Have We Become a No-Frills Society?

ST. LOUIS, Aug. 12 /PRNewswire-USNewswire/ -- The following commentary was written by Dr. Benjamin Ola. Akande, dean, and Richard Ryffel, adjunct professor of finance, George Herbert Walker School of Business & Technology at Webster University in St. Louis:

At JetBlue, the customer is always right; unless you're flight attendant Steven Slater and you're having a bad day, of course. In that case, you go on an expletive-laced rant and make an exit from the plane that would make a great pre-flight safety video.  

It might be easy to excuse his behavior as just one fatigued flight attendant being "tired and not taking it anymore," as Howard Beale said in the 1976 film Network. But there is more to the American business culture and the airline industry that makes it likely we'll see an increasing number of such courtesy-challenged employees in the future.

What gives us confidence in predicting this sort of escapade will become more commonplace?  The answer is the inability of airlines, their employees and their customers to agree on a profitable value proposition and allow equilibrium to return to the market.

Companies rushing to the cost leadership sector of the Porter Curve have dumped costly product features like a plane dumping fuel to make an emergency landing. To keep prices low, companies have cut quality and the level of service. Consumers, as a result, have become accustomed to free cell phones, $10 DVD players, disposable cameras, $5 five-minute massages and $99 coast-to-coast airfares. But, as we all know, you do get what you pay for, and since we pay little, we get little. Ellen Ruppel Shell noted this in her book, "Cheap: The High Cost of Discount Culture." 

Let's compare two cost-conscious, capital-intensive businesses - auto manufacturing and airlines.  While automakers have historically done well at positioning premium value packages, airlines have not.  Automakers, from almost the very invention of the motor carriage, have offered consumers a basic entry-level vehicle and, via tiered pricing, allowed consumers to move up the value curve.  Toyota offers the basic Camry, the SE, the LE and the XLE.  The basic car is a great value.  If you want luxury, you buy it.  The XLE is a phenomenal car.  We are all familiar with Alfred Sloan's model for GM using different nameplates for different price and value points.  

Airlines have gone in the opposite direction. Air travel began as an exotic service available only to the wealthy.  After deregulation, it became more pedestrian.  And then when oil prices rose, air travel became more costly to offer.  Yet, many consumers still have a romantic notion of the way it used to be and how relatively little it cost.

To try to survive in this new world, airlines have tried a number of strategies, from implementing hub and spoke systems, to creating airlines within airlines, such as Ted (United), Jazz (Air Canada) and Song (Delta).  Taking the opposite approach of automakers, airlines have also stripped their product to its skeletal basics - a seat on a plane that does not crash.  Anything else you want, you pay extra for.  You want to check a bag, speak to a human being, have a few inches to stretch out in, change your flight, standby, sit in an exit row - we'll assign a value to it and make you pay for it.  This is taken to the extreme by airlines such as Spirit and Europe's Ryanair, which have considered charging for carry-on bags and using the lavatory.

We'd love to be a fly on the wall for the focus groups their marketing departments hold.  Question - You are on a cross-country flight and need to use the restroom. Would you be willing to A) pay $5 to do so, B) pay $10 to do so, C) hold it, or D) soil yourself. I once flew People Express (the inventor of this air-travel madness) and was told at the counter when inquiring about a delay - "For $99 each way you can't expect the flight to be on time."

But Americans' desire for low prices is not consistent with our desire for comfort. We all want a champagne breakfast on a beer budget. That makes us resentful when we are asked to pay "extra" for features we want – unlimited minutes, unlimited miles, a longer warranty.  We all want a deal – something for nothing.

The result of airlines' race to the bottom is that customers are resentful. They feel that if they are paying "extra" for it, then it had better be perfect. If it is not perfect, it is the client-facing employees who hear about it. With more individual items being assigned a measurable value, there are more opportunities for unmet customer expectations - the warm beer, stale snack or dirty blanket.  When all these items were "free" it was harder to be resentful at every turn.  

This doesn't even take into account how mad many passengers are made by TSA-related indignities they suffer prior to boarding the plane; or worse, the passengers who endure being imprisoned on the tarmac due to air traffic or weather delays.  All this animus is often unfairly directed at the carrier's line employees.

But let's not put all the blame on the passengers. Airlines also have cut employee pay and benefits and made work rules inflexible. This leads to stressed pilots and flight attendants and resentment on their part as well. I remember a flight on Eastern years ago as they were spiraling into one of their numerous bankruptcies and recall listening to two flight attendants complaining openly about airline management as they served drinks.  Now that is customer service - Coffee, beer or whine with your meal, sir?

Thankfully, FAA oversight limits how much pilot resentment can impact passengers, since resentment on their part would have safety ramifications. Imagine, for a moment, if Mr. Slater were a pilot. Perhaps instead of deploying the emergency slide, he would have brought the plane in high and hot to give everyone a good scare!

This combination of frustrated employees and impatient passengers is an airborne powder keg. It is only a function of how many passengers are on the plane, how much sleep the attendants have had and how long the flight is. At some point, something is bound to erupt.

It is easy to see both sides of this story.  It is impossible to excuse either.  We fly a lot.  We've been frustrated by bad service, bad food and bad weather. We've had pleasant flight attendants and shrews. We've been in good moods on our way to vacation and in bad moods after long business trips.  We've also had difficult bosses, challenging clients and unfair feedback. Professionals act professionally and adults act courteously.

But since we know it is naive to expect everyone to behave appropriately all the time, airlines must create work environments that reduce employee frustration. They must devise a value proposition that does not create customer resentment. And they must train and monitor employees to ensure that tensions are defused and fatigue does not set in.

The good news is that this situation is beginning to resolve itself. Employers are learning that morale is so bad it is impacting them in ways they never imagined (How many people canceled trips on JetBlue this week? Will any sue?).  They must respond by improving conditions for their employees.

Passengers, too, are beginning to realize that being "nickeled and dimed" is not a good alternative to fully priced, high-value air travel. Smart airlines will seize this business opportunity, as Southwest and NetJets already have in drastically different fashions.

For everyone's sake, we hope this happens quickly.  If not, we may end up leaving the driving to Greyhound.

With its home campus in St. Louis, Webster University (www.webster.edu) is a worldwide institution committed to delivering high-quality learning experiences that transform students for global citizenship and individual excellence. Founded in 1915, Webster offers undergraduate and graduate degree programs through five schools and colleges, and a global network of more than 100 campuses. Its 20,000-plus student population represents almost 150 nationalities.

Since opening its first campus overseas in Geneva in 1978, Webster has become a recognized leader and innovator in global education. The University's Study Abroad programs rank in the top 2 percent of the more than 1,400 colleges and universities surveyed in the "America's Best Colleges" 2010 edition of U.S. News & World Report. Webster is one of just 34 U.S. institutions to share this distinction. The University's international presence now includes campuses in London; Vienna; Amsterdam and Leiden, the Netherlands; Shanghai, Shenzhen and Chengdu, China; and Bangkok and Cha-am, Thailand. Webster also has educational partnerships with universities in Mexico and Japan.

SOURCE Webster University -- Saint Louis Campus

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