- For the Airline Industry, comfort aboard the airliners is one of the key factors that determine customer satisfaction. This comfort is itself driven by certain aspects of the airline product. As industry analysts and research indicate, the need for comfort is higher on long haul flights compared to short and medium haul flights. Long haul flights are defined as non-stop flights that remain airborne for periods longer than 6 hours.
Going by the feedback available on the internet, the airline industry isn’t doing a good job at meeting its customers’ need for comfort. The passenger feedback sphere is dominated by negative reviews criticizing airlines’ on-board product; mainly on grounds of a perceived lack in certain features that are important for passenger comfort. In an article written for the Denver Post and titled “Most hated thing about flying? Uncomfortable airplane seats” Chris Michaud asserts that the airplane seat is currently the most hated part of the airline experience. He credits this assertion to the 2013 findings of the authoritative American Consumer Satisfaction Index (ACSI) for the transportation industry.
Boeing and Airbus who are the dominant suppliers of airliners used for long haul flights seem to be in agreement. Both declare that the features of an airline seat are critical drivers of passenger comfort. This inference can be drawn from the assertions made in the publicity materials they use to market their wide body airliners. Both identify Space, Seat Pitch and Seat Width as the key factors that drive Passenger Comfort on board. Seat Pitch refers to the distance between rows of seats while Seat Width is the measure of the lateral size of one seat. Combining the two measures yields the personal space available to a passenger on board a plane. What comes out clearly also is the fact that varying row configurations (number of seats side by side) results in significantly different comfort levels. Boeing for example points out that the 3-3-3 configuration across a cabin increases the probability of a passenger sitting next to an empty seat when cabin loads are lower in the sixties range.
Who has the Say on Seat Pitch and Seat Width?
Considering the fact that both Boeing and Airbus have esteemed comfort so highly and demonstrated a considerable measure of cockiness highlighting the significant investments they have made in research and technology in order to maximize the passenger comfort aspects of their products, one would have expected them to be implicit with their recommendations to the airlines on the best configurations to apply on their products. However, as it is, they both stop short of prescribing and leave the decision to the airlines. My theory is that Boeing and Airbus leave it to the airlines to determine their own configurations since this decision plays a critical role in airline economics.
A “simple” Problem that Requires a Complex Solution
Based on our observation in the preceding paragraph, the responsibility for the negative passengers’ reviews on grounds of Seat Pitch and Seat Width lye’s on the shoulders of the airlines. On the surface, this should be a simple and straightforward problem that airlines should be able to solve simply by reviewing the number of rows and columns of seats configured on board their aircraft. However, rather intricate economic dynamics come into play and end up transforming this seemingly simple problem into a genuinely daunting one.
The economics of the airline industry are quite complicated and this is chiefly due to the widely accepted assessment that there isn’t sufficient demand to sustain the industry if the industry was to charge only the price capable of delivering economic profit. Making matters worse is the fact that in spite of the apparent lack of demand, entry into the industry is easy and is largely driven by factors other than economics. The end result is a business environment characterized by cutthroat competition which ultimately hands significant bargaining power to customers at the expense of the airlines. The airlines aren’t lucky either with their suppliers. The latter have stronger bargaining power relative to the airlines, a phenomenon that pushes airlines costs up and diminishes profitability.
Taking the industry’s pricing practice as an example to illustrate the aforementioned complexity, we can highlight the contradictory goals of discounting (in order to stimulate demand) while also going after price maximization (in order to maximize revenues) as an aspect of complexity that makes pricing such an intricate affair. Moreover, the fact that all of this is done against a background of stiff competition creates a phenomenon where the pressure to discount prices tends to exceed the ability to push fares upwards.
Strategy is the Key
In scenarios such as the one we are facing here with the passenger comfort problem, creativity and distinct performance capabilities become critical strategy elements. They would also serve as differentiation and factors. Organizations that are distinctively competent and creatively astute can successfully carve out (for themselves) profitable and sustainable niches from the wider market. Once created, the differentiation must be sustained for longstanding exploitation and gain.
From a marketing strategy perspective for instance, an approach such as the Six Strategies for Niche Marketing advanced by Clemons, Nunes and Reilly (2010) would be a possibility. According to the authors, the six marketing principles which are listed below can allow a company to manage the complexity of the niche marketing strategy and lead the company to reap superior profitability. They emphasize that this would only apply if the six principles are applied in an integrated way. The six principles are as follows;
- Target Carefully: Sweet Spot offerings must be different from the mainstream, must be superior in value and must resonate powerfully with their intended consumers
- Listen to your Consumers: The key is to “really” listen to your consumers. This requires tuning into the consumer channels. The key however is to react quickly to whatever is picked up.
- Control Production Costs: Costs must be managed for profitability
- Control Distribution Costs
- Remember that Some Apparent Losers are worth Keeping: Some offerings may not be profitable in themselves but will contribute to the overall profitability of the company portfolio
- Prune the Product Portfolio Ruthlessly: Drop the offerings that do not contribute to profitability directly or indirectly
Jet Blue’s Example
The industry has examples of players who have used the strategies and approaches that are in line with the six principles discussed above to achieve superior performance. We could look at Jet Blue as an example. Jet Blue has distinguished its product from the “commoditized” industry offering by putting forward a superior product at a discounted value. By setting its Seat Pitch and Seat Width offers at levels superior to the industry average, Jet Blue has decisively satisfied her customers’ top need of comfort while also maximizing the customer’s value by minimizing cost. The combination of those two aspects have endowed JetBlue’s offering with such a compelling value.
