The airline industry has flown straight into a storm of problems. Cost-cutting, security concerns and economic uncertainty have clipped the wings of a once proud and respected industry that struggles every day to deliver and increase customer satisfaction to millions of consumers.
When an industry is ranked lower in customer satisfaction than the Internal Revenue Service, it’s a sign that there’s trouble brewing. That’s where the airline industry finds itself, battling some bumpy turbulence following a May report from the University of Michigan.
Consumers don’t find the skies too friendly any longer, as the airline industry scored a paltry 63 on a scale of 100 on the American Customer Satisfaction Index (ACSI). The airlines’ worst score ever was two points below the IRS, a government organization notorious for having a bad reputation.
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Several airlines have been hit by a multitude of problems in recent years, which have delivered a body blow to customer service. Bankruptcy, increased fuel costs, cutbacks and security concerns have all led to disenchanted employees, fewer on-time flights and more lost luggage. A perfect storm of problems have led to record-low customer satisfaction.
“Airlines are suffering from a nexus of factors that are creating a drop in the overall experience of air travel,” said Howard J. Ross, a customer satisfaction expert and president of a Maryland-based consulting firm. “The security issues, overcrowding and a downgrading of some positions has all played a part in my experience.”
The Michigan study found United Airlines (56) and Delta Air Lines (59), both of which are coming out of Chapter 11 bankruptcy, finishing at the bottom among all airlines. Several other major airlines such as Northwest (61), also suffering with financial problems, didn’t finish much higher.
The study asked approximately 20,000 people during the first quarter of 2007 to rate their level of satisfaction across 19 industries. The only industry to rank lower than the airlines was the cable and satellite TV industry at 62.
Meanwhile, the ACSI found that customer satisfaction as a whole was at an all-time high. The overall index increased to 74.9, its highest level since the survey was first conducted in 1994. Retail and financial services saw the most gain in customer satisfaction improvements, with major stores like Costco and Best Buy scoring well, as well as banks Wachovia and Wells Fargo.
At this point in time, airlines can only dream of the numbers the financial and retail industries are pulling in when it comes to customer satisfaction. In spite of rising fuel costs, security issues and labor woes, Delta’s CEO James Whitehurst knows exactly where the problem lies, commenting in a recent MSNBC story that “the root cause of why we are in bankruptcy is because we lost sight of the customer.”
What can airlines do to recapture some consumer trust and satisfaction? Start by unlocking the secrets of one of its own – Southwest Airlines. The low-frills carrier scored highest among airlines on the ACSI with a 76. Southwest operates on a smaller scale than the bigger airlines, but what it does, it does very well.
“Southwest didn’t have the financial problems all the other airlines did, and so they could continue doing what they were doing well,” said Chuck Cowan, a Birmingham, Alabama-based Ph.D. and financial analyst. “I’d say the basic problem is that airlines are drowning and cutbacks to stay alive are impacting customer satisfaction. Southwest isn’t having the same problem because they hedged against fuel price increases and they haven’t had cutbacks.”
Achieving high levels of customer satisfaction can’t be accomplished simply with meetings and PowerPoint presentations. It takes an investment in people. Home Depot made a $350 million investment in store operations, new hires and more training, which helped the retail giant improve its ACSI ranking by 4.5 points in 2006.
The airlines will have to do more with less, operating with a lot fewer employees. In 2000, U.S. carriers had 672,294 workers on the books. In 2005, that number dropped to 529,590, according to the Department of Transportation’s Bureau of Transportation Statistics. The result? The 20 airlines reported an on-time arrival rate of 73.1 percent in January 2007, down from 78.8 12 months earlier. Mishandled bag reports also shot up from 6.93 per 1,000 passengers to 8.19 in the same time span.
Customer service lies at the heart of the airlines recovery plan. As the Michigan report defined, “the first step in improvement here is to recognize that something is wrong.” No doubt the industry has done just that. But follow through is what’s key here, so when flight delays, lost baggage and weather-related problems strike, the airline industry is going to have to go above and beyond the call of duty if it’s going to regain any traction in customer satisfaction.
Dr. Jan West, Ph.D.
National Business Research Institute, Inc.