I just found an interesting article.
"OK, so you're Air Canada. You're out of bankruptcy protection, unions have agreed to cuts--you're ready to fly. One problem: people don't like you. Our expert panel looks for ways to fix a bad brand" Canadian Business
http://www.canadianbusiness.com/features/article.jsp?content=20040607_60349_60349
I thought this comment was one of the most interesting. Creating a positive corporate reputation in the minds' of customers is tough; trying to do it when the reputation is starting from a negative position is even tougher. They've got to do stuff that is going to create word-of-mouth positive messages. With employees in a poor mood over layoffs and wage cuts, doing those positive things is going to be a challenge.
And yet how many of us know people who don't travel a lot, but make a point of booking on AC? Whether it's some vestige of patriotism, or the sense that AC is solid (despite being bankrupt) vs "those new carriers" like Westjet and Jetsgo, I don't know why. But it is something to build on.
It's interesting that WS loads fell when they tried to raise fares. Have they painted themselves into a corner, by so strongly identifying themselves as an LCC that people will not pay any kind of premium to fly them?
Regardless, it's 100% true that the front line will have to offer consistently great service, if a "new" AC is to survive. Fairly or not, there might be too much animosity towards Milton to allow hm to be the one to lead it.
But as Aeroplan goes, everyone starts out as a Basic memberActually some of us did not. We got transferred from CPlus and we had status since day one, never had basic status. :D
Excellent points brought up by the panelists regarding AC's marketing strategy and organizational policy (coming from a B.Com student at least...).
Ken, I await the next "6"........... ^ !
Well done Ken. ^
The people who fly 2-3 times per yr are not the bread and butter. The 25% of passengers who provide 75% of the revenue are the bread and butter. The masses are just there to provide the frequency for the business traveller.
Yes, its known as the the Pareto Principle (after economist and avid gardener Vilfredo Pareto)! The larger the sample, the closer the ratio approach 80/20 (of course maybe this belongs in the MBA thread). The Pareto manager only cares about the 20%.
Its truly an interesting phenomena that repeats itself in nature as well as in business.
1D
There's another thread about this same Canadianbusiness article, but it would be interesting to know how long AC (or the airline industry in general) manages to retain its most frequent customers?
Surely, most high-volume business travellers don't put on 100k status miles year in and year out for much more than 10 years. What sort of rate of turnover does AC see, on average, with its E and SE customers?
Obviously proprietary business information. But as Aeroplan goes, everyone starts out as a Basic member -- is AC losing the business of new and up-and-coming frequent travellers because the potential high-revenue customers aren't perceiving good service as AP 'Basic' members? And what are the short and long-term costs of this customer loss -- some evidence includes, in the past few years, without lowered qualification levels, AC's E and SE ranks would have been severely decimated.
Well they're certainly right in that all advertising from AC in the last 10 years has been unmemorable dreck. I love the bit about Robert Milton having "personal rebranding" issues! globeandmail.com: Extreme house makeover: 24 Sussex edition::
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"Germain: Air Canada has spent so much time focusing on the executive frequent flier--and it's a natural thing to appeal to your most frequent customers--but the fact is, when you go on the plane there is a ton of people who just fly two or three times a year. They are the bread and butter."
1D
The people who fly 2-3 times per yr are not the bread and butter. The 25% of passengers who provide 75% of the revenue are the bread and butter. The masses are just there to provide the frequency for the business traveller.
"Germain: Air Canada has spent so much time focusing on the executive frequent flier--and it's a natural thing to appeal to your most frequent customers--but the fact is, when you go on the plane there is a ton of people who just fly two or three times a year. They are the bread and butter."
I disagree with this in the strongest of terms, unless by focus he means 'sodomizing'. Especially with the Pareto Principle such a well known business phenomena.
1D
Good read. Thanks for sharing.
A trick question -- which of the three panelists was me?
The answer: All of them.
