An Ad Age piece by Al Ries on value pricing got me thinking even more about how crummy 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.
His 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?
I think of this when I cleaned out a drawer and found this trading card from 1973, when I went to England on a 707 with British Overseas Airways Corporation, now called British Airways. How I have saved it all these years is amazing. What it shows, however, is an attention to detail about the customer experience. Even as an eight-year-old, the brand got me juked.
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
- the seat will be clean and not be stained
- the pilot will make more than $18,000 a year
- they won’t get dumped in an airline terminal at 2 a.m. with no food
- they might get a free deck of cards to take home
- the stewardess will be hot
Perhaps this is all wishful thinking. And the last item is a joke. But seriously, any person who works for a major U.S. legacy airline cannot seriously talk about “branding” when their “brand” is leased out, and more like Aeroflot.