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October 19, 2009
Fees are penalties. Always.
It's a wonder why some businesses can't grasp this. Consider the U.S. airlines last month:
- Southwest reported an 8.8% increase in revenue passenger miles. Its load factor, the percentage of seats that were filled, increased 11% from a year ago, to 74.7% — a big increase for a month in which schools reopen and summer vacation travels stop.
- JetBlue saw a 9.8% jump in passenger miles. Its load factor rose about 1% from the prior year, to 77.6%.
Compare those numbers to other airlines.
- Delta: Down 5% on its mainline operation. It also cut capacity by 5%.
- American: Down 2.6% domestically. It cut capacity by 6.9%.
- US Airways: Down 6.8% domestically. It cut capacity by 5.9%.
- United: Down 6.1% domestically. It cut capacity by 8%.
What's a key difference between Southwest and JetBlue vs. the others? No bag fee charges.
Before you say, "You can't correlate those two things, Jackie!" let it be noted that Southwest has commissioned several studies that show the traveling public hates bag fees.
Southwest seems to be doing pretty well as angry passengers migrate away from the bag-fee chargers. Southwest is even running an ad campaign with this message, called "Why do they hate your bags?"
Those nickle and dime fees add up, the airlines will say, but really, they do little more than penalize customers with complexity and disguise the end price. It's no different when a phone or cable company charges activation fees. May as well call them aggravation fees, as in "It's aggravating to have a new customer."
Little wonder passenger satisfaction with the airline industry has declined for a third consecutive year to a four-year low.
Wall Street analysts don't like Southwest's position on bag fees. They say the company is potentially losing $500 million per year in revenue. That's OK. No one likes greedy, short-sighted Wall Street analysts, either.
Kevin Krone, Southwest's VP of marketing, said it best : "If we're trying to get people to travel, we should probably let people take their suitcase."
Gotta love any company that keeps the obvious in perspective.
Other blogs that reference Fees are penalties. Always.:
100% agree! I will fly southwest over other airlines whenever given the chance. now that you can check in 24 hours in advance or even pay a bit more to get a guaranteed "A" group seating, most of the disadvantage to flying them is gone.
I hate when banks charge ridiculous fees and I hate when airlines do it. stop nickel and diming the customer to death and EARN our loyalty and you will reap far more money from us than getting cheap and charging for every little thing.
The figures correlate but don't necessarily corroborate.
I will never fly united again after their inconsistent and hidden baggage fees - 2 week vacation cost an additional $225 because of bags being 2 pounds over - Customer service was non-existent and when we did get some - exceptionally rude. NEVER again United - never. I will pay $100 or $200 more for my ticket than deal with the snarky smug attitudes of the Untied staff.
Baggage fees are aweful. I can make the trip unaffordable. The SWA commercial is really good, goodie points to them!Dr. Letitia Wright
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Would love to see any consumer research Delta, American, etc. did before implementing the baggage fees. As noted above, it's not just the fees themselves, it's the non-verbal messages these companies communicate via the fees and also bad service. I do think, that as Charles noted above, the data doesn't necessarily indicate a positive correlation. It would be interesting if any of these companies had done some test marketing or quantitative research ahead of time - comparisons between the research and the actual data might be more conclusive in that case.
I completely agree. I just flew AirTran round-trip for a weekend trip to Disney World and had to pay $30 in baggage fees each way. The payment process was particularly irritating when leaving the Disney resort because I had to call a special # to pay the fee - and had to stay on the line for 50 rings before someone answered!
Is it too craxy to say that Southwest is now the leader in airline passenger "experience" rather than other US carriers that charge more yet deliver an inferior experience?
It really seems that any time a business charges a fee for a product or service that customers would reasonably consider as simply part and parcel of the overall service the company provides (baggage fees, ATM fees) there will be customer resentment.
Probably the only "fee" customers understand and accept would be Recycling Fees, but this is mostly due to their understanding that the fee is imposed on the company by an outside entity, not the company imposing it on the customer.
Wow - Jackie I think that you are right on. I travel between Seattle and Denver a bunch. My heart belonged to Frontier for many years - I would never use any other airline - I was a huge fan. Since they started charging baggage fees I switched to Southwest and never looked back.
Thanks for a great post!
This post needed to be written. The "Nickel & Dime Syndrome" afflicts too many brands. It's short sided and does nothing to stimulate customer loyalty. I cringe when have to fly any airline other than Southwest. Think about it...they are the "low cost" carrier but generate more positive feedback for customer service than any other airline.
Zappos is also a good example of long-term thinking. Order multiple shoes to find what you want, Free shipping on returns. Returns up to a year. No nickel and diming here. All this has yielded explosive growth and positive word of mouth.
Very interesting read! Thank you for the great post!
Great post! I absolutely hate the bag fees and it's so nice to see that these two airlines have common sense. By the time the airlines that charge bag fees realize their mistake, their attempts to "win" back customers will most likely be in vain.
