Delivering Superior Customer Value in the Airline Industry
In operating every business efficiently, anything that is related to customers should always be considered and prioritizes; as such, delivering superior customer value is integral. This is particularly true in the airline industry, where customers are the main reasons for the success of the business. The JetBlue Airline is one of the leading airlines in the industry. Despite the challenges that JetBlue faced in terms of delivering superior customer value, it established a close relationship between its crew members and its customers which further added value to the company.
In every industry, competition is always an ubiquitous entity that companies must deal with. Customers tend to patronize the services or purchase the goods that efficiently meet their needs and specifications. Customers are also demanding more for superior value from the products and services. They are also more knowledgeable about and sophisticated in judging the products. For these reasons, companies adopt market-driven strategies that give a clear picture of the market, customers, and competitors. In addition, companies recognize that enhancing customer value would enable them to achieve superior shareholder value (“Market-Driven Strategy,” n.d., p.3).
The customers are the most critical asset of a business, and they are the company’s source of value. Companies also recognize the fact that if they establish customer relationships, it would provide them with enduring profit. As such, they should maximize customer value and incorporate it into their business goal (Pease, n.d.). In today’s world, businesses have also acknowledged the importance of delivering superior customer value. Superior customer value refers to generating business experiences that far exceed the expectations of customers. As such, companies endeavor to “delight and wow” their customers because they know that once they deliver outstanding value, their buyers can become lifetime customers (Weinstein and Johnson, 1999, p.4).
The importance of customer value has been widely acknowledged by different businesses such as Yahoo!, Starbuck’s, Amazon.com, and Wal-Mart. Customer value has helped these companies and many others to design and implement winning marketing strategies to be able to stay on top of the industry, while being competitive in the market. Moreover, customer value is important because if it is further improved, it can enable companies to extend and synthesize the quality of their service; thus, leading to the success of the business. Customer value is also seen as a driving factor for companies, especially the service and information-based companies, for their survival. Furthermore, managing customer value will enable them to have a competitive advantage in the industry (Weinstein and Johnson, 1999, p.3).
As companies understand that customer value can have advantages for their businesses, they develop value-driven marketing strategy to help their operations in different areas including: understanding customer choices, identifying customer segments, avoiding price wars, building customer loyalty, strengthening communications, improving brand success, increasing competitive options, improving service quality, developing strong customer relationships, and focusing on what is meaningful and important to customers. The design and delivery of superior customer value is still being improved and mandated for management. Once the companies have designed and delivered superior customer value, they can be assured that more and more customers will patronize and purchase their goods and services (Weinstein and Johnson, 1999, p. 5).
Accordingly, the airline industry adapted value-driven marketing strategies to attract customers and retain them. This comes handy especially during times of economic uncertainties. Many airline companies have incorporated customer value in their operations as they know the effects of having happy and satisfied customers in their services (IBM Corporation, 2008).
Challenges of Delivering Superior Customer Value
For an industry that consists of many airlines vying for the customers’ patronization, there are certain challenges that every airline company faces in terms of delivering superior customer value. There are some airlines which come out successful in adapting to the challenges and resolving them. There are also airlines which do not live up to the expectations of their customers. Delivering superior customer value should be one of the priorities that airline companies must include in their strategy if they want to be recognized as having services that meet their customers’ needs. The following sections will discuss the challenges associated with customer value in the airline industry.
People want an inexpensive way to travel, especially at a time when the economy is in an uncertain state. They patronize airlines that offer them the best price that their finances can afford. The challenge for airline industry is to offer costs that would appeal to their customers. However, this is a relatively hard goal to achieve. There are security costs, airport usage fees and other charges for using the air traffic navigation system, infrastructure costs, fleet renewal and growth, and other costs (Grossman, 2007; Joyner, 2007). All of these are passed along to the travelers, and in most cases, all the additional costs cause trouble and hassle to the passengers (Grossman, 2007).
Certain airline companies took advantage of this information by devising strategies to relieve their customers of the expensive costs of air fare. Southwest, in particular, has recognized that having a low cost would attract customers. In America, Southwest has the lowest cost of air fare. Southwest has also devised strategies to further meet the needs of their customers. For instance, Southwest can freely offer low prices because the airline’s planes return during the night. Compared with other airlines which return half full during the night, Southwest offered half the price of the day travel for those who will travel at night. This strategy particularly appealed to the customers. In addition, Southwest does not offer meals, just snacks such as nuts and beverages. This way, customers are not forced to pay a higher cost for their meals. It is also their prerogative whether to bring their own meals or not (Britt, Romes, Ross, Santarelli, Calamita, 2002).
Establishing a Brand Value in the Industry
Establishing a strong brand image in the industry is another challenge for airline companies. Those airlines which provide a satisfactory service to their customers, which remain competitive in the market, and which establish strong relationships with customers will definitely be known to the industry and the business world.
