I’ve been emailing with a reader about the state of customer experience on US airlines, and I thought I’d share some of the conversation here, because it opens up a discussion about whether US airline service and experience is as bad as everyone seems to suggest, and whether everywhere else has it as good as we all think.
The point that kicked off the discussion was this: US airlines are now very profitable. Given that, why don’t they invest more in the experience, at least for premium travelers? Why should people who fly all the time feel like the rug is always being pulled out from under them?
My response (shortened) was this:
I think the airlines are figuring out the minimum service level required for each class…
As much as everyone complains, the airline industry is the healthiest it’s ever been. Literally ever. There is probably the right amount of competition, fares are high enough to turn a profit but not so high that demand is suffering, and people who just want very cheap fares have options on the low end. And I know everyone whines about service, but basically all domestic aircraft will have wi-fi and entertainment on them in the next 2 years. I’d trade a 2007 Continental half-turkey sandwich for that any day.
There is no other country in the world with an airline industry like ours. Large country, highly competitive airline marketplace, no flag carrier nor ex-flag carrier, and because of geography and visa laws, no possibility of using anywhere in the country as a transit point. So it’s not like the Middle East. It’s not like Singapore. It’s not like any airline in Europe. It’s its own entity, and it’s not really a passenger service industry, it’s just a utility. So for the first time ever they’re acting as a rational actor in a commodity environment: maximize pricing while minimizing cost at a place where you optimize revenues. Voila.
Singapore was a luxury provider because they didn’t fly short-haul and they were competing solely for long-distance traffic (primarily with BA and Qantas). Emirates was initially competing with Singapore for connecting traffic between Asia/Australia & Europe, so they had to compete with them from a service perspective. Then Qatar and Etihad had to match. The European airlines haven’t been historically profitable, and they have never figured out how to make short-haul work.
US carriers have to do all of that – short haul, compete with lowfare airlines on the same routes, while not being able to benefit from, say, connecting traffic between Europe & South America. They’ve done the most with the hand they’ve been dealt, no?
If you fly a 2-3 hour flight in Europe, there is likely no first class, no wi-fi, and no television. Yes, they give you a sandwich.
If you fly a 2-3 hour flight in the US, I’d say there is a 75% chance that you have a first class cabin, wi-fi, seatback TV, and paid something resembling a reasonable fare. A one-way ticket from Amsterdam to Frankfurt is $600.
The big 3 have now elevated the Transcon product to be perfectly acceptable for a 5-hour flight – full entertainment and wi-fi, a food offering of some sort, and really sold premium cabin options (remembering that it’s a 5 hour flight).
I think the issue is that US carriers do not compete on service in a long-haul environment. They’re somewhat subpar in a mid-haul environment (say <8 hours), but they offer a perfectly acceptable product for that distance. It appears to me that US short-haul travelers simply will not pay for the other stuff. They won't. They apparently will on transcon flights (because there's enough entertainment and finance industry business to support it), so the airlines have invested there. I wish I could see a future where airlines offered a better "more fun" flying experience. But nobody will pay for it. And because literally for the first time in the history of the US airline industry they've actually figured out how to make boatloads of money, I cannot imagine them making any crazy changes right now. So, I'm not sure service is actually bad. It seems to me that the airlines have focused investments on areas where customers will pay for it. Essentially, you've traded free food, drinks & pillows for paid wi-fi and television. I actually think that's a pretty good tradeoff, and well ahead of what most other airlines offer on flights under 5 hours in their regions.