How to squeeze your customers – The Economist (blog)

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IMAGINE you are in a room with the boss of a big American airline, and he asks you where he should invest the company’s resources in the coming year. What would you tell him?

Airlines for America, an industry group, asked this question to flyers from the United States in a survey released last week, and they overwhelmingly chose “onboard comfort” as the top priority. In the same survey, when asked to rank the importance of various in-flight factors, the number one choice by far was “legroom/seat comfort”, selected by 89% of respondents who flew at some point in 2015 (see chart).

That should come as no surprise in a time of ever-shrinking seats, when Congress regularly considers (and just as regularly rejects) legislation to mandate a minimum legroom standard. But when asked how they actually make their travel decisions, those same respondents said it came down to money. “Total travel price” was ranked as important by 86% of those who flew in 2015, more than any other factor. The next three most-cited factors were airline schedule (83%),total travel time (77%),and household finances (76%).

These are, of course, conflicting priorities. Passengers can’t expect cheaper fares and more legroom without sacrificing, well, something. (Lavatories? Flight attendants? Aisles?) They are trying to have it both ways. It won’t happen.

Airline executives will not get mixed messages from the survey. They will see very clearly what their customers are saying: gripe though they may about cramped conditions and poor amenities, flyers simply don’t make their travel decisions based on those factors.

What is more, passengers’ top priority on board a plane—legroom—is the most costly to accommodate. Flying a jet is expensive: it takes fuel, maintenance, airport fees, and wages for pilots and flight attendants. Most of those costs are fixed, pretty much. So the best way to make healthy profits is through airfare. In order to keep fares low, airlines need to pack as many people onto the planes as they can. More legroom equals less revenue, or higher fares. By contrast, the in-flight factors that survey respondents said weren’t all that important—power outlets, entertainment, and internet access—are generally cheaper to implement, since they don’t come at the expense of revenue.

Much as airlines try to get passengers to pay for upgraded comfort, most simply don’t bite. According to the survey, 70% of American personal (as opposed to business) travellers flew basic economy in 2015, rather than splurging on premium economy, business or first class. Airlines aren’t the only ones feeling the pinch when travellers make their choices on the basis of their wallets. Only 19% of survey respondents were enrolled in TSA PreCheck, which would allow them to pay $85 to skip the long lines when passing through security. That stinginess is part of the reason PreCheck is falling well short of its goals and causing lines to become even longer.

Business travellers may be more likely to pay for perks than holidaymakers, although the survey provided few details on that front. But flying isn’t about business as much as it used to be. According to the report, 47% of all trips were for business in 1997; in 2015, that number was just 31%. Which gives those leisure travellers, who have to pay out of their own pocket, more clout. Flying might be on the rise, with just shy of half of all Americans hitting the skies last year, compared with one-fifth of Americans in the early 1970s. But their message to the bosses of America’s airlines could not be clearer.

How to squeeze your customers – The Economist (blog)

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