Interesting interview in Ad Age with Richard Branson on the launch of Virgin America’s new routes to Ft. Lauderdale. The highlight? When asked what legacy carriers could learn from Virgin America, he responded:
They basically should get out a clean white sheet of paper and start again. Most of them are beyond repair. They got far too big and have management groups that don’t care about customer service. The experience the traveling public gets on those other carriers is pretty dire.
He’s right, of course, but I think there’s a bigger issue: legacy carriers were built by operations guys who knew how to run an operations-focused company. That worked very well when fares were regulated and they were all-but guaranteed a profit (they were basically utilities). When you deregulated, they were able to reap solid profits when people had to fly (when the economy was good), but died a slow, miserable death when people stopped showing up on their doorsteps.
Newer airlines, starting with Southwest and continuing through Virgin America, saw customer service (and style, in some cases) as a way to differentiate the business. This wasn’t a superficial decision — certainly, they run solid operational parts of the business; but decisions are quite obviously made from a team that is focused first-and-foremost on customer experience. That makes a massive difference.
Branson hit on that when he said that legacy carriers need to start with a blank page (which is really saying that they have no chance). Yet we’ve been saying that for a looooooong time. I think that Continental has shown that (in some part) legacy carriers can change and create a customer-centered organization. But it’s not easy. And once Virgin America gets on better financial footing (which is beginning to happen), they’ll be a JetBlue-sized major player. How can US Airways compete with that?