I also agree. Bag fees may provide airlines with a bit of extra revenue up front, but at what cost? Little fees and add ons like these are... well, just plain annoying! Not to mention, they alienate customers. I will happily fly with a no frills airline such as Southwest to save on bag fees. Remember the video "United Breaks Guitars?" Southwest saves the day again!
Stupid parts of the fees:
- You have to pay for it separately at the airport. Instead of paying the airline once, you have to pay them twice.
- People bring carry-ons to avoid the fees, making boarding take forever.
- Lack of scale. Having a massive charge for being one ounce over the limit is simply dumb and leads to people having to panic and unpack their baggage to make the limit. Why not charge $2 per pound over 40 lb?
Absolutely spot on!! The "major" US airlines now charge for bags, for a can of soda, a bag of chips, a really nasty sandwich if they even stock them; and the worst is coming...
They are now installing expensive Internet capabilities - but who in economy has enough room to open a laptop and actually see the screen in the tiny space they give you?! Like nobody ever used those phones they installed in seat backs...
I flew Jet Blue a lot of the last 3 years - amazing - and they always came through when the other airlines failed me.
I refuse to travel a US airline overseas now - they've cut out all meals on transatlantic and lon-haul flights, charging a fortune for alcoholic drinks and generally making the trip plain miserable. Fly a Euro airline - most of them still know they need to earn customers loyalty through great service. I'll be flying Virgin to London in a couple of weeks ... it's just a shame my only real choice to get to JFK is via Delta ...
My sister was recently charged a $125 baggage fee from US Airways for her bag being over by 6 pounds. She said the people were very rude about it and said there was nothing they could do. A rule is a rule. As she was walking down the line of terminal check-ins, another couple seemed to be having the same problem but their attendant suggested that they pull some items out, put them in a bag, tape it closed, and only have to pay 20 some odd dollars for an additional bag. When my sister went back to her counter to see if she could do the same thing, she was told she couldn't because her bags had already gone down the conveyor and couldn't be retrieved. How lame!
Jet Blue and Southwest totally have the right idea. Now we just need to get them to start baking cookies on board the way that Midwest does.
Southwest is great in many other ways, too. No fee for transferring a ticket, you only pay the difference in fare, is just one way.
Now the other airlines are pushing people to try Southwest to avoid the bag fees, and they're going to find out that they probably should have been flying them all along.
I love this article! My daughter's mom-in-law is an attendant for Southwest and said from the get-go that bag fees would hurt the other airlines. Good grief...why do we have to be nickle and dimed to death?
So true. I chose Southwest over the other airlines solely because of that reason. No baggage fees!
-Bryan
This post resonates with most of us because it highlights the incongruity between a service being offered and a customer's expectation of price (both experientially and monetarily).
Rather than getting in touch with passengers to get to key behavior drivers, airlines slap arbitrary fees on top of ticket prices because they haven't learned to think creatively yet. They're still in the mindset where they hold the traveling consumer over a barrel - people *have* to fly, don't they? - rather than recognize their flawed model.
Customer satisfaction is really pretty easy. Tell your customer what they'll get and then give it to them. When I started flying on Southwest I knew that I wouldn't get fed anything but peanuts and I'd wait in line to get a seat. I was willing to pay their price for that service.
Now I know they'll be on-time at a high rate, I can pay for "A" seating, and I don't have to pay for my bag. By the way, I would suggest there is some correlation between on-time and free bags.
Another tendency of the legacy airlines I've never understood is why they treat their business travelers the worst and their infrequent vacation travelers the best. I'm thinking an airline could clean up with service that was aimed specifically at the business traveler and fares that made a business person want to use them.
I flew yesterday and what is happening is the carry-on luggage is growing creating congestion in the airplane itself and disgruntled customers when they cannot find room for their bags or need to put them in the back of the plane. The seats are so tight you can hardly breath. We did have one Southwest-like steward that made everyone laugh. Flying is definitely not much fun any more.
This post needed to be written. The "Nickel & Dime Syndrome" afflicts too many brands. It's short sided and does nothing to stimulate customer loyalty. I cringe when have to fly any airline other than Southwest. Think about it...they are the "low cost" carrier but generate more positive feedback for customer service than any other airline.
Zappos is also a good example of long-term thinking. Order multiple shoes to find what you want, Free shipping on returns. Returns up to a year. No nickel and diming here. All this has yielded explosive growth and positive word of mouth
I hate that Southwest does not have a route from Seattle to Atlanta, because I would book with them everytime. The upper management at these airlines are just like the CEO's at the banks. Reaping big bonuses, yet piece-mealing the customer. Don't forget we bailed their asses out after 9/11, too.
I hate that Southwest does not have a route from Seattle to Atlanta, because I would book with them everytime. The upper management at these airlines are just like the CEO's at the banks. Reaping big bonuses, yet piece-mealing the customer. Don't forget we bailed their asses out after 9/11, too.
So true. I chose Southwest over the other airlines solely because of that reason. No baggage fees!
