New passenger dynamic
05-28-2017 | 04:51 AM
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https://www.nytimes.com/2017/05/28/b...ore-ipad-share NYTimes: Route to Air Travel Discomfort Starts on Wall Street
When an unlucky passenger was violently dragged off a full United Airlines flight in Chicago in April, setting off a public-relations nightmare for the company, the blame naturally fell on the cabin crew, the police and eventually airline executives. But ultimately, the episode was set in motion elsewhere — on Wall Street.
Relentless pressure on corporate America is creating an increasingly Dickensian experience for many consumers as companies focus on maximizing profit. And nowhere is the trend as stark as in the airline industry, whose service is delivered in an aluminum tube packed with up to four different classes, cheek by jowl, 35,000 feet in the air.
For the lowest price comes the most basic product,” said Alan Wise, a senior partner with the Boston Consulting Group, who leads the firm’s travel and tourism practice for North America. “Spirit has been a growth story in the space, and it’s forced the legacy carriers to adapt and innovate.”
To be sure, some industry veterans insist it is a mistake to simply blame investors or hedge-fund managers for fostering a race to the bottom in customer service.
“The response isn’t to Wall Street. It’s to customer behavior,” said Alex Dichter, a senior partner at McKinsey who works with major airlines. “About 35 percent of customers are choosing on price, and price alone, and another 35 percent choose mostly on price.”
Mr. Dichter noted that when American added two to four inches of legroom in coach in the early 2000s, “as far as I know, the airline didn’t see one bit of improvement in market share or pricing.”
“The great irony is that most C.E.O.s would love to compete on product and experience,” he added. “It’s much more fun. The problem is that customers aren’t paying attention to that.”
When an unlucky passenger was violently dragged off a full United Airlines flight in Chicago in April, setting off a public-relations nightmare for the company, the blame naturally fell on the cabin crew, the police and eventually airline executives. But ultimately, the episode was set in motion elsewhere — on Wall Street.
Relentless pressure on corporate America is creating an increasingly Dickensian experience for many consumers as companies focus on maximizing profit. And nowhere is the trend as stark as in the airline industry, whose service is delivered in an aluminum tube packed with up to four different classes, cheek by jowl, 35,000 feet in the air.
For the lowest price comes the most basic product,” said Alan Wise, a senior partner with the Boston Consulting Group, who leads the firm’s travel and tourism practice for North America. “Spirit has been a growth story in the space, and it’s forced the legacy carriers to adapt and innovate.”
To be sure, some industry veterans insist it is a mistake to simply blame investors or hedge-fund managers for fostering a race to the bottom in customer service.
“The response isn’t to Wall Street. It’s to customer behavior,” said Alex Dichter, a senior partner at McKinsey who works with major airlines. “About 35 percent of customers are choosing on price, and price alone, and another 35 percent choose mostly on price.”
Mr. Dichter noted that when American added two to four inches of legroom in coach in the early 2000s, “as far as I know, the airline didn’t see one bit of improvement in market share or pricing.”
“The great irony is that most C.E.O.s would love to compete on product and experience,” he added. “It’s much more fun. The problem is that customers aren’t paying attention to that.”
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