The Airline Industry and its Pursuit of the Elusive Customer Satisfaction

The passenger side of the Airline Industry scores significantly lower than other industries when it comes to customer satisfaction. Taking the airlines operating in North America (USA) for example; a significant persistent gap is seen between the Customer Satisfaction Index (CSI) for Airlines and the same for the All-Industries Average. Research data published by the University of Michigan’s Ross School of Business under the title of the American Customer Satisfaction Index (ACSI) for the period between 1994 and 2012 shows the gap clearly. Furthermore, this data also indicates that the gap has widened by a massive 400% (from a 2 points to 8 points difference) in two decades. The graph below illustrates.

ACSI GRAPH

Comparison of Airline CSI against Average for 47 Industries. Data from The American Customer Satisfaction Index (ACSI) and The Bureau of Transportation Statistics (BTS).

Airlines Have Failed to Soar

The Airline Industry’s’ average ACSI score of 66 points over the two decades that the ACSI study measured puts the Industry second last in the list of 47 industries. That score is modest considering that it is registered on a 100 points scale. It is also significantly lower than the overall average for the 47 industries measured; lower by 8 points (or 11%). Only Subscription Television Service has a lower score!

Cyclic Trend

The following observations can be seen on the ACSI score trend for the Airline industry between 1994 and 2012;

  1. Starting with a score of 72 in 1994, a year-on-year declining trend persisted until the index hit the two-decades low of 61 in 2001
  2. The index then shot up sharply (from the 2001 low of 61 points) to hit 67 in two years
  3. The sharp rise mentioned in “2” above was followed by a period of gradual decline that brought the index down, almost to the lowest level of 61 registered over the period evaluated
  4. The drop in “3” above was then followed by another recovery phase which culminated in the index hitting the highest level (67 points) for the period evaluated

A cyclic trend can be deduced from the observations listed above.

Why is Airline Customer Satisfaction a Problem?

A number of factors interact to create the customer satisfaction scenario described in the preceding paragraphs. These factors can be grouped into two categories; those that drive the perceived value for airline services downwards and those that drive the oscillation between low and high satisfaction scores (cyclic trend).

Factors Driving Down Perceived Value:

The key ones here include the fact that the utility customers obtain from Airline Service is strongly linked to Time, is Highly Perishable and is to a good extent subject to Emotions. This strong linkage between value and time is a challenge for airlines since service recovery for Irregular Operations is usually time-consuming and resource intensive. Noteworthy too is the fact that the Industry’s product is a Premium Product (Due to Cost of production) while a significant portion of its market is of Discretionary nature and therefore Price Sensitive. More still, lack of transparency in the way Airline services are priced and marketed (due to the industry’s yield management concept) leaves customers with doubts over the “value-for-money” they get when purchasing airline products. From a customer’s perspective, these factors combine to create a scenario of significant negative pressure on the perceived value for airline services.

Factors Driving the Cycles in Satisfaction Scores

The cyclic trend of the customer satisfaction index is due to the cyclic nature of the industry’s profitability. As is normal of businesses under siege, periods of negative profitability induce Airlines to spend extra efforts towards Customer Satisfaction leading to improvement in CSI scores. CSI scores end up following the profitability and loss cycle patterns that are typical of the airline industry.

Customer Satisfaction variation with On-Time Performance

Graph showing the Relationship Between CSI and OTP in the US Airline Industry. Data from the Bureau of Transportation Statistics (BTS)

Emotions, Perish-ability and Time Pressure

It is a known fact that significant levels of emotions are attached to the Airline Industry and its perceived Customer Service problems. A search on the internet on this topic is guaranteed to yield a load of forums, sites and articles bashing airlines for their poor service and poor delivery on “value for money”. Dislike for Airlines and their alleged “poor customer service” is a topic people love to discuss and they do so with lots of emotional undertones. Complaints and allegations range from Indifferent and Incompetent Service to Nickel and Diming. Airlines are accused of attempting to extract more from customers for None Value-adding product features. Intentional Misleading with the aim to rip-off is also a charge Airlines have to answer to!

As players in the Airline industry, Airlines have an unfair share of constraints and challenges to deal with compared to other players in the industry value chain. However, that in itself should not be an excuse worthy of preventing the industry from restructuring itself so as to better deal with those constraints and challenges; the customers satisfaction problem included.

Even though some of the issues that drive the Industry CSI downwards arise from factors beyond the control of Airlines, it would help if Airlines structured themselves to handle those service issues adequately, speedily and at the first point of contact. What this means is that Airlines must posses the capability to handle these issues adequately and promptly at ALL customer touch points.

Flight related problems (delays, misconnections and cancellations) constitute the bigger portion of the customer service issues the airline industry  faces.  Airlines can gain valuable Customer Satisfaction Index (CSI) points if they can improve their ability to better handle these flight related problems; the main aim being to minimize Time Loss. It would make a great difference if  every customer touch point can have the capability to understand a disrupted customer’s problem; respond adequately to customer queries; reassure the customer and initiate the necessary steps to resolve the case conclusively and quickly. Such actions would go towards preserving the utility customers derive from airline service when delivered On-time.

The above can also be achieved if Airlines simplify their product and the interface between the Airline and the Customers with the aim to promote self-service at multiple points along the service chain. The benefit of this is that the Airline will be able to pass on to customers more and more of the simplified service responsibilities that they currently shoulder because of complexity. The time saved by relinquishing non-value-adding activities can be used for value-adding activities resulting in a positive impact on the Industry’s CSI score.

Overcoming the Challenges of a Complex and Pricey Product Targeted at Discretionary Spenders

The Simplification efforts previously mentioned should also be of value here. Simplified pricing structure and transparency in marketing should lead to better understanding of the product on the part of customers. This by extension should translate into an improved score for the product on the “value for money” front and ultimately an improved CSI score too.

While not much could be done to remedy the negative perception associable with the airline product because of its high cost which compares negatively against its intangibility and the shortness of its life, it can be hoped that the gains that could be realized from all the other areas discussed can still have a positive impact on the CSI for the Airline Industry.

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One thought on “The Airline Industry and its Pursuit of the Elusive Customer Satisfaction

  1. Hi
    can i have the name of the aurthor please?

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