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Airline Loyalty Or Just A "Hostage" Situation?


A Million Miles vs. a Few More Smiles

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Jan 14, 2008

James T. Kane, a corporate consultant on customer loyalty, has a news flash for his airline.

“I hate you, and I tell everybody I hate you,” he says. “You could not pay me to get on your airline if I didn’t have to. The reason you think I’m a happy customer is I flew 178,000 miles on you last year — but that’s because I didn’t have a choice.” Like many other frequent business travelers, he finds that there is only one airline whose flight schedule fits his needs.

“I’m not loyal,” he adds. “I’m just a hostage.”

Many frequent fliers share similar feelings about the airlines they, too, fly most often — even when those customers have, as Mr. Kane does, high elite status in mileage programs that provide perks like the occasional free upgrade or priority boarding.

Mr. Kane’s sentiments underscore a quandary for domestic airlines even as the industry compiled a second consecutive year of profitability in 2007, the first time that has happened since 1999-2000. Having cut services, reduced routes and crammed planes full, and having steadily eroded benefits associated with frequent-flier programs, airlines may have alienated their best customers.

And their chief brand-builders, those elite-status frequent flier programs, may merely reinforce a customer’s dislike of a company that he or she feels forced, not motivated, to use, Mr. Kane contends.

“We don’t look on those perks as privileges,” Mr. Kane said. “We merely see them as entitlements. To get mine, I had to fly 178,000 miles last year. At the same time, every delay, every missed connection and overcrowded plane, every bad meal, every time somebody reclined a seat and rammed it into my knees — it doesn’t matter if it was caused by circumstances beyond the airline’s control or not, I blamed them for all of it.”

Mr. Kane’s specialty is helping corporations with customer-relations and marketing strategies. He is a senior consultant and partner at the Brookeside Group, and his clients include Universal Studios, NBC, Major League Baseball, Coors Brewing and the National Park Service.

Airlines often presume deep customer loyalty based on evidence not much stronger than, “I keep showing up,” as Mr. Kane puts it. “The game is, you keep accumulating points with them, but loyalty should come down to whether they’re building up points with you,” he said.

He cites American Express and Amazon as models of companies that know how to build trust and loyalty.

The airline industry notes that mileage programs, which have been around for 26 years, still dole out millions of free tickets a year. But they have steadily cut back benefits by piling on more blackout dates and higher mileage requirements.

“Airlines want to generate as much loyalty as they can, but do it as cheaply as possible,” said Tim Winship, an editor at SmarterTravel.com and an author, with fellow mileage guru Randy Petersen, of “Mileage Pro: The Insider’s Guide to Frequent Flyer Programs.”

“We have got to what could be a tipping point” with the viability of mileage-based loyalty programs, Mr. Winship said. In an article on SmarterTravel.com titled “Frequent Flyer Resolutions for 2008,” he wrote, “My first resolution is to continue my gradual disengagement from mileage programs.”

Analyzing airline loyalty among frequent travelers might seem an academic exercise, because industry cutbacks often mean less choice on many routes or, in some markets, virtually no choice.

There is wider competition, however, on long-haul routes and especially on international routes. Brand-conscious airlines such as Southwest and JetBlue, meanwhile, have built solid and even fervent loyalty based mostly on positive image and customer service, not complex frequent-flier programs. Virgin America, a new airline, is hoping to do the same.

STARTING this year and accelerating in coming years, new domestic competition is also expected from well-regarded international airlines able to fly between more cities in the United States as the new Open Skies agreement between the United States and the European Union evolves.

True customer loyalty is defined by long-term trust that a company anticipates a customer’s needs, Mr. Kane said. “The airlines keep trying to change your behavior rather than changing theirs,” he said. “When an airline makes a big mistake, they want to give me more miles. They don’t understand: I really don’t want to get on your plane under the conditions you’re subjecting me to. Give me good service instead.”

nytimes.com

A Million Miles vs. a Few More Smiles
airliners.net



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