Airlines Need To Innovate The Consumer Experience

Ask anyone these days how was their last flight and the most common answer is “uneventful”.  That is the consumer expectation for flying these days and that speaks volume to the state on the industry.

Since September 11, 2001, the industry has suffered tremendously.  This lead to what is called in the industry “un-bundling” which means that rather than a airline ticket including everything, you now pay for everything from luggage to food on board, allowing airlines to monetize their business as much as possible and return to profit.

The airline industry has a very challenging business model.  It faces tremendous costs:

Add to that long-term leases on airplanes (and parts for maintenance) and you have an industry with a huge amount of expenses – most of them are hard to control.  Fuel prices are dictated by the market.  Southwest is known in the industry for hedging its fuel purchase (agreeing in advance to purchase fuel at a set price for an extended period of time) which has helped it save money.  Airplanes are built by other companies and leased or purchased over a long period.  Because their expense is amortized over many years, it is hard for an airline to quickly switch to more fuel-efficient airplanes.  Labor contracts are long drawn negotiations with unions that take effect over many years.  So costs are locked in over the long-term.

What the industry controls is the service.  And what it has done is monetize the service by charging for everything.  What it has done is basically commoditized its business (red ocean) so consumers look for price as deciding factor in choosing a flight because paying more for an “uneventful” flight does not make much sense.

The airlines will not differentiate themselves by their airplanes.  There are only two major airplane manufacturers with a variety of airplanes that does not change very often.

The airlines will not differentiate themselves by their routes.  Most major cities these days have multiple airlines serving them.

The airlines will differentiate themselves with the experience they offer to their consumers.

One approach that has been taken recently by Virgin Atlantic was to redesign its airport terminal, adding comfortable seating in the waiting area, hydration station so you can fill your empty water bottles inside the terminal, lots of open spaces – all to transform and differentiate the “consumer experience” from the regular packed terminals we all dread.

Another approach is to provide great service, on the ground and off the ground.  Remember when Southwest attendants were singing and making jokes onboard their airplanes?  You had a great time and you certainly felt the change when you travelled with another airline.

The secret sauce has always been the consumer experience, yet it always seems to be the last thing an airline thinks about.  That is the one of the few thing that an airline can control and help differentiate it from its competitors.  It is important to minimize costs and maximize revenue, but it usually gets you deeper in your industry’s red ocean. 

Innovate the consumer experience and profits will take off.

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About Stephane

Stephane Bardin has a deep understanding of consumers, combining go-to-market strategy and successful execution to drive sales growth. He is a strong marketing executive with strategic consumer and analytical talents in growing brands in the US and internationally. He is a consumer catalyst, producing results for: - Budweiser Beer - McDonald's - Hasbro - Pfizer - Kraft - Starbucks - Bumble Bee - Designer Whey - Aquafina - Tropicana - BRISK - Pepsi and more • Drove Budweiser Beer achievement of #1 foreign beer brand recognition in China. • Developed strategies to re-launch McDonald’s chicken sandwiches. • Developed top-line revenue stream for Bumble Bee in two new markets • Created the best-ever consumer promotion for Unilever brands. Stephane has a reputation for conceptualizing and executing integrated consumer marketing programs that positively impact P&L results. Stephane Bardin is an expert in using new technologies and media to connect consumers with brands and drive bottom-line results. He is a collaborative contributor who is an expert at building brand equity, loyalty, and ROI for highly recognized consumer products and brands. He has demonstrated performance using key levers of marketing to drive strategy and sales growth: advertising vehicles, consumer promotions, consumer/market research/syndicated data, new product development/innovation, multicultural marketing, interactive/digital/mobile/social media, SEO, public relations, shopper marketing, and partnership/alliance marketing. • Positive P&L Impact and Growth • Branding / Equity Building • Strategic Alliances / Partnerships • New Product Development / Innovation • Social Media/Online/Ecommerce Marketing • Cross-functional / Cultural Team Leadership • Strategic Planning /Tactical Execution • Syndicated Data Analysis and BASES • Advertising and Sales Promotion • Shopper Marketing • Trademark Management • Global Marketing Strategy
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3 Responses to Airlines Need To Innovate The Consumer Experience

  1. Teresa says:

    But, how does an airline provide great (differentiated) customer service when TSA has set up the customer for a less-than-ideal travel experience (confiscating liquids, pat-downs, scans, etc.)? By the time I get to the waiting area, I’m already discouraged by the entire travel process, over which the airline themselves have no control.

    • Stephane says:

      I understand your point. Do you associate the TSA/security checkpoints with the airlines or with the airport or with the government?

      Your first contact once you go through the doors of an airport is usually with an airline representative. At that point, the airlines control the experience, from the counters (with fresh flowers or candy) to the service provided by the attendants behind the counters in efficiently processing your needs with a friendly smile and a helping hand.

      After the TSA checkpoint, which is less than optimal, but as you mention beyond the control of the airlines, the airlines once again own the experience (varies if one airline “owns” the terminal or just “sublets” a few gates). No matter what, the experience given at the gate is within the control of the airline. From what is on the counter to what/how things are spoken (memorized/canned announcements), the airlines can differentiate the experience. Keep in mind that this pre-boarding experience will definitely impact the passenger behavior inside the airplane so it is in the interest of the airlines to make it pleasant/memorable. It is emotional branding.

      Once on board, airlines have full control of the experience – how the seats are laid out, what is posted on the walls, colors, sounds, smells, etc.

      Even if the TSA checkpoint has a negative impact on a traveler’s experience, the airlines still can use that “opportunity” to blatantly show their customer service in light of the “cattle drive” created by the checkpoint.

      Thoughts?

  2. Pingback: Time to Chart A New Flight? | Dare to Innovate

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