I dare say I've said most of the things they've said at one time or another over the past 5 years. Sometimes I still say them. More importantly, if the author had simply skimmed FlyerTalk, he would have heard all of that and more from a wide variety of people on FlyerTalk, and from all walks of life. Seems everybody knows the answers. Except Air Canada.
So let's go over them again, in the hope that maybe someone at AC reads them. Maybe they'll think now there's a gem of an idea. And maybe they'll even act on one or more of them.
Here's my take on the various points raised. But this is gonna be a long one, so get a cup of coffee first, or a mug of beer. And find a comfortable seat. 'Cause here we go again...
Keresteci: The first day this deal is done, they should get up and say, "This is the problem we got ourselves into, here's what we're going to do about it, and here's how to give us feedback." And they should act on that feedback on a real-time basis.Indeed. But has history has shown, AC management has a long history of wearing rose coloured glasses on one hand, and on the other claiming every problem they encounter is someone elses fault. Whether it was the unpredictability of SARS, or the fact that the wrongly blamed Transport Canada for an Air Canada policy of disallowing people with medical conditions to bring their own oxygen, the answer is always the same -- it's someone else's fault.
That leads to two things, both of which have the same result. The first is that there's nothing wrong, so there's no need to do anything about it. Secondly, if it's someone else's fault, there's nothing they can do about it. So in the end, nothing get's done. Until it's too late. And it always looks like it's too late.
So much as stepping up to the plate, or microphone, and saying "This is the problem we got ourselves into,...", based on past experiences I don't see it happening. That's a shame, because admitting a mistake is cathartic, and immediately disarms your opponents. All they can do is say "He's such a... Oh! Well, at least he knows."
Secondly, it gives you a chance to make a testable commitment that you are going to do something about it. That's very important, because just making vague unmearsurable or untestable promises just makes you look wishy-washy, and causes people to think "nothing new here."
And not just getting feedback, but inviting it, and acting upon it, is the absolute best way to bring a disatisfied customer back to the fold. This could be the start of their recovery campaign -- build a process where anyone can quickly and easily make a complaint or compliment, and make sure that every single one of them is read and acted upon, and where appropriate, responded to. The first step in this process would be not to dismantle, but to utterly destroy, even in a symbolic way, the so-called "Customer Solutions" department. (They may have already done this, but if they've just appointed a "new boss, same as the old boss" and given it a new name -- "The Customer Experience" then nothing has changed, except the feeling that maybe you're only a Disney amusement ride, going 'round and 'round and 'round.)
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Responding doesn't necessarily mean taking direct action on every complaint. Perhaps you only need to categorize the complaints to determine which are the biggest problems, and deal with them first. But you need to put that knowledge of what is bugging customers the most to use, because often as not it will tell you exactly what you have to do.
And when a complaint does require a response, not only "should they," they must "act on that feedback on a real-time basis." But here again is a historical problem -- AC doesn't seem to be able to respond to any problem in less than a couple of months, let alone in real-time.
A couple of years ago then Air Travel Complaints Commissioner (or whatever he was called) Bruce Hood noted that he had asked all airlines flying into or within Canada to respond immediately to customer complaints. With the exception of Air Canada, as reported some six months later, all airlines took this to mean that they should empower employees to take immediate remedial action, on the spot. Air Canada however took a different approach. They decided this meant that any complaint received by their "customer solutions" department should be acknowledged within 7 days. Not acted on. Not responded to. But acknowledged!
Now this may be getting better. Recently when my luggage did not arrive in Paris with me, I was handed 330 Euros cash, to cover my incidental costs. While I would have preferred that my bags simply showed up, I thought that was a completely reasonable and acceptable temporary (and real-time) response. Problem is I've been so conditioned that my first two thoughts were "there only doing this because I'm SE" and "only I would be that lucky." (And trust me, if it wasn't for good luck, I'd have no luck at all.)
There seem to have been a few reports on FT of late where immediate responses have occured. And I recall that recently AC implemented a program to empower their employees, at least in some cases, to make those "immediate" responses. But still, often as not, FT suggests that sometimes the response is not forthcoming, or if it is, is wholly inadequate. They need to make this effective, system wide, and a cultural imperative. And they need to advertise it, perhaps as one of the first steps to recovery.
