When a low fare airline chose to
set its main base at one of the most congested world airports, and a major
legacy airline based at one of the most congested world airports starts
offering low-fare services to its customers, it doesn’t need think tanks to say
that they have chosen a very risky path ahead. These are the paths of two major
carriers: the low fare easyJet ('big@Gatwick'), and a legacy, Heathrow based
British Airways, aspiring to bring lower fares to its customers.
These hybrid strategies came from a
desperate need to ensure growth and stay competitive, while trapped in a capacity
constrained environment. Unable to strike the right balance, they put the
expansionist strategies and short term profit before quality. After all, the
elements of quality require more knowledge, time, and effort to measure, and
are not recognised as performance metrics.
To get closer to reality, let’s
briefly examine some of the consequences of submerged quality issues that
strongly impact operational and business performance, and learn some lessons
from the most valued passengers who are near to becoming very disloyal to their
once most favoured airline.
easyJet
EasyJet shows its pride in being a
major Gatwick carrier, which is their biggest base airport. Its share
in departure seat capacity has grown quite rapidly between 2010 and 2015 - from
26.1% to 42.1%. This has inevitably resulted in an unprecedented drop in service quality, especially
punctuality (shown below), with deeper implications on easyJet’s overall
performance.
This didn’t come as surprise. It is a notorious fact that short turn around times, load factors above 90%, high aircraft utilisation, and low fares cannot fit well into the schedule of the world’s busiest single runway airport which has no slacks to absorb even the smallest disruptions, disrupting the travel of millions of passengers annually. Not only does the company disregards most of its passengers’ complaints, but it expects them to bear the high costs of disruptive travel. It looks as the attitude of ignoring passengers experiencing delays and cancellations is deeply ingrained in company culture.
No wonder that the mainstream and
social media are flooded with unflattering stories about easyJet customer
experience, complaints, and airline refusal to compensate delayed passengers.
EasyJet has been named as an ‘airline that is difficult to deal with’, ‘the most
complained about airline’ and often listed as one of the ‘world’s worst
airlines’.
The airline is about to face a
drop in annual profit for the second year in a row, despite low fuel prices and
no significant external disturbances that wouldn’t affect other airlines. There
is more to be done to put easyJet back to its feet than counting the increase
in aircraft, flights, passengers, and load factors, which in this case proved
to be counterproductive.
What easyJet experienced following its major change in business model is what has been happening with hub airlines across the industry ever since the industry deregulation, just skilfully hidden behind figures in company reports.
British Airways
Despite the fact that the BA's low-fare high-cost experience is at its early stage, there are strong signals
that this strategy following the earlier merger with IAG may pan out not to be as good as originally expected. This
may not be reflected in BA financial and operational reports yet, but signs of a
drop in quality haven’t passed unnoticed by BA’s most valued customers who
shared their experiences publicly.
Some of them provided insightful comments
and suggestions, like Martin Geddes, a frequent flyer, loyal BA customer,
Executive Club Member, and Executive Club Gold card holder whose connection
with BA is partly emotional (his father worked for BA for 34 years). As a
frequent flyer, Martin was often in a position to experience operational and
service mishaps, especially those affecting full fare passengers. His views about recent changes in BA service quality and how they affect
business passengers are described in his post 'Brand Suicide Case Study British Airways'.
This is a rare chance to learn about quality pitfalls and disjointed services
at various stages of a journey of an airline passenger which is not unique to British Airways.
Another valued BA customer,
Executive Club Member Scott Martin, MD Costa Express, has given up on BA after two decades of loyalty. This followed the recent drop in quality which he found
unacceptable and has already taken over 15 business flights with a BA
competitor in 6 months. His experience is described in 'Have British Airways Lost The Plot'?
So, BA has already lost Scott and is on the way to losing Martin. It may have difficulties to compensate for the loss theoretically equivalent to 500 low-fare passengers in six months. How many more passengers are sharing the same experience? If their numbers start growing exponentially, how realistic would it be to replace them with more low-fare passengers considering already high load factors? And
how long will it take for the new low-fare passengers to realise that their
disrupted journey can cost them much more in money, time, and anxiety that they
are willing to bear.
As airlines don't measure impact of quality issues on overall business performance, they can grow unabated and come more costly than anyone can perceive - they can wipe out many of locally confined cost savings.
Until the emerging methods for measuring quality become ingrained in standard practices, there are the elements of quality that could be improved without hard investment, something human and simple, things that Seth Godin described in his post ‘Maybe your customer isn’t trying to save money’:
Perhaps she wants to be heard instead.
Or find something better, or unique.
Or perhaps customer service, flexibility and speed
are more important.
It might be that the way you treat your employees,
or the side effects you create count for
more than the price.
The interactions in the moment might be a higher
priority.
Or it could even be the sense of fairplay and
respect you bring (or don't bring) to the transaction.
All this prompted me to think:
wouldn’t it be good for airlines to occasionally invite passengers like Seth,
Martin, Scott, or other fresh thinkers to inspire leaders stuck in daily
routines and bring them closer to real life?
