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A Quick Word about Onboard Product

Those of us in the airline blog world seem to write a decent amount about on-board products provided by airlines (some more than others, certainly; and some taking more photos than others; and some taking many, many, many more photos than others).  But it occurred to me this morning after reading this story which suggested less than 10% of travelers on wi-fi equipped planes actually use the service that on-board product barely matters, if at all.

There, I said it.  Sure, those with a first class fetish (FCF) love that they’re given a $12 glass of champagne with a mediocre meal in exchange for cashing in an extra 60,000 frequent flyer miles, but if we’ve learned anything over the years it’s that airline success has little-to-nothing to do with the product they offer (in the US, at least).

The two most consistently profitable airlines over the past years – Allegiant and Spirit – offer an in-flight product that would be generously described as non-existent.  Many travelers would suggest that Virgin America offers the best coach product in the sky, and they have yet to turn a profit.

Among legacy carriers, Northwest (prior to their Delta merger) offered the least-amenity-filled in-fight product and their financials looked roughly as miserable as other airlines offering some level of frills on newer planes.

The best example of this is American’s ill-fated “More Room in Coach” initiative, which offered exactly what every single coach passenger complained about:  legroom.  Those same passengers then refused to pay any premium whatsoever, and American ripped the seats out.

jetBlue did differentiate themselves with TV (along with consistent great service), but they were unable to grow and keep the same service level consistently, and hence they ended up in a financial situation more akin to what we see from legacy carriers.

First class?  US airlines have upgraded their wares while at the same time showing a massive decrease in premium class bookings, coupled with discounting at the front of the plane in ways we’ve never seen before.

Airlines are a commodity business.  They can market themselves as if they are not; and they can offer amenities to try to differentiate themselves, but in the end, people care only about 2 things:  1) fare; 2) frequent flyer program.  Don’t discount the frequent flyer program – it is a major decision factor for travelers (ask Virgin America…or Eos).  Everything else the airlines offer – wi-fi, TV, food, massage, whatever – have zero value to consumers in coach.  In first class, the only real value offered is some amount of additional legroom (certainly domestically, and for the large part internationally).  Domestic first class fares are pretty much the same, regardless of the quality of the first class product.  Internationally there is some difference in some markets, but not much (if any).  One major benefit for the airlines, though, is that people are willing to burn an extra 60,000 miles for that glass of $12 champagne. That’s not too shabby for the airline.

That all said, you can get on a plane in New York, and show up 8 hours later in Dakar.  And regardless of the food they serve on that plane, it’s still pretty amazing that in the blink of an eye, you can be in Africa.  For all the fetishism around onboard product, the real onboard product – going anywhere you want in the world for less than $1200 – is pretty hard to beat.

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  1. What gets me is that people are constantly complaining about how badly airlines treat people (and they do), but when an airline offers (i.e., AA “More Room in Coach”) to upgrade its service, people won’t pay for it.

  2. Weel, the one time I flew Allegiant, there was a raffle on board and all sorts of fun things. It felt like a cruise ship. It made the trip so much quicker. I don’t know if that counts as “on board stuff” but in my head, it does. And it’s fun :)

  3. Oh, and who cares if we paid 4200$ for a world executive class plane ticket to Amsterdam on KLM when we get a nice little collectible House filled with a shot of some type of hard liquor ;-) Seriously, that 12$ thingy probably works on a couple of us. Just like with employees, give everyone a cool company t-shirt and you’ll see smiles all around, almost more impact than a 3% vs 4% pay raise. I think giving swag works on a lot of folks. Make the plane fun and human. Liek soutwest did with its jokes and Allegiant does with the raffles. We suddenly become elevated from “sardine” to an actual little giggling community. And it doesn’t cost much. Well, for airlines that think that peanuts and snacks are too expensive, maybe skip what I just said. Everyone else, you might consider making it FUN to fly and be part of the hiring process of the onboard crew.
    Just an idea…

  4. It’s actually 3 things: price, frequent flyer program and — perhaps the most important thing — nonstop service. Being an airline of convenience can be more profitable than being an airline of choice.

    And, as a “platinum elite” flyer on a couple of airlines, I like upgrades as much as the next guy. But I like free upgrades because, objectively, there’s not a heck of a lot of value being up front. I suspect “feeling special” has more to do with “FCF” than the actual seats, meals or booze.

  5. You’re right, Americans will consistently buy the cheapest, crummiest product they can, and then complain about how bad it is. That’s not just plane tickets, it includes just about everything at Walmart.

    I used to be annoyed at United for charging extra for Economy Plus, but then I realized that it means that those of us who really care about legroom (I’m 6’4″ with long legs) can pay a modest amount of money and get it. The short guys can sit in back and complain.

  6. I started flying AA explicitly because of the “more legroom in coach” when that was ripped out, I stopped. At 6’3″ I value getting somewhere with my knees intact.

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