If the reality was that providing better service, at the cost of higher prices, would win customers, then airlines would do that. Who decides these things? The consumer. In the thoroughly free market that the airline industry is that we travelers enjoy.

 

[MEL_Traveller]

For an airline to compete with another, they are fighting for the pax.

Exactly my point.

The airline is fighting for passegners and lowering the price.

The consumer is not pushing for the lower price. They are just taking advantage of it.

If an airline reaches a point where it's no longer profitable they can withdraw the service.

 

[juddles]

Exactly my point.

The airline is fighting for passegners and lowering the price.

The consumer is not pushing for the lower price. They are just taking advantage of it.

Yes, they are taking advantage. And hence voting with their feet (and wallets).

Those decisions are " pushing". In a business sense, it is actually beyond pushing. It is pax demanding those lower prices. The airlines that fail to deliver these lowest prices simply die.

 

[Forg]

Exactly my point.

The airline is fighting for passegners and lowering the price.

The consumer is not pushing for the lower price. They are just taking advantage of it.

The consumer demand is for lower prices, if it wasn't then consumers wouldn't choose lower prices over greater service.
That's how consumers are driving reduction of service; because consumers don't care about it, not when they're putting the $$$ down.

 

[juddles]

The consumer demand is for lower prices, if it wasn't then consumers wouldn't choose lower prices over greater service.
That's how consumers are driving reduction of service; because consumers don't care about it, not when they're putting the $$$ down.

It is an age-old argument, between paying for a more comfortable flight, versus having more cash to spend at the destination. I completely understand and agree with the philosophy that it is better to save a couple of thousand dollars flying on an economy ticket, and having that cash available for far more "bang for buck" enjoyment when you reach Bali or whereever.

Consumers have consistently demonstrated that they prefer to save dollars and fly with their knees around their ears with no food, than to spend more and enjoy a human experience in those few hours of flight.

 

[drron]

Exactly my point.

The airline is fighting for passegners and lowering the price.

The consumer is not pushing for the lower price. They are just taking advantage of it.

If an airline reaches a point where it's no longer profitable they can withdraw the service.

Just read a few of JohnK's posts.There is one consumer who very definitely is pushing for lower prices and there are very more of his type when you get away from the typical AFF flyer.Several in my family who would do exactly the same as JohnK.

 

[wandering_fred]

If the flight is cheap enough I might just fly for my holiday.....or to see "my team" play. And the airlines want to fill their planes, so the prices (on some tickets) are lowered. And to still break even, services from the airline (somewhere) are also lowered.

Why fly J*/3K instead of QF? Well the MAX fares are cheap status runs and QF's schedule into Perth (from SIN) is unusable if you have a four hour drive after you arrive. Well as the latter constitutes a very small minority, QF doesn't care.

Long haul? Fly from somewhere else with enough competition to have somewhat reduced PEY fares (not hard when compared with Australian departure points except for the serious sales).

Just wandering
Fred