JetBlue Airlines is known and self-branded as a carrier offering low-cost discount trips (Smart, Saydalikhojayev, and Craig, 2007). Other airline companies must realize the importance of making authentic brand promise to be able to satisfy their customers (Nigam, 2008, p.5). This is not the only importance of establishing a strong brand value. Companies can build influence in the airline industry if they have a strong brand value. Having a brand value refers to the companies’ endeavor to construct communities around the product and the service leading to a strong relationship (Ross, n.d., p.4).
Companies can meet this challenge by focusing on the brand experience. This is because customers today prefer the airline that gives the best overall value. Moreover, focusing on the brand experience will lead to customer retention and will attract other customers that are not satisfied with the competition (Ross, n.d., p.4). In the long run, this can benefit both the company and its customers.
Providing Convenient and Cost-effective Service
Other than the affordable cost in air travel, customers demand a convenient and cost-effective service. Companies also endeavor to meet the challenge of providing their customers with travel experience considered as “improving value.” This is challenging because of the effect of the price increase in fuel in providing the best service (Ross, n.d., p.4).
Many airlines resorted to new automated technology to assist their loyal customers in their transactions with the airline. For instance, airlines have implemented online booking of tickets and electric tickets. This way, customers can do these things voluntarily and independently to save time. This means that these customers are loyal to the airline company, and they might recommend the airline to other customers (Chen and Ling, n.d.).
Furthermore, customers can book their flights through the Internet. This eliminates the need to have a ticket, as the trend today is ticket-less air travel. The customers just need to have the identification and the confirmation number of the flight. This way is more efficient because the customers are spared from allotting hours just to book flight reservations. Additionally, the company benefits at the same time, because online reservations reduce the amount of labor services for the booking process. Aside from these, customers can save money because online reservation would only cost around a dollar compared to booking reservation through travel agencies which would cost around $7. The airline company can also save money because there is no need to print tickets (Britt, Romes, Ross, Santarelli, Calamita, 2002).
Furthermore, there are airline companies which offered a “Low Fares, No Frills” service to their customers. This aimed to reduce the costs while delivering friendly and efficient service. These airlines offer snacks or beverages, which customers can purchase at their convenience. They can also bring their own meals. Aside from these services, certain airlines such as Southwest and RyanAir (Europe) offer point-to-point service. Since the airlines offer low fare, they make sure that they will arrive on-time in their destinations. To enable the efficiency of this service, the airlines cannot transfer baggage to other flights. But they suggest that customers do not book any connecting flight (Britt, Romes, Ross, Santarelli, Calamita, 2002).
Another convenient and cost-effective service offered to customers is the policy of no advanced seating. The passengers are served on a first come, first serve basis. They are free to sit anywhere they want. This reduces the chance of passengers boarding the plane earlier. This also reduces any delays since customers are expected to arrive 30 minutes before their flight departure. If customers are late, they will lose a guaranteed spot in the plane. Airline companies found out that this also benefits them because they can be more punctual with the departure and landing schedules.
Quality of the Equipment and Service
Airlines’ mission must to deliver the best quality of equipment and service to their customers. The JetBlue Airlines ranked second in the annual national Airline Quality Ratings (AQR) in 2007, with Air Tran leading the list. AQR was a survey conducted to judge the quality of airline service that airline companies provide to their customers. However, providing a high quality of equipment and service to the passengers becomes a challenge that weighs on airline companies due to the rising costs. According to researchers, there was a notable decline in the overall performance of the airline industry because companies are losing money. Added to this is the rising cost of fuel. As a result, airline companies have to cut back on their services and on people (AQR Aero, Inc., 2008).
Airline companies spend large amounts making sure that their equipment is of best and perfect quality and their service meet the expectations of their customers. The JetBlue customers loved the new planes, low fares, and assortment of snacks that JetBlue provides (Gittell and O’Reilly, 2001).
Intense Global Competition
The competition between airline companies is brought about by the growth in the industry. When the deregulation took effect in 1979, there has been a notable growth in the airline industry. Deregulation and competition have spurred the growth in the industry, wherein the growth continued for the following years (Gowrisankaran, 2002).
Airline companies know that remaining competitive in the market is another way to attract and retain customers (Britt, Romes, Ross, Santarelli, Calamita, 2002). In global competitive markets, companies need to establish their resources and meet the needs and expectations of their customers (Chen and Ling, n.d.). In addition, companies that are market-oriented are in a more competitive position when it comes to providing superior customer value (“Market-Driven Strategy,” n.d.).
However, being competitive in the global market is a challenge because there are some companies which try to suppress competition. They do this by using their dominance of hub airports to be able to keep the fares high and thus block any competition, especially from new competitors. The large and major airlines usually compete with low-fare airlines by implementing unfair practices that abolish competition. The crucial issue of competition confronted by many airline companies affects the states or countries where there are few airlines. Being competitive is hard to achieve, and is further worsened by the consolidation in the airline industry (Miller, 2001).
