The real reason bad airline service is profitable
If you’ve always suspected bad airline service is the quickest flight path to profits, then here’s your proof. A new study by the University of Nevada, Reno, finds there’s no link between customer satisfaction and an airline’s financial performance.
That’s right, an airline can mistreat you and it won’t affect how much money it makes. Not a penny.
While that may not come as a surprise, this probably will: The research also suggests airlines can get away with offering bad customer service because you let them.
“Airlines don’t seem to place a priority on customer service despite the fact that they advertise to the contrary,” says Jeffrey Wong, a professor and department chair of the University of Nevada, Reno’s College of Business Accounting Department. “And yet, some airlines are still profitable.”
The study reveals one of the most uncomfortable truths in the travel industry: no matter how much airline passengers complain about ridiculous fees, indifferent cabin service, or lengthy delays, they’ll keep buying tickets.
I cross-referenced the University of Nevada research with my case files, and sure enough, travelers with even the most serious “I’ll-never-fly-your-airline-again” grievances often welcomed a chance to return to an offending carrier again. The findings underscore an unavoidable conclusion. Until passenger threats translate into lower ticket sales, the airline industry has a green light to continue mistreating its customers.
Is bad airline service profitable?
Wong’s focus is on the practice of overbooking flights and on how customer satisfaction affects an airline’s financial results. He conducted his research with a colleague, Kevin Dow, and Belaynesh Teklay from Nottingham University in China.
The researchers found that while airlines often promote their customer satisfaction scores, they also know they can get away with a variety of grievances because they offer a service unlike any other.
“From the shrinking width of seats and space in-between the seats to baggage fees for luggage and limited food services on domestic flights, many airlines still tout their customer satisfaction,” says Wong. But an airline’s profitability, he adds, “is based on factors not associated with a price for service, but rather logistics.”
Specifically, the research notes that increased load factors make airlines more profitable. That’s a fancy way of saying carriers squeeze more people on the plane. And the best way to do that is to move seats closer together, adding a few extra rows in economy class.
Airlines know you’ll complain about the tighter seats — then turn around and fly them again.
“In the end, their profitability does not appear to be dependent upon customer service, based on our analysis,” Wong said. “Given that the airline industry offers a service with few alternatives, the findings of our research may not be surprising.”
Did passengers do this to themselves?
A careful look through my database of airline complaints, received through my nonprofit consumer advocacy site, further explains why there’s no direct link between good service and profits.
Time and again, I receive the following types of cases:
Air travelers whose first, last and only consideration is a low airfare. These passengers will purchase the lowest-priced ticket, even if there’s overwhelming evidence that the airline will treat them with indifference, or will add unconscionable fees for items such as carry-on bags. In the airline industry, that’s the conventional wisdom — price is the single most important thing to most passengers.
Customers who lower the customer-service bar to the tarmac. Equally frustrating are the air travelers who believe they deserve poor treatment. Too often, I see passengers with intractable, “I’ll-never-fly-your-airline-again” cases, who settle for a boilerplate apology. Why? They believe the airline industry’s propaganda, which is that you deserve bad service when you don’t pay enough for your tickets. This fallacy is also popular among extremist loyalty program bloggers who believe in a laissez-faire unregulated economy.
Passengers who are willing to accept vouchers for service missteps. Remarkably, when an airline fails to deliver even basic customer service, passengers are quick to forgive them. Time and again, I find air travelers with horrific experiences, who probably could have successfully taken their cases to court. Instead, they accept ticket vouchers that expire after a year. In other words, they’re eager to fly the very airline that gave them bad customer service.
Unfortunately, price-conscious air travelers who believe their customer concerns are worthless, implicitly permit the airline industry to deliver the worst possible customer service.
The industry’s abysmal scores are on display for the whole world to see at the American Customer Satisfaction Index (ACSI), which Wong used as a benchmark in his research.
The results are breathtakingly awful. The industry scored an average grade of just 73 out of 100. But some airlines performed far worse. Frontier Airlines and Spirit Airlines both scored a 63, while United Airlines received a 67. Meanwhile, domestic airlines will earn a staggering $16.4 billion in profits this year, according to the International Air Transport Association.
The airline industry’s scores are so terrible that when I asked the ACSI researchers to help me compile a list of the worst companies in America, they declined to help. They knew it would turn into another story about the airline industry since the worst companies in America for customer service are airlines.
Does blaming the victim make airlines profitable?
The University of Nevada research is another piece in the puzzle of bad airline service. The results suggest that removing outrageous fees or instructing flight attendants to smile instead of snarl, won’t affect the airline’s profitability. That’s because airlines offer a service “unlike any other” — a faster way to get from point “A” to “B.” Also, there’s very little competition, with four domestic carriers controlling more than 80 percent of flights.
However, squeezing more seats into a plane will make the carrier more profitable. But the missing ingredient, unmentioned in most research, is the airline industry’s clever PR campaign to blame the victim. Its talking points parroted by media apologists say we, the passengers, get what we deserve when we pay a low fare. We alone are to blame for the low customer satisfaction scores.
Of course, that’s nonsense. Blaming the victims of bad service may allow airlines to earn more money in the short term, but it makes no sense over the long haul. Airline passengers deserve both a low price and great service, something many other industries have been able to provide while still earning a respectable profit.
But until we passengers start punishing the worst carriers by refusing to fly them, we are hurting ourselves. Some might even say we’re accomplices to one of the greatest coordinated customer service disasters of the 21st century — although that sounds an awful lot like blaming the victim again.
It’s only a matter of time before a disruptive technology comes along and leads to the permanent demise of an industry that stopped caring for its customers.
Christopher Elliott is the founder of Elliott Advocacy, a 501(c)(3) nonprofit organization that empowers consumers to solve their problems and helps those who can’t. He’s the author of numerous books on consumer advocacy and writes weekly columns for King Features Syndicate, USA Today, and the Washington Post. If you have a consumer problem you can’t solve, contact him directly through his advocacy website. You can also follow him on Twitter, Facebook, and LinkedIn, or sign up for his daily newsletter.