Airlines headed for a crash

While it's fresh on my mind, I'll share my terrible customer experience on American Airlines. The plan was to fly from DFW to Zurich to Copenhagen, then hop on a train for 30 minutes to arrive in a small town in the south of Sweden. So we boarded the plane and sat in purgatory (the interminable time between boarding and take-off) for an hour until the pilot announced that the plane was officially out of service and they're trying to find us a new airplane. Knowing (along with most of the other passengers) that I wouldn't make my connecting flight, I was fortunate to get at the front of the line at the ticket desk to find out my options. The two gals working the ticket desk were 1) either new or incompetent, as they kept having to ask supervisors how to get things done on their computers, and 2) flat-out rude. One of them actually turned to the supervisor and audibly said, "Can I go work at another ticket counter? I just can't take it here anymore." (Excuse me? Isn't this your job?) No apologies to the passengers, nothing. We were treated like hassles to be endured, not valuable paying customers who had been greatly inconvenienced by their airline. Anyway, they finally got me on a flight to London/Gatwick, where I then spent almost 4 hours transferring over to Heathrow before continuing on to Copenhagen.

Is it any wonder that the airline industry is in the toilet and in need of a major overhaul? A recent commentary on MotleyFool shares another bad flying experience and says:

These businesses (major airlines) are largely failing for two reasons. One, their antiquated structure makes it exceedingly difficult to bring costs in line with revenues. Two, they provide a commodity product in a service industry, yet overall they offer an abhorrent level of service to their customers...

Is it really a surprise that US Airways is likely heading for its second bankruptcy filing, or that Delta (NYSE: DAL) is knocking on the default door as we speak? How about American (NYSE: AMR)? Are Northwest (Nasdaq: NWAC) and Continental (NYSE: CAL) looking good to you these days?

Certainly these companies have -- with your money -- helped to build the infrastructure that makes modern air travel possible. But it would take a complete rewrite in order to make these dinosaurs competitive with the JetBlues (Nasdaq: JBLU) and Southwests (NYSE: LUV) of today (not that I'd recommend those stocks either).

Personally, I believe a fundamental change is taking place in the airline industry as we speak. Further, this change will ultimately create a completely different view of what it means to travel by air in this country, and the major carriers simply won't be able to reinvent themselves in time.

When you're operating in a commodity industry, you've got two choices. Either create a new disruptive product or service that takes you out of commodity status, or differentiate on service. The major airlines are doing neither of these. MotleyFool author Matthew Emmert is right: the airline industry is going to get blown apart in the near future. JetBlue and Southwest have started the shakeup, but there's more ahead. Thank goodness. I don't think change could come fast enough for most of us travelers.

Comments

[Gary Agnew]

And It Gets Worse, Now you better have a Receipt for everything you travel with!!
February 2009 American Airlines charged me $125, for each leg of my trip (a total of $250), to carry the sporting equipment I required for my holiday, it would be reasonable to assume they would take all due care in delivering it to the tagged destination. At the time of this charge, no one ever suggested I would have to produce receipts for the ownership of my personal equipment if it were lost or damaged; however, the agent refused to check said baggage unless I paid the additional fee. The fact that American Airlines was negligent in caring for the items entrusted to them, and there by ruining my vacation, I have not submitted these damages as part of my loss claim, however perhaps I should. I will speak to my solicitor on that point. In fact, the hard sided carry case was smashed beyond repair and the fishing rods inside were missing as witnessed by the Agent in Baggage Claims at the Miami Airport. The one rod that remained in the case was damaged beyond repair. All this was examined by an AA Agent in Miami on arrival.
As American Airlines charged me for the transportation of my fishing poles, in addition to my personal airline fare, it is reasonable to presume American Airlines assumed responsibility of the equipment and therefore are responsible to ensure it was properly insured for its safeguard and delivered to the destination tagged.
Eight months later and several letters AA Management advised me if I cannot produce receipts for my property then the incident never happen. Now that is what I consider client abuse and a management philosophy that condones their employee’s theft practices. I have always believed that you treat others as you wish to be treated and that what goes around comes around. They lost a lot more than just my property they lost my respect.

[Susan Reid]

First of all, let me say that my family and I had a really bad experience with AA on May 11, 2008. Please see my post on complaints.com. I wrote Gerald Arpey, CEO of AA directly. He passed my letter on to their "Customer Service" department and I received an e-mail basically stating, sucks to be you. I have again written Mr. Arpey directly and am waiting "HIS" response. Now with that said, there are no phone numbers to directly call anyone at AA corporate. You can only e-mail them from their website. This says to me that customers do not count. No one wants to talk to you directly. After much internet research, I now see why AA employees are disgruntled and why over a dozen have killed themselves and their families. It is very sad that AA just does not SEEM to care about me as a consumer and MANY, MANY others but they don't care about the very people that make their company run unless they are upper management. I am sure Mr. Arpey and his family have wonderful flying experiences when they take their family trips. That is wonderful for them but what about the rest of us? A blogger named, "Fair is Fair" on another site says that we are to write letters to AA management. What if I have? AA is much like the movie the Wizzard of Oz. There is no clear way to get in touch with the "Wizzrd." There are only smoke and mirrors. While at O'Hare on May 11th, I kindly asked several different AA employees for a number to contact customer service. They each handed me a pre-printed paper that said please call this 800 number with any questions. Almost like Mission Impossible, the number would self-destruct in 24 hours. This says to me that they do not want to hear my voice. After calling the number and becoming entraped by a web of voice commands, I realized that there would be no actual living person to take my call. Again, this told me, I do not matter. I am amazed that a company with this many complaints and internal problems can still be in operation. I feel truly sorry for all the AA employees even though many of them make way more an hour than I do as a school teacher. I see WHY the majority act rudely but I cannot agree that they SHOULD act that way. There are many days I want to take somneone's head off verbally. All jobs have their stress. It is not easy dealing with parents who think their children do no wrong BUT that does NOT give me the right to act unprofessionaly. I don't make what I feel like I should. Do you? I feel teachers are worth way more than they are paid but do I take it out on my students? Of course not! Bottom-line: I would just love to see AA go out of business. Get the fat cats at the top out on the runway at another airline doing the hard labor for a change. Justice is mine saith the Lord. AA will meet its demise.

