By way of context, in the US we have some of the most savvy and demanding consumers that have ever walked the planet and at the same time we have a thriving marketing industry whose primary task is to ensure that consumer needs and wants are satisfied. Which makes the mystery of the US airline industry even more perplexing. Let me explain…
Over the past 20 years or so, we have watched the US auto industry decline year after year as it became increasingly uncompetitive globally. Many of us have witnessed first-hand its failure to meet consumer needs in the areas of style, quality, value and image. All of this came to a head earlier this summer with the obliteration of the old General Motors and Chrysler businesses. Bankruptcy hardly came as a surprise – the market share figures spoke for themselves and many experts had predicted this ultimate fate for as long as I can remember.
So, if the unthinkable happened to the once-dominant US auto business, the big question is, could (or should) the same thing happen to the US airline business? A spate of recent articles about further service cuts and rising consumer anger got me thinking…
Now admittedly there are different dynamics in place here yet there are also some disturbing parallels, mostly on the consumer side, between the two industries. From a global comparison, all the US airlines are, without exception, all second class…if you want confirmation just read the US travel magazines annual surveys…poll after poll shows US airlines to score very badly in comparison to the world’s best.
Looking more closely at the US airline business, on almost every key dimension, they seem to have lost the plot…whether it be on food quality, on-board service, seat comfort, cabin design, modernity or innovation. We have been taken to the cleaners by first the Europeans (thank you Virgin, Lufthansa, Swiss), then by the Asians (thank you Singapore Airlines, Cathay and Thai) and most recently by the Middle Easters (thank you Emirates, Qatar and the unlikely sounding Etihad).
What is equally scary is that most consumers know we have a second class airline business, they have been dissatisfied with the product for many years and they are frustrated about the efforts, or lack of efforts, to right this wrong. As in the case of the auto industry, the dissatisfaction has existed for many years and is deeply rooted in our day-to-day culture. And if the truth be told, the last time the US had a truly world class airline was in the early days of flying with Pan Am and TWA.
So doesn’t this story seem horribly similar to the crash of the auto industry with consumers increasingly vocal and dissatisfied with the domestic brands and switching, wherever possible, to the superior foreign brands. And although Southwest and jetBlue continue to make some progress, these are 100% domestic airlines and they have left the larger task of building our international reputation to those now fondly referred to as “the legacy carriers” —– now there’s a flattering phrase!!
The desire for a better product/service (what the marketing industry calls the unmet consumer opportunity) is nicely illustrated by the fact that in 2008, in only their second full year of operation, the fledging Virgin America, was voted the best domestic airline. Virgin America is a licensing arrangement with the UK parent brand but funded and operated by US owners.
The only factors keeping the US airlines in the global skies are government regulations that seriously handcuff foreign airlines and well-established mileage programs that keep some customers loyal.
From a marketing perspective, it feels like a huge problem just waiting to happen. No industry that is so vital and so visible can continue to operate long-term when so few of the primary consumer needs and wants are not being satisfied and where the bad press surrounding the industry continues to increase.
It seems to me however that, even the threat of foreign airlines being allowed to compete in the US domestic market on the same terms as the domestic carriers, would result in the US airlines either dramatically improving their product/service or facing a similar fate to that of GM and Chrysler. In the meantime, the American consumer has to put up with an airline business that is below par and which generates more consumer bad-will and negative feedback than any other that I am aware of.
Having a successful domestic auto industry and a successful airline industry is partly driven by a sense of patriotism and national pride and were once considered sacrosanct. But if we have learnt any lessons from Detroit, it is that this factor becomes secondary to having competitive products, clearly positioned, that deliver a range of consumer benefits across price, style, comfort, quality. And until that happens to the US airlines, we will continue to witness an industry in disarray.
Simon Williams
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