Shot Across the Bow to Connection Carriers?

:yeahthat:

Well put. There is a niche market available, people who make a good bit of money annually, WANT quality service. . .even if there are ZERO First class seats. Hell, First class service now isn't ANYTHING close to what it was even 10 years ago.
 
tonyw said:
If I were in charge of an airline, I'd up the service -- meals on all flight of more than two hours, maybe free booze as well, and more room -- and charge more.

And if you bitched about it and said I want low low fares, I'd say, take a hike to someone who wants to give you that.
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These guys aren't dumb--their reluctance to provide better quality service isn't because they aren't capable, or aren't willing. It's because the market research they've done shows that folks are looking for the lowest price, more than the best "customer experience."

Like mpenguin said, people have been trained to look for the lowest fare. FOR NOW at least, that's what folks want. They'll SAY they want better service, but the next time they go looking for a ticket, it's off to Expedia or Orbitz or Hotwire to find the lowest fare. Heck, if FDX or UPS allowed people to box themselves up and send themselves, and it was cheaper than the airlines, they'd do it!

Your desire to provide great service is commendable, but you'd probably lose your shirt in the process.
 
tonyw said:
If I were in charge of an airline, I'd up the service -- meals on all flight of more than two hours, maybe free booze as well, and more room -- and charge more.
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... and you'd be bankrupt.

I work for a Fortune 500 company that has oodles of cash and guess what our VPs fly on? Yup. Thats right. SWA!

You cant take two airlines, one low cost and one elaborate and justify a $100 price hike for a 1.5 hour flight. In the end you'd be making less than the low cost carrier. 1) Your free meals, booze, and room equates to higher operating costs. 2) You've priced yourself out of the market and will see less pax.

The only thing your price hike does is cover the cost of your overhead. In case you havent noticed, the public doesnt care about that. They only care about the cost of their ticket.
 
tonyw said:
And if you bitched about it and said I want low low fares, I'd say, take a hike to someone who wants to give you that.

I want to take care of you better, and if all you care about is how cheap I can move your fat ass from point a to point b, I'm not interested in your business.
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And once you'd taken your 400 plane airline down to 30 aircraft and taken the people you employ down from 30,000 to about 1500 and once you'd taken the stock price from $40 to $0.00000000003 what would you do for an encore??????
 
CFIse said:
And once you'd taken your 400 plane airline down to 30 aircraft and taken the people you employ down from 30,000 to about 1500 and once you'd taken the stock price from $40 to $0.00000000003 what would you do for an encore??????
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Like they say, the easiest way to become a millionaire is to start as a billionaire and start an airline.
 
mtsu_av8er said:
Thief.
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But...but...but...we only steal the best customers!


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tonyw said:
Well, if you ask me, those are the only kinds of customers worth having.

The idea is to bring in PROFITABLE customers. Screw the ones who don't make you money. They take away from your ability to service those customers who do make you money.
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All other things being equal, this is true in business. Airlines are a little different though.

If I were in charge of an airline, I'd up the service -- meals on all flight of more than two hours, maybe free booze as well, and more room -- and charge more.

And if you bitched about it and said I want low low fares, I'd say, take a hike to someone who wants to give you that.
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You won't hear me complaining. Buuuuuut....

meritflyer said:
... and you'd be bankrupt.

I work for a Fortune 500 company that has oodles of cash and guess what our VPs fly on? Yup. Thats right. SWA!
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I have worked for a number of firms as a hard-core road warrior. In each of them, the first...the VERY FIRST thing the VP of sales told us, was "Use Orbitz, Expedia, anything you can to get the lowest airfares. Hotels you have a little more flexibility, but lowest airfares."

I got fairly intimate with SWA, Airtran and ATA during those years...
 
SteveC said:
But...but...but...we only steal the best customers!
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"Attention passengers, this is your captain speaking. Those of you who make less than six figures are politely asked to contact your flight attendant, who will pleasantly escort you off our plane. Please don't stink up the aisle on your way out. For the rest of you, thanks for flying Blueblood Air, and please excuse the riff raff."
 
Fly4Pay said:
"Attention passengers, this is your captain speaking. Those of you who make less than six figures are politely asked to contact your flight attendant, who will pleasantly escort you off our plane. Please don't stink up the aisle on your way out. For the rest of you, thanks for flying Blueblood Air, and please excuse the riff raff."
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That's the long version. The short version is: "$3,000 per aircraft hour. Still interested?"
 
Fly4Pay said:
Your desire to provide great service is commendable, but you'd probably lose your shirt in the process.
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I disagree.

Look at the companies in the service/goods industry who are making money. The ones who are competing on price are not doing as well as those who compete on service.

As for me taking an airline into bankruptcy, is that any different than what the folks who tried to compete on low, low fares did?

The definition of insanity is trying the same thing over and over again and expecting different results.

At least I'd be trying to do it differently.

Why some people don't see the goal of any business is to get PROFITABLE customers, not ANY customers, is something I'll never understand.
 
tonyw said:
I disagree.

Look at the companies in the service/goods industry who are making money. The ones who are competing on price are not doing as well as those who compete on service.
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Okay... :rolleyes:

If its such a great idea, why aren't the airlines following such a model? Answer - the bottom line is all that matters to pax.

See Skybus.
 
meritflyer said:
Okay... :rolleyes:

If its such a great idea, why aren't the airlines following such a model? Answer - the bottom line is all that matters to pax.

