According to a JD Power survey of nearly 13,000 passengers who flew on a North American airline between April 2008 and May 2009, customer satisfaction declined due largely to unfavorable customer perceptions on in-flight services, flight crew, cost, and fees.

The importance of developing customer loyalty is part of the crisis airlines face today; this is particularly challenging as charging additional fees is viewed as one of the top tactics to increase revenue. “Unfortunately, any improvements in customer satisfaction are being offset by passengers’ displeasure with cutbacks on in-flight services, increases in fees, and issues with the helpfulness and courtesy of flight crews,” said Dale Haines, senior director of JDP’s travel practice.

These two surveys show additional fees are heavily relied on to increase revenue; however, these fees hinder clients’ appreciation for good customer service. Fees may generate revenue during a tough quarter, but they are undermining their brand’s value. Which is more important? Despite their annoyance to the flyer, ancillary fees have become an integral part of the airline revenue structure. Unfortunately, from a loyalty perspective, long-term brand value does not strengthen immediate revenue. On the flip side, the increase in fees coupled with the lack of clear communication surrounding them have resulted in a steady decline of customer loyalty and brand value.

It’s true that fees are bolstering bottom lines, so is there a way for airlines to keep fees without making customers feel like there’s a trick around every corner? Yes, with transparency.

Of course not every carrier can eliminate baggage fees like Southwest (despite losing $16M in 2009), but all carriers can be clear about what the fees are for and how customers will be charged. For instance, RyanAir “comes clean” on all its charges on its website, which provides a simple table with the facts and data a customer might need to figure out the additional cost on tickets.

Communicating clearly and honestly with customers is just one way to increase revenue through fees while improving customer satisfaction. Airlines can also extend brand value through appropriate trends and promotions. For example, Alaska Airlines recently launched “Mystery City Savings,” offering a 25% discount off fares between Portland, Oregon, and a new destination each day for five consecutive days. Customers are encouraged to log onto AlaskaAir.com to check out which new destinations will be highlighted each day.

“Rollover Minutes” (AT&T’s claim to fame) has just entered the loyalty program sphere. Marriot Rewards is applying this “rollover point” strategy to their hotel loyalty program. With “Elite Rollover Nights,” guests, who stay more nights than they need to achieve an Elite status, can roll those extra nights into 2010. Stemming from this, Delta Airlines recently initiated a rollover program, for members who are at least Silver status. The program allows 2009 miles to be rolled over toward qualifying in 2010—an offer sure to create a more enjoyable customer experience.

After all, it’s that experience, which when aligned with any carrier’s brand promise, supports financial business growth.

According to the Sabre Airline Study, customer loyalty and retention efforts are viewed by most airline decision makers (86 percent) as having the most positive impact on their businesses. Simultaneously, airline customer satisfaction has fallen to its lowest level in four years.

But enhancing the overall customer experience through clear, consistent communications and interactions increases customer satisfaction, retention, and loyalty—giving airlines the fuel to obtain both increased revenues and brand value.

This entry was posted on Thursday, February 4th, 2010 at 10:20 am and is filed under brand. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.