Dr. Helen

Does Air Travel Discomfort Start on Wall Street?

Yes, according to this NYT’s article:

When an unlucky passenger was violently dragged off a full United Airlines flight in Chicago in April, setting off a public-relations nightmare for the company, the blame naturally fell on the cabin crew, the police and eventually airline executives.

But ultimately, the episode was set in motion elsewhere — on Wall Street.

Relentless pressure on corporate America is creating an increasingly Dickensian experience for many consumers as companies focus on maximizing profit. And nowhere is the trend as stark as in the airline industry, whose service is delivered in an aluminum tube packed with up to four different classes, cheek by jowl, 35,000 feet in the air.

“There’s always been pressure from Wall Street,” said Robert L. Dilenschneider, a veteran public relations executive who advises companies and chief executives on strategic communications. “But I’ve been watching this for 30 years, and it’s never been as intense as it is today.”

Rich bonus packages for top executives are now largely tied to short-term income targets and fatter profit margins instead of customer service. Of course, bolstering profits — and in turn, stock prices — has always been a big part of management’s responsibility to shareholders, but making it virtually the only criterion for executive pay is new.

The blame is on Wall Street but others view customer’s only paying attention to price as the reason for problems:

“The response isn’t to Wall Street. It’s to customer behavior,” said Alex Dichter, a senior partner at McKinsey who works with major airlines. “About 35 percent of customers are choosing on price, and price alone, and another 35 percent choose mostly on price.”

Mr. Dichter noted that when American added two to four inches of legroom in coach in the early 2000s, “as far as I know, the airline didn’t see one bit of improvement in market share or pricing.”

“The great irony is that most C.E.O.s would love to compete on product and experience,” he added. “It’s much more fun. The problem is that customers aren’t paying attention to that.”

I think part of the problem is that everyone is flying together in the same plane regardless of price. Sure, you can pay extra for first or business class but my experience lately is that it is pretty crummy on some flights and okay on others.

If the plane is delayed or cancelled, it doesn’t matter that you paid extra for first class because sometimes the re-scheduled flights just put you in coach or wherever there is a seat without a refund so it isn’t always a better experience. I wish there was some way to have those who are care only about price fly certain airlines and those who are willing to pay for a more premium airline fly another. But who knows if it would be profitable.

What do you think?