An Ad Age piece by Al Ries on value pricing reminds us how crummy and proletarian the airline business has become, and how un-important branding is to particularly our American airlines.
The story is called Variable Pricing is the Ultimate Brand-Destroyer.
Reis’ point is that because of value pricing, consumers have turned air carriers into commodities.
Take the five largest U.S. airlines. United went bankrupt. Delta went bankrupt. Northwest went bankrupt. US Airways went bankrupt. And American Airlines is losing money. In the last 10 years, American has had revenues of $199.8 billion and managed to lose $6.7 billion. Not exactly an industry to emulate.
Why do otherwise intelligent people borrow ideas and concepts from failing industries and think they will succeed in a different setting?
Recently, I cleaned out a drawer and found this miniature trading card from 1973, from a trip to England on a 707 with British Overseas Airways Corporation, now called British Airways. What it shows is an attention to detail about the customer experience. The cards made for a memorable gift to the passenger, both in entertaining them while on board, and remembering the airline once the passenger got home.
Not too long ago, every airline offered free playing cards, either free, or for sale. They were a perfect take home present, and not particularly expensive when purchased in bulk.
The cynic will say airlines can no longer afford this; the consumer wants cheap. But let’s reverse the question to ask what institution trained the consumer to think this way?
How did a pricing analyst in headquarters get to rule the roost?
One of the basic tenets of humanity is hospitality; when you have a captive guest, you do things to entertain and feed them. That used to be the way it was with an airline. They assumed, quite naturally, that if you had a guest with you at lunchtime or dinnertime, you served them a meal. It was basic courtesy.
Now, the cynic would say that this happened in an airline setting during a time of regulation; now no airline could afford to serve a sandwich. Why can’t they afford it? They are addicted, like crack, to crazy pricing schemes. In the hope of extracting the last penny, they do the opposite.
What if we had a different airline industry, where consumers decided that when they went on vacation, they might pay $100 extra for the knowledge that:
- They won’t be bumped
- They might get something to eat at mealtime
- They might not lose their luggage
- They might get a few trinkets like cards, or toiletries
- They seat will be clean and not be stained
- They won’t get dumped in an airline terminal at 2 a.m. with no food
- They might actually enjoy the time in the air, or at least consider it a break from the daily stress of everyday life.