Ongoing Changes in Customer Services

As the price of oil rose above $150 a barrel, the airline industry responded by raising fares, cutting unprofitable routes, adding fuel surcharges, and implementing fees for services that passengers previously received at no cost.

With oil now below $120 a barrel, things may look better for the industry, but still have a long way to go before they actually look good.

I wrote before about Southwest Airlines and its unique ability to make a profit in this tumultuous time. In June Southwest Airlines CEO Gary Kelly told the Austin-American Statesman “We are expecting to take more market share. We are planning for that.” How quickly things change.

The Wall Street Journal reports that Southwest will reduce its schedule by almost 200 flights in January 2009. This is a reduction of almost 6% of its daily schedule of over 3,400 flights. In addition, Southwest will proceed with previous plans to add 14 aircraft to its fleet, but will accelerate the rate at which it retires others, leaving the size of its fleet relatively stable.

Southwest has made a profit in every quarter since 1991. It speaks badly for the industry if the nation’s most profitable airline sees the need to reduce service.

I do the majority of my flights on American Airlines. Many years ago American stopped serving meals in coach on domestic flights but thankfully continues to serve them on international flights. However, one airline may be setting the precedent of ending that service.

As part of a service cutback, United Airlines announced that it would stop serving complimentary meals in coach on flights to Europe, instead offering snack packs. And to make matters worse, they raised the cost of the snack packs from $7 to $9 each.

Happily, this turned out to be a victory for all travelers. So many people protested United’s actions that it canceled the change and will continue to serve hot meals in coach on flights to Europe.

The importance of this cannot be overstated. In an era when the airlines are continually adding fees and surcharges to their increasingly expensive tickets while at the same time reducing service, United’s passengers loudly said “Enough!” and the airline listened. This is an important lesson for all travelers: let the airlines know when you are unhappy, let them know you plan to take your business elsewhere. They cannot make any money if you stop flying with them! It’s good to see that the consumer still has some influence.

However, United said that it would stop serving meals in business class on domestic flights, instead offering complimentary beverages and snack items, and this policy has not changed. The importance of this move cannot be ignored: while airlines have cut back on services to coach passengers, this marks the first time that an airline has reduced service to passengers buying the much more expensive (and profitable to the airline) business class tickets. Will any other airline follow suit? We’ll see. It will be interesting to see how many of United’s business class passengers take their business elsewhere.

Finally, US Airways announce that it would no longer award bonus miles to its Preferred status Dividend Miles members. The airline said “By reducing the number of bonus miles issued, US Airways is in a better position to withstand the impact of record fuel prices.”

So far, US Airways’ unhappy passengers have not been able to reverse this decision.

If I had elite status on US Airways Dividend Miles program, I would be looking for a new airline right now. One of the benefits I receive for my Platinum status on American Airlines is double AAdvantage miles on all flights. If the flight is 2,650 miles, I earn 5,300 miles. If that benefit were eliminated, my return on mileage runs would be so poor as to no longer make it worthwhile for me to do them. I hope AA will not follow US Airways in this decision.

The future of air travel
Sadly, air travel is starting to resemble restaurant service more and more. Passengers used to get free meals, free beverages, free blankets and pillows, a selection of newspapers on each flight, and paid no charge for checking their baggage. Those are the old days. We are now moving to restaurant-style a-la-carte pricing.

You go into a restaurant, and they give you a table to sit at, a chair to sit on, and silverware. You go onto an aircraft and you get a seat and a seatbelt.

Do you want an iced-tea at that restaurant? It will cost you $3. Do you want to check your bags at the airport? It will cost you $15 for the first bag, $25 for the second.

Would you like a salad at the restaurant? No problem, that will cost you up to $8. Do you want a snack pack on your flight? Again, no problem, that will cost as much as $9.

In each case, you will have to pay an additional fee every time you ask for something. We may see the day when travelers will have a Travel Options area they can use when making an online reservation. Once they reserve their seat, they will be able to use that area to reserve a pillow, a snack pack, and a blanket, and have the cost included in their purchase price.

The idea seems absurd today, but no more absurd than it seemed two years ago to think about charging passengers $15 to check their first piece of luggage.

When it comes to air travel, the good old days are gone.