But they have to be transparent about their fares and about how they do business with all their stakeholders, including their employees. And they have not been transparent.This too would be a good first step, and something that the public could immediately see. Start advertising fares "all in" -- that is, with every imaginable surcharge already included. (It's long been custom in North America to advertise prices without tax included. It would probably be reasonable to continue this practice. But if they wanted the best of both worlds, they could advertise both the pre-tax and post-tax prices.)
Doing so, presuming they actually followed through on it, would have the immediate effect of establishing credibility. It would also make them look good in the eyes of most customers. And they could rightly use words and phrases like "honest pricing." And in the same way West Jet's current ads suggest "were not Air Canada" AC could say things like "Unlike other airlines, are prices are real/accurate/honest/etc."
It's a waste of time, though, because a brand isn't built on a price. I think price is the opposite of a brand. People are willing to pay more, always, for a very special experience.Remember my tirades on the difference between "low cost carriers" and "high value carriers?" Or my economics lesson on the dangers of competing on price alone? Need I say more?
"Germain: To make an ad right now, or a campaign, whatever, hire an ad agency to say, "We're new, we're fresh," is a crock. You know what? The consumer is not stupid, won't buy it; it won't change their attitude. It will take some time. How long would it take to change a corporation like that, after what they've gone through? Probably at least a year. To go out with brand information in their advertising would be a waste of time right now because it would be like putting lipstick on a pig."
I thought this comment was one of the most interesting. Creating a positive corporate reputation in the minds' of customers is tough; trying to do it when the reputation is starting from a negative position is even tougher. They've got to do stuff that is going to create word-of-mouth positive messages. With employees in a poor mood over layoffs and wage cuts, doing those positive things is going to be a challenge.
They've been sodomizing expectations for so long. It's been endemic with Air Canada for the past 30 years. You can't rape those people who are paying for first or business class, and then open it up to the world [with free upgrades]. There has to be a distinction.It's like two-tier medicine. If you pay for first class or business class, somebody should deliver on it--or don't do it.Strangely enough, I don't disagree with this. Much. (And you thought my language was nasty?) But I think the problem is not so much the upgrades, but rather the fares they used to charge for business class, and in some cases, still do. Riding in J in a domestic 767 is only marginally better that riding in coach. (Some would ask "Better?") It's one thing to upgrade from a low fare. But to upgrade from a very high Y fare, or worse, purchase a J class ticket, and then get stuck in one of those disasters is a certain way to burn off high fare customers.
Which led me to ponder on a recent flight if AC isn't missing the opportunity to charge for something else -- the equipment you are riding on. If you make clear the advantages of riding on certain planes (ERJs vs CRJs, A345s vs 767-200s) you might well be able to make more money by "selling" that equipment. I've said it before about the ERJ vs CRJ issue -- if people understood the differences, many would happily more for a better plane. Perhaps not $100, but probably at least $20. And it would be all gravy.
More important, those who didn't want to pay the extra $20 would get stuck on the "lesser" plane, and be happy that they saved the money, while those who paid the $20 would be happy that they got a more comfortable ride for a small premium. People are obviously paying $10 for advance seat assignments on a range of airlines, including AC, and some are paying $30 for an exit row. I dare say lots of people would happily pay $20 (or more) if they really understood how much nicer a ERJ is than a CRJ. You don't even have to disparage the CRJ. Simply say that the "new" ERJ offers leather seats that are 1¼" wider, with wider arm rests and much more underseat space, for carry on luggage or just to stretch out in. (Do that with the first ERJs to arrive, and who knows -- maybe they'll end up cancelling the CRJs altogether.)
