Both Gerry Wingenbach of The Tarmac and Tim Winship of FrequentFlier.com reported earlier today about the state of commercial aviation worldwide financially as announced in Cape Town by Tony Tyler, director general and chief executive officer of the International Air Transport Association.
Are Worse Times Ahead for Airline Passengers?
Although overall profits are expected to increase for commercial airlines worldwide in 2013, the actual profit margins themselves are expected to be slim — 1.8 percent, to be precise. Both Wingenbach and Winship point out that that equates to airlines earning about four dollars for every passenger carried — “less than a cost of a sandwich in most places.”
How long will it be before the airlines need your help again? I do not believe those days are coming anytime soon — but I do believe that they will return one day.
Look no further than the discussions around FlyerTalk — especially in the forums for frequent flier loyalty programs based in the United States. Read about how many FlyerTalk members are outraged and frustrated about what are being perceived as changes which are unfriendly to the customer which alone have been implemented in 2013 — changes euphemistically known as enhancements.
Better yet, ignore me. Go to any of the other weblogs located at FlyerTalk, First2Board, Upgrd.com and BoardingArea.com — or even any of the independent weblogs — and you will not need to conduct an exhaustive search to see the anger and disappointment pertaining to veteran frequent travelers who have been loyal to particular airlines for years.
Sure, you can argue that the frequent flier is but a miniscule percentage of the customer base of airlines — but how many of them are what are considered by the airlines to be high-value customers who significantly contribute to their bottom line? Airlines in North America are expected to deliver a profit of $4.4 billion in 2013 — but is increasing fees and eroding benefits to save a few bucks the answer?
I am not a betting man — but I would have to say “no.” Angering your loyal customers now in lieu of short-term profits could prove to be detrimental in the long run. Frequent fliers look to the benefits offered with elite status which they have enjoyed for years to help mitigate the travails of travel — such as long lines at airport security checkpoints, the ability to enjoy an airport lounge and its offerings, and the ability to not have to redeem 630,000 frequent flier loyalty program miles simply for one person to enjoy a single free trip plus the cost of taxes and fees, including fuel surcharges.
Are worse times ahead for airline passengers? I would argue that the answer to that question depends on the type of customer — but I would also say that from the perspective of the frequent flier, the “worse times” have already begun.
The good news is that those times will not last forever, according to a comment posted by FlyerTalk member BlueEyedDevil:
“It’s just a business cycle. The better the airlines do, the worse for the high value flyer — they don’t need us as much. The airlines are doing great so they’re cutting our benefits. When the market turns they’ll come crawling back with new presents to swoon us.
It’s just how it is, don’t cry about it. Ride the wave in the good times and take what you can get in the lean times. But lean times never last long because in the end the frequent flyer always has the upper hand in the long run because airlines can’t stay profitable. Anytime they have a bit of success they run themselves right into trouble and right back into the arms of the high value flyer.”
…but then again, FlyerTalk member Asiaflyguysummarizes that “Airlines are some of the worst managed companies in the country IMHO.”
What do you think? Let’s discuss this. I look forward to your comments. Thank you.