Poor customer experiences erode loyalty

Airlines currently operate under fierce cost pressures. Deregulation removed a variety of supports and protections for the traditional network carriers, and several waves of nimble, clean-slate, low-cost airlines — unburdened by retiree pension obligations, older equipment or outdated systems — have changed the industry’s operating standards. Additionally, airlines are hit regularly, but unpredictably, by a variety of disruptions — in the weather, in energy markets, in political or security situations — thus making planning difficult or impossible.

Unable to control many variables, airlines have focused on not merely holding down costs, but on paring back as many costs as possible. Cost-cutting — which used to be a discrete, periodic process of reviewing and optimising systems — has become a continuous process that, in the short term, has proven effective: costs have come down. The unintended consequences have included a reduced focus on issues that passengers care about and that cause concern when left unaddressed.

Most critically, brand loyalty has declined. Passengers used to clearly understand the differences between and nuances among airlines and often preferred flying with one over another. However, cost-cutting has made air travel and what amenities remain feel generic, if not austere or virtually nonexistent.

Travellers have issues with every segment of the experience: booking flights, getting to and from airports and traversing the airports, as well as the actual experience of flying. When customers are asked what improvements in their overall air travel experience they would most like to see, spending less time in the airport (78%) topped the list, followed by having a more enjoyable experience in the airport and improving on-time performance (both at 74%).

For airline executives surveyed, however, the customer experience comes in third on their priority list (40%), behind building customer loyalty (49%), while cost reduction remains on top (57%) by a wide margin.

Surprisingly, the goal of increasing revenues comes in fourth place at 34%, indicating that airlines have reduced their focus on this priority by adopting the low-cost carriers’ pay-for-what-you-use approach to maximise passenger revenue per seat mile.

This is good news for the flying public: for some carriers, the focus may now be shifting from costs to customer experience. It can be good news for the industry as well. Having been broadly successful in reducing costs, airlines can now turn to rebuilding one of their most important, if recently neglected, assets: a core of loyal customers.

Three broad areas offer a wealth of underleveraged tools to achieve this goal:

  • Technologies that are already available can be used to better personalise air travel, from before customers book through post-trip feedback.
  • Best practices in hospitality, logistics and gaming offer powerful road maps for improving the customer experience, thus boosting loyalty and increasing repeat business.
  • The abundance of data available to airlines — about both their own operations and about their customers — can be used to provide travellers with more information on which to base decisions, while also allowing airlines to better understand and, thus, offer more of what customers want.