retail news in context, analysis with attitude

Interesting confluence of stories in recent days about the airline industry, which currently is being investigated for possible collusion - the US Congress has suggested that by limiting flights, major airlines are in fact conspiring to keep prices high and limit consumer choice.

In the case of these two stories, the subject has more to do with how they treat their customers ... and the impact it could have on long-term brand equity.

For example, the New York Times had a story about all the extra fees that passengers now have to pony up when they fly:

"Some airline passengers view high fees, an increasing number of fees and poor disclosures as sources of friction when traveling. But even with recent meetings among regulators, pressure from lawmakers and now a Department of Justice investigation into possible collusion among airlines, the airlines’ penchant for fees is not going away any time soon in what has become a highly profitable industry ... A recent analysis of 63 airlines by the airline consulting firm IdeaWorksCompany and sponsored by the travel-technology service CarTrawler found that these airlines earned $38.1 billion in ancillary revenue, or revenue from nonticket sources, last year."

Now, not all of that $38.1 billion was from fees. But a lot of it was. And passengers don't like it ... not that they can do much about it, since pretty much everybody charges those fees.

The Times also had a story the other day about how, "over the last 18 months, Delta Air Lines ... no longer posts any award chart explaining how many miles your free tickets will require, the way that United and American Airlines still do" for their frequent flier programs. "But Delta also hasn’t moved to a transparent miles redemption system that is based entirely on the cash price that the 'free' ticket would otherwise cost, as Southwest Airlines and JetBlue Airways do.

"Instead, Delta issues proclamations like this one that came along a few weeks ago: 'For travel on or after June 1, 2016, the number of miles needed will change based on destination, demand and other considerations. But most Award prices will remain unchanged.'

"Which destinations? How much demand? What other considerations? Which prices? The airline won’t say. You’re just supposed to cross your fingers and hope that you have enough miles come vacation time or if you have to get to a funeral quickly. Or hope for some magic."
KC's View:
For me, stories like these about the airlines serve as a reminder that brands do have a breaking point, and that brand equity doesn't last forever, especially if the brand abuses the customer for its own purposes.

Right now, we're in a period where lack of competition seems to be hurting the customer, but regardless of what conclusions the government comes to, I suspect the tide will turn at some point, either because one of the big airlines decides it is in its best interests to change policies, or because some new competitor comes onto the scene with a plan to disrupt the way the major airlines work. And then, the airlines may have to face the music, as it deals with customers that they disenfranchised for years and years.