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Airline performance and customer segmentation
by LuxLawyer

A few comments on Gross's piece, coming from a somewhat but not extremely frequent flier (I average ~150K flight miles and 80-100 segments a year). In my view, what Gross ought have focused on is not general deterioration of the flying experience, but rather how it, like many other things, is becoming increasingly segmented. In this case, the "haves" are the high revenue, frequent fliers. The "have-nots" are those who fly occasionally.

First, on the data. Gross makes it sound bad, but take a step back. He says that about 19000 passengers were involuntarily bumped in Q1 2007. The Bureau of Transportation Statistics reports that US passenger traffic is about 660 million passengers a year, or about 160 million per quarter. In other words, you have about a 1 in 10000 chance of being denied boarding. Similarly on cancellations. US air traffic is about 900,000 flights a month. 17,000 cancelled flights is about 2%. Annoying when it happens, but not terribly frequent. The overall picture isn't that bad.

Second, and more fundamentally, is the airline management issue. Gross is clearly right that load management is key. But there's also something else that is related to the statistical data--better customer segmentation. Specifically, airlines seem to be getting much better at managing their high value customers (i.e., frequent business travelers). Why are there so many cancellations? Because there are so many flights. That's designed to respond to schedule-sensitive business travelers. For the destinations I go to most, looking only to 3-4 carriers, there's usually a flight leaving every 30 minutes or so. It's great, but it also means that the system is very sensitive to schedule disruptions (hence the >4%, or more than twice the average, cancellation rate at my beloved Chicago-O'Hare). One might think that a hassle for business travelers, but:

  • Frequent fliers are rarely, if ever, involuntarily denied boarding. It's never happened to me
  • Delays and cancellations are annoying, but generally when one occurs, there are almost always other flight options. High-revenue passengers are rebooked or fly standby. If the 8 is delayed until 11, usually the 5 is delayed until 8--so I take the 5 that leaves at 8.
  • The "premium economy" Gross refers to is partially an independent revenue generator, but is mostly a way to offer high revenue passengers in an intermediate class of service on a regular basis (frequent fliers are typically seated in premium economy automatically if it is available).

When I saw the article title, I thought Gross would use the Dickens reference to play up this customer segmentation, since it is both a driver of airline profitability and the source of Dickensian differences in the experience of different flyers. My wife, who only flies a handful of times a year, recently had a very difficult experience. After describing it to me, she asked "how can you do this every week?" I could only muster an honest answer: "I don't."

Re: Airline performance and customer segmentation
by dobbsfox

Excellent post, LuxLawyer. I'm an infrequent air traveler, but I've found the experience far from the Dickensian Hell Gross implies it is. It does help that I don't have small children to carry with me, and I use some basic strategies for getting through the airport experience (i.e. bring something to read and a fully-charged MP3 player).

Maybe you can answer this question. Airline delays are always quoted as being miserable, but how are those calculated? If a flight is scheduled to take off at 5:31 PM and it actually leaves at 5:37, is is considered delayed, and if so, does that six minutes really matter?

Re: Airline performance and customer segmentation
by wmccomninel

The disparity between the haves and have nots which you very clearly describe becomes much more clear still when the decision about who gets bumped is made literally at the 11th hour on a small commuter flight which is the last flight of the night. I fly infrequently but when I was a sergeant on active duty and returning from leave on 2 or 3 occasions I was unceremoniously bumped from the only flight back to Fort Hood from Dallas by a group of last minute arriving VIPs (I assume that they were business men because they were flabby and not about to do PT with me in 6 hours when Fort Hood woke up). I was given no explanation or compensation and told I could take the next flight in the morning. When I spoke up I was told the police would be summoned. Next stop was the rental car desk where due to conventions in town those midsize cars on the lot were not available to me. It was rent the top end Jaguar S type or Chrysler 300 with a Hemi or walk. I would pony up the 4 or 5 hundred dollars for a two day rental to avoid being AWOL and to have time to return the vehicle (being a top end car it had to go back to the same Dallas location and could not be dropped off at the Fort Hood location like a normal rental). I would then rent a different midsize car to drive one way back to Fort Hood and drop it off there. The whole mess would cost me $125 for the flight I was bumped from plus another 5 or 6 hundred for the car rentals to shuttle back and forth. The silver lining was the look of envy of the Warrant Officers when I drove to work in a Jag or a Hemi but it was a pricey moment of satisfaction. In the greater scheme of things I was fighting your war on terrorism to help me win my own war on poverty and I am not sure that either of us have made much progress.

Re: Airline performance and customer segmentation
by NickD
wmccomninel:

The disparity between the haves and have nots which you very clearly describe becomes much more clear still when the decision about who gets bumped is made literally at the 11th hour on a small commuter flight which is the last flight of the night. I fly infrequently but when I was a sergeant on active duty and returning from leave on 2 or 3 occasions I was unceremoniously bumped from the only flight back to Fort Hood from Dallas by a group of last minute arriving VIPs (I assume that they were business men because they were flabby and not about to do PT with me in 6 hours when Fort Hood woke up). I was given no explanation or compensation and told I could take the next flight in the morning. When I spoke up I was told the police would be summoned. Next stop was the rental car desk where due to conventions in town those midsize cars on the lot were not available to me. It was rent the top end Jaguar S type or Chrysler 300 with a Hemi or walk. I would pony up the 4 or 5 hundred dollars for a two day rental to avoid being AWOL and to have time to return the vehicle (being a top end car it had to go back to the same Dallas location and could not be dropped off at the Fort Hood location like a normal rental). I would then rent a different midsize car to drive one way back to Fort Hood and drop it off there. The whole mess would cost me $125 for the flight I was bumped from plus another 5 or 6 hundred for the car rentals to shuttle back and forth. The silver lining was the look of envy of the Warrant Officers when I drove to work in a Jag or a Hemi but it was a pricey moment of satisfaction. In the greater scheme of things I was fighting your war on terrorism to help me win my own war on poverty and I am not sure that either of us have made much progress.

segmentation is a wonderful thing when one is segmented to first class, for the rest of us it can be an undignified unsult. Thanks for your service by the way.

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