By Gary Sherwin, President and CEO of Newport Beach & Co.
After having to cancel her wedding twice due to Covid19, my oldest daughter is getting married in a much scaled down ceremony this Sunday. It’s been heartbreaking for her and her fiancé who have been riding this emotional roller coaster since March.
It will be a particularly difficult day since my other daughter, who would like to attend the event but lives in Kansas City, isn’t comfortable getting on an airplane. She is a hardy soul and not usually fearful, but flying right now has got her scared.
I totally get it and it will be heartbreaking not to have her there. But her concerns are representative of the larger challenges facing the airline industry.
For years, airlines have endured the wrath of customers who have spent the last several years getting squeezed with ever smaller seats and nickel and dime fees. Have a bag? Ching! Want to change a flight? Ching! Want to sit in somewhere other than a middle seat? Ching!
I think pretzels might still be included in your fare, but nowadays that’s about it. Except for Southwest, if there is a fee they can charge you, it seems they will. I’m waiting for the oxygen surcharge next.
It’s no wonder that few are sympathetic to the hemorrhaging balance sheets that the airlines are facing right now. Recently Delta Air Lines reported a quarterly loss of $2.8 billion and the rest of the major carriers are not far behind.
The satisfied customer experience has had a slow painful death on most of the US legacy airlines as they find ways to prop up their stock price.
Traditionally, the business traveler is the one who pays the bills. They make up to 70% of an airline’s revenue according to the trade group Airlines for America. These have historically been the “road warriors” who fly regularly on a company’s dime and often pay full fare and book at the last minute.
But those rich days may be gone. Half of respondents in a survey of Fortune 500 CEOs said trips at their companies will never return to where they were pre-Covid19.
“I don’t think we’ll ever get back entirely to where we were in 2019 on the volume of business traffic,” said Ed Bastian, the Chief Executive at Delta. Forecasters said that even in two years after the pandemic recedes, business travel will remain at least 25 percent down and that figure may be even larger.
Even Warren Buffet cashed out his airline holdings earlier this year saying “The world has changed for the airlines.”
I’ve said before in this column that I think people want to travel for business and really want to get out there again and I still believe it. But they may not do it as often as people rely more on home-based technology.
Even Wall Street agrees. The six largest airlines ended last week with a combined market value that’s less than the $70 billion of Zoom Video Communications. That is an unimaginable fall from grace.
Back in March and April, passenger counts dropped more than 95 percent, and while they have been slowly rebounding, it is far cry from any profitability as they rely on leisure passengers and not the affluent business types.
Which brings me back to my youngest daughter and her fear of flying now. While the airlines could show some empathy for the condition we find ourselves in, instead several of them are using it to do a cash grab.
While Southwest and Delta are not selling middle seats right now, other carriers like United and American are packing planes and promising alleged new standards of cleanliness. While the airlines took $25 billion in federal payroll aid to stay aloft, they’ve decided to put money over their customer’s health.
Listen, I get it. Even in a spaced-out cabin, you are still in pretty tight area. But how about providing some psychological comfort by not selling seats where people are constantly looking over their shoulder at the coughing person jammed into the middle seat next to them? How about acknowledging that money will not be the driving factor in their business after taking a load of government cash and perhaps they need to provide a service during a national crisis?
Now we are supposed to feel sorry for the airlines as their business gets gutted. I certainly feel for the thousands of industry employees who are getting pink slipped in the weeks ahead. But it’s hard to be sorry for the carriers who have generated no feeling of goodwill among their customers over the last several years.
Listen, we need healthy airlines, and so does Newport Beach tourism. But the industry is too well versed in a boom and bust cycle that puts the customer dead last.
Why should someone worry that they could get on a plane and infect themselves and others upon arrival and risk death because the airline had to sell an additional 15 seats on that flight?
My daughter had to make that decision quite correctly, and we as a family are worse off because of it.
