Airlines raising fares in plain view…

I just received an email from US Airways (my preferred airline) in my inbox…here’s an excerpt:

It's no secret that the airline business is facing difficulties of unprecedented proportions; and 'unfortunately
US Airways is no exception. Surviving high oil prices is going to require some substantial changes to the way the industry is run. Today, we announced a series of changes designed to prepare our airline for these new ways of doing business.

Specifically, we announced changes to domestic capacity, the Dividend Miles program and our overall business model. We're transforming our business by initiating a 'pay-for-what-you-use' model for items like baggage and beverages. We're also making changes to the Dividend Miles program that you should know about.
Among the changes we announced today, we will:

• Assess a $25, $35 or $50 award processing fee (depending on where you travel) for award tickets booked on or after August 6, 2008.
• Introduce a first checked bag fee of $15 for tickets booked on or after July 9, 2008. As a Preferred member, you and anyone traveling on your reservation will be exempt from the baggage fee.
• End Preferred bonus miles for travel booked on or after August 6, 2008.

I knew this had to be coming.  American was the first to charge for baggage and then others (including US Airways) indicated they would stop serving snacks.  I expect that the free drink services will transition to a full charge service shortly as well. [UPDATE: wow, I didn't click through the email until now -- they will charge for soft drinks--$2!]

Now before you comment about “US Scare” or “America Worst” I realize that the airline is not without faults.  In fact on a recent trip to New York, my baggage was lost (which included my suit for a wedding I was to attend the next morning).  I was livid.  As an exclusive traveler on US Airways (I’m not a huge traveler, but did clock 170K miles last year on the airline) I felt the way I was being treated was horrible.  My initial compensation offer was $25/ticketed passenger.  I eventually got this to $250/ticketed passenger which met our needs until our baggage was found (2 days later and at the end of the trip).  During this time I reflected on the airline.  I could have easily said that US Airways sucked horribly and I would never fly them again.  There were other situations on that particular trip that could have easily swayed me that way.  But I realized that no airline is perfect.  Especially calculate that with each airline is actually interfacing with other staff in hundreds of airports across the world, it isn’t always in complete control of the situation.  But I came to one conclusion during my anger toward the situation.

Given all that is happening with the airline industry the customer service group and how it treats its customers is the most important part of the business and should be given 100% budget and attention. 

You see it isn’t the crap that happens (like lost luggage) that makes you a bad or good airline (or any other company for that matter), it is what you do in those situations that defines you as an organization.  The airlines claiming all these price crunches, gas prices, etc. need to refocus on customer service…because right now since I have to pay for a ticket and pay to bring clothes with me on my trip – the only differentiating factor in the industry is how I’m treated as a customer…all other things to me are now equal.  My preferred airline program now is barely yielding me benefits it initially promised.

This brings me to a thought on this whole baggage fee thing got me and my wife talking.  Specifically she asked why they don’t just raise ticket prices.  And I agree.  You see, charging for checked baggage I think has negative effects in a few places:

• It will encourage people to carry-on which will lead to even more dis-satisfaction (DSAT) because you’ll now have even more crowded overhead space.  What will happen if I run out of space and have to check?  Is the gate agent prepared to accept a transaction fee at the gate?
• It makes customers feel unhappy and feeling targeted as consumers to excessive fees…we look at it as double-charging us.

But on the other side I get it.  You see US Airways couldn’t have just raised their fares.  Well, they could have, but it would likely have even more a negative effect on their business bottom line.  Why?  Because we as consumers are irrational.  You see, when we (most of us, so if you are an anomaly, disregard :-)) book airfare, we’ll search for airlines and see that PHX-EWR might be $200 on US Airways and $200 on American.  Great, they are the same so we’ll book with our preference.  But if US Airways raised their price, then it would be, for example, $215…we’ll look at that and say that American is cheaper and book that ticket…not realizing that American will still charge us $15/bag checked.  You see unless all airlines raised their fares, then everyone is trying to play by the same sneaky rules.  US Airways is raising their bag fees because it can’t raise the fares or would be less competitive on fares.  We consumers don’t mentally take into account fees until after the purchasing decision has already been made.  It’s lame, but true.

But instead of trying to change the industry and just being honest – raising fares – the airlines are taking these fees in a way to disguise the fares (which are probably being raised anyway) remaining the same.  This is happening, however, at the DSAT of the customer.  I mean, c’mon – how many of you are reading into baggage fees and saying Are you kidding me?  I have to pay to bring my [clothes] now?  Ridonkulous!  I hope that the geniuses at the airlines know what they are doing…I don’t think they do.  Consider the email above.  What if it read something like this:

Let’s face it, the economy isn’t the greatest right now.  You likely have an automobile, were you happy the last time you put gasoline in your car?  Neither were we.  US Airways is faced with these same economic pressures as you are and unfortunately we’ve had to make some tough decisions.

We could have easily said we’re going to charge you to check your baggage or stop feeding you the small snacks that we provide, but we figure we’d be more honest.  We are likely going to have to raise our fares in most situations.  This is not an easy decision to make, but a necessary one in the current environment we are faced with.  We felt it would be better to be honest with you rather than assess new fees for baggage, etc. that would cause more trouble during your travels.  We want you to have the same travel process as you always have done and not interrupt preparation for your business trip, weekend getaway, or family vacation.  We want your flights to continue to be as smooth as possible, enjoy the same service you’ve been accustomed to with US Airways on the ground and with the in-flight service.

We’re sorry about this and as one of the nation’s largest, low-cost airlines we strive to continue to provide the best service.  We hope that you will continue flying with us as we’ll do our best to put YOU first.

Now, I’m not sure if that would have changed your mind, but had I received that, it would have been refreshing honesty.  “Hey, we need to raise rates…we don’t want to, but are going to have to to remain in business and provide the service you expect.”  That’s the message I want to hear.  Instead I hear “We’re not creative enough to think otherwise or bold enough to try to change the industry thoughts, so we’re going to charge you $15 to bring your bathing suit with you on your trip to San Diego.  Enjoy suckers.”  Here’s a suggestion of reducing costs instead of charging me to bring my underwear:  Get rid of those credit card peddlers in PHX.  It’s annoying and not adding value to the brand of US Airways!

It sucks.  The industry is really not being smart.  They need to get creative.  Think hard on putting the customer first while still surviving in a highly competitive industry.  Changing your fees only is NOT differentiating yourself.  US Airways now to me is no different than anyone else.  In fact Southwest is looking more and more attractive and for me is a decent alternative flying out of the southwestern United States.

What do you think?  Maybe Doug Parker will read this and respond?  Doug?  Are you listening?  Have you really thought different?

Suggested reading:

• Customer Satisfaction is Worthless, Customer Loyalty is Priceless
• Predictably Irrational

I hope it gets better…soon.