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Tuesday, September 29, 2009

Tie your cost accountant to a chair.

One of the main reasons why the US airline industry is composed of Southwest Airlines and everyone else is their fundamental understanding of customer behavior, its impact on their service operations, and how to promote consumer behavior that makes them a more efficient business.

Most famously, it was the airplane seating process – beginning as the “cattle call” and later evolving through multiple iterations of online check-in that have morning travelers setting early alarms the day before they fly, just so they can log in to get that highly prized ‘A’ section seating assignment.

Truthfully though, it is evident in everything Southwest does, which is one of the reasons they are consistently able to stay on time for departures, stay inexpensive and ultimately, stay profitable.

Keeping in mind the customer role the service is also why Southwest has been able to avoid the misstep that almost every other airline has made in charging customers for checked baggage.

Set aside, for the moment, the vehemently negative reaction the traveling public has had to the checked baggage fees. (A reaction Southwest takes GREAT pride in stirring up through their advertising)

In charging $15-$30 for checked bags, the other airlines have demonstrated a lack of understanding about their core service operation.

Planes are making money when they are in the air, not when they’re at the gate. Turn times and on-time departures are critical to an airline’s ability to make money. Everyone who has stood in the aisle while a 110lb non-gender-specific human tries to launch an oversized, 50lb suitcase into an overhead bin 3 feet above their head knows instinctively that the only way to get a plane to lift off on time is to completely separate the loading of people and luggage. (In fact, airlines employ professionals for just this reason, though I imagine their CFO’s at this very moment to be looking at some metric measuring bags per handler per hour and wondering why productivity is slipping.)

By charging extra for checked bags, the airlines ensure that everyone tries to cram as much as possible into the largest carry-on bag they can get away with, causing the overhead compartments to be crammed beyond capacity and requiring overflow processes of their own, all of which creates more time at the gate.

And who does this policy screw, apart from the airlines that created them? Not the business traveler, who can find room for that oversized suit bag if they take long enough. It’s the family of four, with 2-3 legitimate bags, maybe a car seat, that has no alternative but to check and pay. Of course, these customers are now flying Southwest, so it’s not the other airlines’ problem anymore.

By demonstrating a fundamental lack of understanding of how customers in a service environment pull a significant lever on their business’ productivity, most US airlines have incented exactly the wrong consumer behavior, created consumer discord and driven ever more business directly to their most able competitor, Southwest.

Leaves me wondering what's next from this group.

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