Airline passengers, particularly high-income flyers, are finding the skies a lot less friendly these days. As airlines seek to manage skyrocketing costs, it comes as no surprise that their primary solutions — price hikes and fewer frills – are being met with jeers rather than cheers.
In fact, a new survey released by research firm PhoCusWright, found that while most travelers have a lukewarm feeling about their carriers, more consumers feel worse about their airline experiences now than they did few years ago. To make matters worse, airlines’ most profitable customers – high-income and business travelers — are far more likely to be dissatisfied with their airlines than are the rest of the flying public.
“Fliers are essentially giving airlines a grade of C+, which is barely above satisfactory,” said Carroll Rheem, research director, PhoCusRight. “But even more concerning for airlines is that their most valuable customers – business travelers and those with higher annual household incomes – are even less happy than the average.”
That news shouldn’t come as an epiphany for major U.S. airlines like Delta (NYSE:DAL), AMR Corp.’s (NYSE:AMR) American Airlines, United Continental (NYSE:UAL), Southwest (NYSE:LUV), US Airways (NYSE:LLC) and Alaska Air (NYSE:ALK). After all, with oil prices sailing over $107/barrel on Friday, they’ve got to find all that extra money for fuel somewhere.
And that somewhere happens to be in their passengers’ wallets. In fact, raising ticket prices in the face of more expensive fuel could help airlines hold on to 70% of their profit this year, J.P. Morgan analyst Jamie Baker noted.
Still, the fact that fare hikes and belt-tightening are necessary doesn’t dispel the feeling of many passengers that their airlines are taking them for a ride – and not the one they bargained for. Here are five facts about the trend in angry airline passengers:
- Both business travelers and affluent travelers (annual household income of $100,000 or more) are less likely to feel positive about their flying experiences and more likely to have negative sentiments, the survey said. Affluent passengers are nearly twice as likely as travelers with annual household incomes of $50,000 or less to have slightly or very negative sentiments.
- Consumers’ attitudes have soured since airlines started adding baggage fees and other new charges: 38% of leisure-only U.S. travelers feel slightly or substantially worse about their airline experiences compared to a few years ago. More significantly, 40% of business travelers feel their experiences have gotten worse.
- Passengers are less than enthusiastic about buying add-on services like preferred seating and priority boarding. Even though this presents a strong revenue opportunity for airlines, passengers increasingly feel like carriers are taking advantage of them.
- Glitches and delays are inevitable, but passengers howl with protest anyway. Case in point: when Alaska Airlines experienced computer problems last weekend, more than 12,000 passengers had their travel plans disrupted – and many were still waiting for flights on Tuesday and Wednesday. Result? The news media couldn’t swing a dead mouse around Sea-Tac Airport over the weekend without hitting a vocal group of disgruntled Alaska and Horizon Air customers.
- Incidents involving unruly passengers are on the rise. Last Tuesday, a United flight from Washington, D.C. to Portland, Ore. had to be diverted to Chicago because of three unruly passengers. Everyone onboard had to deplane at O’Hare and be re-screened by security and the three men involved in the fracas were removed from the plane before it could proceed to its destination.
Bottom Line: All that having been said, airlines either have to cover the rising cost of doing business, or get into another line of business. And when push comes to shove, they will make the right business choices, not the popular ones. And that increases the odds that passengers will be feeling a lot less love for their carriers for some time to come.
As of this writing, Susan J. Aluise did not hold a position in any of the stocks mentioned here.