Budget Airlines' Secret: First-Class Customer Service

Giving customers what they want is one way to make up for small size.
By Elizabeth Blackwell ,

This hasn't been the greatest week for airlines.

AMR's

(AMR)

American Airlines has been canceling hundreds of flights to check wiring on its jets, leaving stranded passengers steaming. Whistle-blowers from the FAA are testifying before Congress about lapses in safety inspections. Low-cost carrier ATA recently shut down and filed for bankruptcy.

Then came the final blow. Researchers at the University of Nebraska at Omaha and Wichita State University announced their annual Airline Quality Ratings. The headline-grabber? As a whole, airlines received the lowest scores in the 17-year history of the ratings.

Ouch.

But believe it or not, small businesses can learn something from this bruised and battered industry.

Take those Airline Quality Ratings, which measure criteria such as baggage handling, on-time arrivals and how often ticketed passengers get bumped.

Which airlines scored best on customer service?

Air Tran

(AAI)

,

JetBlue

(JBLU) - Get Report

and

Southwest

(LUV) - Get Report

-- all of which just happen to be low-cost carriers.

How do these upstarts -- with lower-paid employees -- manage to deliver better service than the big guys? Any small business can follow the lead of these airlines to shoot to the top of customer-service rankings.

1. Know What Matters

Sure, we'd all love to return to the days when cross-country flights meant free meals and seats with enough space to stretch your legs. But ask an airline passenger if she would rather have a roomy seat or an intact suitcase, and guess which one she'll choose?

Find out which criteria are key for your customers and focus on those above all else.

"Airlines do a bad job in just about every dimension," says Professor Claes Fornell, director of the National Quality Research Center at the University of Michigan's Stephen M. Ross Business School. Fornell leads the research team for the American Customer Satisfaction Index, which found that airlines ranked at the very bottom of customer-service ratings. (The other two losers? The IRS and cable TV.)

However, Fornell points out, discount airlines focus on travelers' most important needs. "They do a better job providing the basic service: delivering you to your destination, more or less on time, with your luggage," says Fornell. "The major airlines are operating with a business model that no longer works, and they're probably slashing costs in the wrong areas."

2. Underpromise and Overdeliver

Entire books have been written about Southwest's successful marketing, but just as important is what the airline

doesn't

sell: an image of airline travel as glamorous or relaxing. Passengers don't book a flight on Southwest or Air Tran expecting a luxurious getaway; they're picking a relatively affordable way to get from Point A to Point B. So when an Air Tran or Southwest passenger is able to board their plane on time and pick up their bags afterward -- the bare minimum for a successful plane trip -- they walk away satisfied.

Larger airlines push their first-class and business-class amenities to draw big-spending corporate travelers. But the discount-fare crowd doesn't get anywhere near that level of service -- and they walk away resentful.

People are willing to put up with some low-cost inconveniences (like Southwest's cattle-call boarding process) if the end result measures up to what they expected. If you keep your customers' expectations realistic, it's that much easier to dazzle them.

3. Location, Location, Location

When it comes to baggage handling and on-time arrivals, smaller airlines may benefit from something that seems like a handicap: their out-of-the-way location. JetBlue and Southwest avoid high-traffic airports such as Atlanta's Hartsfield and New York's LaGuardia, where delays are common and the sheer amount of bags coming in and out makes mix-ups more likely.

A location away from the center of the action -- and your big competitors -- can seem like a disadvantage. But the cost savings from that less-than-desirable spot can be used to lower prices, convincing customers that you're worth the trip.

Once you've got those loyal customers, they're a powerful force. Southwest, for example, has had planes grounded for safety inspections -- and recently got hit with a $10 million fine from the FAA -- without any noticeable drop in bookings. JetBlue suffered a PR nightmare a year ago when it canceled flights for days with no explanation, yet the airline now pulls in high customer-service marks.

This is a dismal time for many industries. But if you get customers on your side, your business can still fly high.

Elizabeth Blackwell is a freelance writer based in Chicago. She is the author of Frommer's Chicago guidebook, and writes for the Wall Street Journal, Chicago, and other national magazines.

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