The success of Jet Blue’s strategy is indicated by the fact that the low-cost carrier is not part of the industry’s negative statistics with regards to comfort. Rather, the airline is a leader with an enviable list of awards received over the years for its customer friendly product and service. For example, the JD Power and Associates award for Customer Satisfaction in the Low Cost Airlines category has been Jet Blue’s for the last seven consecutive years. In an article titled “Jet Blue looks to stand out in industry’s middle seat” Karen Jacob’s states that the low-cost airline has been profitable since 2009 even though its return on investment is lower compared to its larger competitors in the US market. Perhaps what it misses profit-wise is made up for by the superior customer satisfaction which guarantees long running success as opposed to short term high profitability followed by losses.
In order to appreciate the magnitude of Jet Blue’s effort, one would have to consider the fact that the 32-34 inches of seat pitch and 17.8 -18.25 inches of seat width that this Low Cost carrier is offering on its narrow body regional jets is superior to the average of the same features as offered by full service carriers on wide body fleet. The result is a short to medium haul product that is superior to a significant proportion of the industry’s long haul product.
As it turns out, Jet Blue’s is a case of a bold move aimed at distinguishing the low-cost carrier’s offering from the crowd while at the same time ensuring that the offering is great enough to resonate powerfully with the target market. That goal has been achieved.
Could Current Capacity Slack facilitate Seat Pitch/Width Improvement?
Jet Blue’s example above proves that in spite of the complexity of its economics and competitive nature, room exists within which industry players can play in pursuit of differentiation that would enable them to carve out profitable niches from the general market. Options exist such as the following for the seat pitch and seat width domain;
- Current Capacity Slack can be utilized to Improve Seat Pitch/Width: Since the average load factor in the industry is never 100%, the underutilized space can be applied towards improving seat pitch and width. The lower the average load factor, the bigger will be the room available to play with.
- Seat Pitch/Width Based Product Differentiation in Coach: There is opportunity to shift to product differentiation based on seat pitch for the economy cabin. This approach may even be more understandable for customers compared to the current approach which uses rules and restrictions such as minimum stay. The value that can accrue to a seller when customers understand product feature is well captured in the blog post titled “Jet Blue Demonstrates the Right Way to Increase Your Fees” posted on the “Cranky Flyer” blog in May 2013. The blogger praises Jet Blue’s methodology chiefly because it is logical and more understandable from a customer’s perspective when compared to the general industry approach.
- Extra Seat Pitch in Low Season: Seat Pitch can be varied with seasonality. Extra pitch may be offered in low season and promoted as a benefit to attract new customers or reinforce product value and drive loyalty. Such an approach is superior to discounting prices in order to attract volume. This is possible since aircraft can be reconfigured back and forth without significant cost.
All of the above can be done at various scales. The extra pitch and width may be offered uniformly across the entire cabin. It is also possible for a multiple of products differentiated on the basis of seat pitch and width across the cabin. It is all up to the airline to do its analysis and determine its approach.
Sources of Information:
- Clemons E., Nunes, P., & Reilly, M. (2010, May 24). Six Strategies for Successful Niche Marketing. Retrieved from http://online.wsj.com/news/articles/SB10001424052748704130904574644084205858424
- Michaud, C. (2013, June 18). Most hated thing about flying? Uncomfortable airplane seats. Retrieved from http://www.denverpost.com/tourism/ci_23484106/most-hated-thing-about-flying-uncomfortable-airplane-seats. June, 18, 2013.
- Costello, C. (2013, June 18). Customer Satisfaction with Airlines Is a Dismal Failure. Retrieved from http://www.smartertravel.com/blogs/today-in-travel/customer-satisfaction-with-airlines-is-dismal-failure.html?id=15220556. June, 18, 2013.
- Tinseth, Randy. (2010, March 08). Dreamweaver. Retrieved from http://www.boeingblogs.com/randy/archives/2010/03/dream_weaver.html.
- Passenger Comfort and Space. (n.d). Retrieved from http://www.airbus.com/innovation/well-being/inside/passenger-comfort-space/
- The American Customer Satisfaction Index. (2013, June 18). ACSI Transportation, Accommodation, and Restaurant Report 2013. Retrieved from http://www.theacsi.org/news-and-resources/customer-satisfaction-reports/customer-satisfaction-reports-2013/acsi-transportation-accommodation-and-restaurant-report-2013
- Our Planes. (n.d). Retrieved http://www.jetblue.com/travel/planes/
- Jet Blue Demonstrates the Right Way to Increase Your Fees. (2013, May 20). Retrieved from http://crankyflier.com/2013/05/20/jetblue-demonstrates-the-right-way-to-increase-your-change-fee/
- JetBlue looks to stand out in industry’s middle seat. (2013, Mar 26). Retrieved from http://www.reuters.com/article/2013/03/26/us-jetblue-outlook-idUSBRE92P0DY20130326