[JOE]

AA SUCKS AND THEIR EMPLOYEES CREATED WWW.PUPOFF.COM TO PROTEST MANAGEMENT BONUSES.

[Joanna]

It is unbelievable that this airline is still in business. I would never fly this airline again even if they gave me free tickets for life. The rudeness of their employees and their lack of communication is unacceptable. I flew to key west for the weekend of labor day 2006 and every flight was either canceled or delayed, not to mention they lost our luggage. The people at the desk (if you could find them) were so rude I can’t even imagine how this is tolerated among the company. They really need to do the public a favor and just get out of business. It was that bad.

[Rebecca]

American Airlines ruined my anniversary. They to issue a boarding pass to my husband because they did not like what his birth certificate looked like. They claimed that he needed a new one. They were rude obnoxious and jsut plain dumb. I will never fly them again.

[aleah]

I have been seeing more ad campaigns from small airlines these days that take advantage of waning consumer confidence in larger airlines. This lax customer service is also true of many necessary service providers, including public transit.

Too bad there aren't alternatives to government offices. That's where CRM goes to die.

[David Foster]

"The college that can half tuiton costs, improve course qulaity and offer a great campus life will be the Nucor of universities"....I would like to think so, but...Nucor sells steel to people who actually care about the quality of the steel. To a significant extent, colleges sell degrees to people who care only about how the quality of the degree is *perceived* by potential future employees and others. So that brand advantage that (perceived) "elite" incumbent colleges have is far stronger than the brand advantage that the incumbent big-steel companies had in the Nucor case.

[robert paterson]

I think you are right Jennifer. Those with a more community based culture are literally killing the top down guys whose only response to the cost issue is to beat theur staff and treat us like poo. It's a death spiral.

Isn't this the path for all who find a community culture competitior? Nucor and Big Steel. Ebay and every reatiler except Wal*Mart who in practice is very inclusive of its staff and their opinions. Amazon and Barnes and Noble - the list goes on. In Canada I fly the Southwest clone WestJet as often as I can - it is so much better - you feel like you count and the price is amazing.

I think that we are at a tipping point that will extend beyond business. Think of how badly students are treated. The college that can half tuiton costs, improve course qulaity and offer a great campus life will be the Nucor of universities.

[Yvonne DiVita]

Forget flying. Let's all send money to the scientists working on time travel. I'm totally serious. We should be able to get from here to there without the hassle of tiny plane seats, inattentive personnel, rude ticket clerks, cancelled flights, etc. etc. etc. Funny...I wouldn't consider a spaceflight...too dangerous...but I will be the first in line to experience the whole, "Beam me up, Scottie," thing. Your experience makes me reluctant to travel anywhere by plane..but then, that would make Europe as far away as the moon. Big sigh.

[David Foster]

I wonder if it is possible to operate successfully (from a business standpint) in this industry. For each route, you incur high fixed expenses (capital cost of the plane, cost of the crew, landing fees, fuel costs 90% of which are independent of the # of passengers on board), so the dynamics force the participants toward selling at prices which cover only the variable costs (the other 10% of the fuel + the peanuts or pretzels.)

I've heard it claimed that the total net income of the U.S. airline industry since day 1 is a negative number. Anyone know if this is true?

None of which is an excuse for management incompetence or employee rudeness.

[David]

Glad to see you back in one piece!

Air travel has changed a lot since the Sixties. (I won't bore you with the details, but there were cloth napkins, real utensils, and edible meals in steerage, oops, coach.)

Welcome to the Brave New World of the 21st Century where air travel is now only slightly better than a trip on a bus, and some might dispute that.

I have missed your incisive thinking. We are truly dealing with a commodity product here and the quicker the airline industry gets it, the better off we will be.

In the short term, I would expect to see many more blog conversations highlighting the "pleasures" of modern air travel.

[scott]

think everyone has bad days and good days best to make the most of each one,,,smile even when the other folk
are frowning,,,at fast food r3estaurants see this alot,, so much personal interaction,,hard to say
have a nice day with conviction every second,,being "On"
for everyone,,something to say, How's your day been?
Trying to be responsible for our own happiness,not letting others pop the bubble

[Jochem Donkers]

I am always happy to arrive at Copenhagen airport (www.cph.dk). I really like the quality of this airport. I can imagine you were just glad to be at your destination and did not care too much.
Never flew with American Airlines (or any other US airline), and avoided London my entire life. Probably a good idea to stick to that the rest of my life.

Good luck recovering!