Building Strong Customer Relationships
Years ago, customer service was in a bad shape in the airline industry. In 1997, it was reported that customer complaints reached 70 percent. The complaints stemmed from issues such as delays, cancellations, confusing airline rates, job actions by employees, and crowded and oversold flights. Moreover, companies prioritized achieving their bottom line than giving a satisfactory service to their customers. Some companies also failed to understand that attracting and retaining customers would be possible once they offer good customer service. This issue has negative effects as a customer will likely share a bad customer service experience to 72 people, while a satisfied customer will share his experience to 12 other people (Ransford, 1999).
Furthermore, this challenge faces every business and company, not just the airline industry. If carried out properly, it would benefit the airline industry as a whole. This is one of the keys that make an airline company successful. Having a strong relationship between the company and the customer would mean that the company can enjoy the positive effects the relationship can have on the operations. Moreover, establishing a strong customer relationship will enable the airline company to sell additional products and services. This challenge can also give the company opportunities to remain competitive. There are studies which showed that every five years, a company loses half of its customers. In addition, obtaining a new customer would cost five to ten times than to keep an existing customer (Jiang, 2003).
Only recently were much attention focused on prioritizing customers. Companies came to understand that establishing customer relationships would lead to airline business growth. Companies are challenged to provide customers with a satisfactory service throughout the experience. Moreover, companies should continually learn and keep track of their customers’ needs, lifestyles, and behaviors. Once the companies achieve this, they would be enabled to create a specific value proposition for their loyal customers; which further leads to consumer loyalty (Jiang, 2003).
JetBlue started its operations in 2000. The airline was known for offering low costs of air travel and providing the best quality of service to their customers. Aside from these, one of the advantages of JetBlue is having a more service- and customer-oriented approach. David Neeleman, the founder f JetBlue, has envisioned the company to be customer advocates, and to provide customers with a high quality service that is affordable (Gittell and O’Reilly, 2001).
One of the reasons behind JetBlue having such a high level of service is because the company hires the right people for the job and treats them well. Neeleman believes that treating the employees, which the company calls as crewmembers, right will influence them to do the same to the customers. This helps achieve the company’s goal of providing customers with a satisfactory air travel experience. Additionally, JetBlue is different from its competitors because it constantly endeavors to create a “customer-friendly environment” towards a more successful business operation (Wynbrandt, 2004, p. 152).
Furthermore, Neeleman believes that the company must listen to what the passengers have to say. Customers’ feedback must be given importance (Wynbrandt, 2004, p. 153). The JetBlue Airlines has shown its dedication to its customers’ opinion during an incident after the Valentine’s Day in 2007. Flights have to be canceled and passengers were stranded due to an ice storm. Some passengers waited for as long as 11 hours (Silverman, 2007). JetBlue responsibly responded by quickly apologizing to the customers. Moreover, the company made sure that each passenger was contacted either through phone or email to personally apologize. The employees who called the customers asked the opinions of customers about what happened and what can be done about it (Kercher, 2007).
As a result of the incidence, and to further show JetBlue’s dedication to its customers, the Customer Bill of Rights was introduced. It aims to compensate the passengers for cancellations or delays (Silverman, 2007). Aside from this policy, JetBlue has also offered its customers a loyalty program called the TrueBlue Flight Gratitude launched in 2002. TrueBlue Flight Gratitude is an online program whose purpose is to reward and recognize its loyal customers. This loyalty program will offer incentives to further increase travel using JetBlue. Additionally, the program is designed to offer customers with additional features and conveniences. For every one-way trip flown, a member gets one point. Once the member reaches 100 points, he will be rewarded with a free round trip to any JetBlue destination (Securities and Exchange Commission, 2002).
Another thing that sets JetBlue apart from other airlines is that its CEO is involved with the operations. This is not something one would usually observe from other airlines or companies. Neeleman would sometimes assist the passengers in placing their bags into the overhead bins or help the luggage handlers in loading bags into the cargo. Neeleman serves as the role model for the employees, showing that the little things matter to the customers. In turn, employees are trained early on to assist passengers who have carry-on bags and place it on overhead bins. Many people from the airline industry compliment JetBlue for this action because the normal scenario is that flight attendants do not help passengers with their bags. Another thing that keeps JetBlue’s passengers satisfied is the fact that Neeleman communicates and interacts with the passengers once the plane is airborne. He and the flight attendants would also hand-carry and distribute snacks and refreshments to the passengers to reduce any inconveniences on the part of the customers during the flight (Wynbrandt, 2004, p. 153)
Providing superior customer value is one of the things that the company instills to its crewmembers (Johnson and Weinstein, 2004, p.317). JetBlue has succeeded and continues to do so because they make sure that the customers are satisfied with their air travel experience. Having employees that treat their customers in a way that they want to be treated is not something new to the company. As strong relationships are formed between the employees and the customers, this further adds value to the company. This is because customers will continue to patronize their favorite carrier, and not even incidents such as the one during the Valentine’s Day can change their minds. Customers know that they will get their money’s worth and the value they want when the airline company meets their needs.
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