IATA: Customer Satisfaction Alone Is Not Enough To Run A Successful Airline

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IATA just presented and discussed a study which finds that something travelers deem very important is actually not such an important factor for the airlines to stay in business: Customer Satisfaction!

LH A380Keeping customers happy and making money therefore do not stand in such correlation to each other as people might think.

Especially in the area of Cabin Ambiance the grade of passenger satisfaction and overall earnings grows apart since (as per IATA) the high investments in cabin products are not offset by customers who buy tickets due to good seats and cabin interior.

I personally disagree with this but I guess this is an individual decision and maybe some people or companies solely purchase based on ‘Best Price’ or brand while disregarding the actual product.

Travel News website Skift (access here) wrote about the IATA Conference in Hamburg, Germany where details of the study were unveiled.

During a special session on Cabin Trends during the recent IATA World Passenger Summit in Hamburg, Tim Jasper Schaaf, Director Marketing and Sales for IATA, presented the results of a comprehensive passenger study, but could not prove any correlation between making passengers happy and keeping airlines in business.

The study looked at 75 individual passenger experience factors which influence passenger satisfaction, from crew, to services and products. It was based on a survey of 60,000 passengers at 30 major participating airlines in 39 hubs around the world, separated by market and by business or leisure passengers.

I have participated in such surveys myself many times and maybe you have too. 60,000 passengers is a good representative sample based on numbers. Unfortunately there was no reference to the actual study and I wasn’t able to find it on the IATA publication page (see here) either. I’d really love to read a few more details to interpret their numbers and findings a bit better.

“Initially we thought this presentation may also include a link between passenger satisfaction and commercial success,” Schaaf told attendees. “There is academic evidence, across various industries, where they found strong links that if your customers are happy, you’ll be successful. You can measure that, by share price and so on.”

Based on the assumption that the same would prove true for airlines, the group studied financial data from its chief economist, looking at a span of four years of data, to identify the degree to which satisfied passengers made airlines profitable.

“We saw there is no link,” Schaaf said. “We saw that airlines from certain regions were commercially more successful, where maybe, based on passenger satisfaction, on average, they may not have been so successful. But there were other things happening in the region, such as consolidation, that probably allowed them to be commercially successful. We couldn’t really prove that if your customers are happy you’ll be a commercially successfully airline.”

The Economist (see here), also leaning on this article, summed it up in a blunt but realistic manner:

The result of this double-whammy could very well be exactly what many travellers dread, even if their wallets don’t: a further trend toward a bare-bones flying experience, maximising cost efficiency at the expense of an enjoyable flight.

In regards to this I guess it depends on what class of service and type of route you’re talking about. Domestic, continental traffic traditionally has a rather trimmed down version of product in almost all classes of service. For example, flying domestically in the U.S. I’m not sure if you can spiral further downwards than it currently is that case. The same pretty much goes for intra Europe connections where Business Class even bears the same, identical furnishings as Economy Class. Asia is still the most sophisticated market in terms of service and general product quality.

Conclusion

Without doubt many customers are highly price sensitive and this has an effect on the airlines pricing structure and what they are willing to offer for a certain price. The old saying ‘You get what you pay for’ is still very much true and alive.

Running an airline is a thankless job, it’s hard to satisfy customers while running operations under constant pressure of price, schedule and external influences such as oil prices and weather. It’s simply impossible to satisfy every customer, yet scaling your product back too much could catch up with you a few years later.

It takes a long time to renew onboard products and just this situation is what right now creates such problems for the European and U.S. airline: The Middle East carriers such as Emirates, Qatar and Etihad are offering such great products that the competition is toxic and customers are turning on the traditional legacy carriers.

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