See Skybus.
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Because they're stuck in their "right-after-deregulation" thinking where they have to compete for business. Back then, flying was a rare commodity for people. Today, buying an airline ticket is like buying beer, cigarettes or gas. You can put whatever price you want on those things, within reason, and there's a very good chance that your sales volume will remain nearly the same. People don't cancel a trip because it's expensive...they just grit their teeth and buy the ticket.

Just yesterday I was talking with a passenger who was pissed off because he bought his ticket on expedia really cheap. His first leg was on american and his connecting flight was on united...2 terminals down. Of course, he missed his connection, and when the CS agent told him that he could have bought a ticket on united for the whole trip for 100$ more, he was dumbfounded. He said, "I think I'll just pay the extra money and not have to deal with the hassle any more".....

Now that the airlines have addicted everyone to air travel, people are going to be looking for the quickest, friendliest, and most convenient way of getting to where they need to go.....regardless of price...

I think Grinstein is right on with putting the connection carriers in check...hopefully he'll make good on what he's saying now and trim the low quality fat...
 
tonyw said:
Look at the companies in the service/goods industry who are making money. The ones who are competing on price are not doing as well as those who compete on service.
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Wal-Mart anyone? They're winning through lower prices--definitely NOT on service. No slam against them, it's just the way Americans are leaning right now.

tonyw said:
As for me taking an airline into bankruptcy, is that any different than what the folks who tried to compete on low, low fares did?
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I thought the goal of business was to MAKE money, not just lose money in a different way. Just because others found a way to go bankrupt doing the right thing doesn't mean that doing the wrong thing will work better. For instance, let's say that you're from a town in TX where BBQ is king. Nobody eats anything other than BBQ. Everyone tries to get a piece of the pie, and opens a BBQ restaurant. Some succeed, some fail. You decide to do something different and open a tofu restaurant. NOBODY in the town wants a tofu restaurant, but you do it to be different, because you think that's what people want. The restaurant fails. Now, was opening a tofu restaurant the best plan, or would opening a better BBQ restaurant be the better idea?

<dang, now I'm hungry>

tonyw said:
The definition of insanity is trying the same thing over and over again and expecting different results.
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Absolutely correct.

tonyw said:
At least I'd be trying to do it differently.
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See above. Different doesn't necessarily mean better. You have to be the RIGHT kind of different.

tonyw said:
Why some people don't see the goal of any business is to get PROFITABLE customers, not ANY customers, is something I'll never understand.
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You're right--you DO want profitable customers. In this instance, though, I think you're fishing for them in the wrong pond.
 
launchpad said:
Because they're stuck in their "right-after-deregulation" thinking where they have to compete for business. Back then, flying was a rare commodity for people. Today, buying an airline ticket is like buying beer, cigarettes or gas. You can put whatever price you want on those things, within reason, and there's a very good chance that your sales volume will remain nearly the same. People don't cancel a trip because it's expensive...they just grit their teeth and buy the ticket.

<snip>

Now that the airlines have addicted everyone to air travel, people are going to be looking for the quickest, friendliest, and most convenient way of getting to where they need to go.....regardless of price...
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Personally, I'd say you're PARTIALLY correct. It's like with gas prices,. People don't buy appreciably less gas when the price goes up--they just gripe more. BUT... if the guy across the street is a penny a gallon cheaper, his lines (and his profits) get longer, because he's the cheapest. It doesn't matter if the guy with the penny higher price is a nicer guy and friendlier to his customers.. the cheap guy is gonna be swamped.

People care about the RELATIVE price of two sources, not so much the ACTUAL price.
 
I'll add something here as well - apologies for the length.

Business travelers (who, if I'm not mistaken, make up the bulk of passengers) are working in a different world now - companies have to be lean to compete because their respective markets (in IT/telecom anyway, but I'm sure it's true of others) are getting more crowded with more vendors. Comms technology has gotten cheap enough to allow an IT firm in Ontario, Canada to compete directly with an IT firm in Miami, FL, y'know? 25-30 years ago, this wouldn't have been the case.

Because of this, those who travel for business are under much greater scrutiny when they travel. Every dollar spent generating revenue has to be stretched further because revenue streams and margins are thinner than they used to be, and in a violently competitive economy, tenuous at best.

Those dollars spent on airline tickets have to count for something, so if a sale doesn't go through, the exposure on expense outlay has to be minimized. THAT is why biz travelers buy the cheapest damn fares they can find.

It's going to take several large trend setting companies losing a major deal or series of deals that they can directly attribute to poor airline service (a tough case to prove) and screams from their rainmaker salesmen and braintrust of engineers before they look hard at quality of service over fare price.

In other words, when they calculate time and productivity losses (X) vs. lowest airfares (Y).

When X is greater than Y, you'll start to see changes.

I think I'm oversimplifying the economics here, but the theory is sound, in my opinion.
 
tonyw said:
I disagree.

Look at the companies in the service/goods industry who are making money. The ones who are competing on price are not doing as well as those who compete on service.
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You're making two basic mistakes imho.

1) You compare the airline biz to other businesses. This only works in a general sense. It's very different, for example, from any goods industry in that the airline seat is a very perishable product. You either sell it by the expiration date or it's worthless. This is why airline fares are best compared to commodities pricing.

2) You think that price and service are mutually exclusive. I know this is a big one for you Tony. All ills are solved by ignoring labor costs and cashing in on the people begging to spend more money (and change their schedule) to partake of the joyous and highly motivated service.

The truth is that successful airlines must be able to compete on cost and the most successful airlines will do so while providing superior service. That has been a winning formula in any business at any time and any place.
 
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