As for upgrades, they are a competitive fact of life in North America, even in Canada. Good idea or bad (at least for the airline) they are here to stay. 'Cause the first airline to do away with them will die a quick and ugly death. Even if all the airlines were somehow able to simultaneously stop offering upgrades, it wouldn't be long before one of them (probably AA in my guess) would say to themselves "Ya know, if we started offering upgrades again, we could steal a lot of that high fare business back from our competitiors." And just like with FF programs in the mid-80s, and with the recent reintroduction of more generous upgrade policies in the competitive markes of the US, all the airlines would once again in lock-step formation, start offering upgrades.)
Air Canada has spent so much time focusing on the executive frequent flier--and it's a natural thing to appeal to your most frequent customers--but the fact is, when you go on the plane there is a ton of people who just fly two or three times a year. They are the bread and butter.The solution is not to spend less on the frequent flier, but to start treating the two or three times a year (or even one time) flier as something more than just self loading cargo. If 10% of your customers are generating 44% of your revenue (or whatever the number is these days) you best give that minority special attention. But not at the cost of sub-standard service to the other 90%.
They can't win in the low-price game, but they can win in the best-value game. What they should do is simplify their offering and get into the better-value game, which is a combination of a good price and a good customer experience. They've poorly managed our expectations for years. They are in the gutter now, so they have to fix the experience.Oh geez, doesn't this sound familiar.
One problem is that notwithstanding the new "simplified" fare structure, their fare structure is now more complicated than it ever has been, and seems to be getting more so with each passing day. They sometimes seem simpler, especially for changes. But since they can be booked one way, they are booked one way, even on return flights. So now even the return flight has an advance purchase requirement. Advance purchase requirements that have only recently (and quietly) been snuck back in. And if you want to change both directions, you now pay the lower change fee, but twice. Finally there's the same day change fees. Seems old habits are hard to break. And making fare rules ever more complex with the intention of extracting every last possible cent from every passenger still seems to be in vogue.
As for adding value, it seems to me that there's a huge range of things that could be offered, if only they'd brainstorm, listen to their employees, or maybe even their passengers. Here's one off the top of the head -- because connections are so difficult to make in YYZ, and because a reduced number of flights to many destinations has made legal connections harder to come by, why not offer extended connection times for a small fee. $25 for an 8 hour connection, say. Or maybe $10 per hour up to 24 hours, which would mean a 24-hour connection for $200.
Yes, this might mean that AC wouldn't get the perhaps higher stopover fare. But it seems to me that people who would utilize this option are already circumventing the process using a number of techniques, like overnight connections. But more than just allowing a longer meeting in the airport, it would also allow people like me to take more convenient (read later in the morning) flights, that connect on to other more convenient (read those with upgrade space available, and not so tight) connections, perhaps on to planes that they charge more to fly on in the first place.
They're already charging for meals on some flights, but I think that's a mistake, for a number of reasons. The first is that people have come to expect a meal, at least on longer flights near meal times. The second problem, and it's a big one, is the logistics. How many meals do you take. Take too many, and you lose in the waste. Take too few, and you've give up revenue and profit, and maybe pissed off a few customers. Better to add $3 or $5 or $7 to every ticket, and have a meal available to every passenger. Then advertise yourself as the airline the "feeds you on every flight."
Or if you insist on charging for meals, then a couple of things. First, make sure the meals are really worth what you are charging, in the eyes of the passenger. If you're charging $7 for a mini-box of cereal, a mini-tub of skim milk, a stale pastry, and a mini-glass of orange juice, it won't be long before nobody buys the meals, and it all goes to waste.
Secondly, smooth out the logistics. Offer a meal at time of booking, perhaps for a reduced price, that is added to the ticket. This means you now have a better idea of what to board, reducing spoilage, and also that you've assauged the customers' expectations. When they get on and find there's no meal waiting for them, they won't be surprised, disappointed, or pissed off. (They might have been when they purchased the ticket, but chances are that will have worn off by flight time, and maybe they'll bring their own.) This process would also have the effect of expediting the meal service, because you'd already know who's getting the meals, and you won't have to worry about payment, making change, etc. Who knows, perhaps you could even board a reduced number of meals on spec.
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Extreme makeover: Fixing the AC brand...