Just when you thought the airline industry couldn't get any worse, they concocted an incredible scheme to piss off their customers even more. This is the death of a thousand cuts, um, fees. As an exalted frequent flier, I don't yet have to pay to check bags or to quaff a warm soft drink, yet the days are coming when everything I want to do on an airline will be accompanied by a fee.
Why ask your customers to pay more for things they expect, or make up your failure in strategic thinking on the back of expenses and fees? Right now the airline industry is betting they can move into the black by charging for booking tickets on the phone, checking baggage and selling soft drinks and snacks. So a $400 ticket becomes a $600 ticket for many travelers. Recently I had to pay $20 for ticketing assistance for a ticket I booked and tried to buy online. For some reason my card was rejected, and even though I wanted to purchase the ticket online, I no longer had that option. So I had to pay $20 to purchase the ticket. This is no way to run a business.
Banks are another firm trying to break even on penalizing people for doing business with them. It's a dirty little secret that most banks make most of their profits through penalties and fees. Most of us can't wait to get into online banks or credit unions where we aren't nickeled and dimed to death. Is this what constitutes executive strategy? Making profits or breaking even based on penalties? How long do you think customers will stand for that?
The airlines miss a huge opportunity to gain more income from advertising, for example. How many places can offer 200 people as a captive audience for two or three hours for short flights? Why not have a plane sponsored by Coke, or Pepsi? Why not place ads on the tray tables (some airlines already do this). Why not place a corporate logo on the fuselage? There are hundreds of business, predominantly online, that make tons of money based on providing eyeballs and advertising. Yet a firm that routinely packs thousands of people into small tin cans for hours at a time fails to make any real revenue or income from advertising. Why? Is this because they are concerned we'll revolt if there are a few more ads in a plane? If it means a little more legroom, a snack and a less surly attendant, I'll stare at consumer goods advertising for a couple of hours on a plane.
The major airline carriers are lucky that they have a monopoly hold on gates at airports. that's really the only major hurdle to entering the airline business. If Yahoo or Google or one of the firms that really understand how to convert eyeballs and advertising into income and revenue ever decide to get into the airline business, they may radically change the way we consider flying. Right now, we are stuck the the leadership that has lost more money cumulatively in the last decade than most other industries combined. Southwest is starting to look better all the time.
Oh, and don't tell me these folks are strategic geniuses. Anyone who fails to hedge one of the largest input costs and then is surprised when the cost of fuel goes up is kidding themselves and you. While few of us could have predicted the scale of the increase in cost, none of us should be surprised that fuel prices went up. Yet again, very little strategic action was taken to anticipate that by the airlines. So, if you've cut the wages all you can, and removed all the blankets and service items, and reduced flights, what more can you do to earn money? Penalize customers who want to do something as crazy as check a bag.
Who is dreaming this stuff up?