Over at Seeking Alpha, where they reposted my recent rant about airlines, there’s a classic example of industry insiders in denial bitching at me: How dare I expect decent, civilized service. Water? You want water? Sit down and shut up. This is exactly the same reaction I get from whining real estate agents every time I dare to question whether I get 6 percent’s worth of value for the service they don’t provide. Head, meet sand, insert. It’s going to be fun watching them self-destruct. Couldn’t happen to better industries. Except perhaps cable and other protected monopolies and oligopolies. Bye-bye now. Bye-bye.
Posts about airlines
If there ever was a tipping point for an industry, headed down, surely the airline industry has reached that unfortunate metaphor. They’re fucked and their passengers with them.
On NPR this morning, I heard an old lady in a wheelchair forced to come to the airport to change her canceled American tickets — she wasn’t allowed to do it online or on the phone, not even after she said she was disabled and her daughter had seven children and a newborn and couldn’t take her to the O’Hare’s hell.
She is Customer Omega, the last screwed consumer.
You simply can’t treat people this way and survive. We all hate the airlines. We hate the experience on the plane and in the airport. We should fear for our safety, given American’s shoddy (and, one wonders, fraudulent) maintenance work. (As the Times said this morning, at least the FAA is doing its job.) The airlines never see themselves as our advocates, friends, servers; no, they are our prison wardens and enemies as they fight down legislation that mandates they should give us the crudest amenities a prisoner would get: clean water, air, and a toilet. The economics of the industry as it is being run today are unsustainable. And apart from the all-business-class airlines I try to fly every time I can (Eos, Silverjet, and there are more coming), there is not one visible bit of innovation — not one attempt to get out of this mess — visible in the industry.
Here are a few of my earlier posts thinking about a different future for the airlines. See also Chris Anderson on a new, free business model. What would you do to bring this industry back from the cliff? I think the essence of their future is there: They have to explore new value by having a decent relationship with us, using that new value to improve the experience so they can have a decent relationship. Screwing your customers is the least sustainable business model.
Furthering my ruminations on the social airline….
Today’s NY Times writes about travel publishers still trying to figure out the web (they’ve been trying and failing to figure it out since the web’s start; I worked, frustratingly, with Fodor’s back in the ’90s as it tried to find a strategy). It says that among their tactics is licensing book content to airlines to display on their seat-back entertainment systems.
But that should be a two-way exchange. Airlines should capture the knowledge of their wise-about-traveling crowds. Imagine if, on return trips, the airlines asked us the hotels where we just stayed and ate and invited us to rate and review them. Imagine if they asked natives to share some inside tips on eating and shopping in their towns. They have a currency to pay for the information: They could reward us with frequent-flier bonus miles. Because they know who we are, they could even start to anonymously aggregate other data around this: ‘American Express Platinum customers recommend….’
The airlines would gather an incredible data base of live knowledge of real travelers with fresh knowledge. They’d outdo TripAdvisor over time. Or they could license their content to TripAdvisor or some of those travel publishers. The airlines could themselves become publishers by listening to and capturing and sharing the knowledge of their customers. But first, the an airline needs to think of itself as a platform for travel and of its customers as networks.
This should be a basic question of any company or industry in the internet era: ‘What do my customers know and how do I help them share that?’
What if a plane flight were networked and became a social experience with its own economy?
For part of a book I’m finally starting to work on, I’ve been thinking about how companies and industries can be remade with Googlethink and social smarts (note how I’m not saying Web 2.0). It’s harder to reimagine some than others. The benefits of tearing apart and rebuilding cable companies are obvious. But I just about gave up on airlines, dooming them to their status as the new buses. What can one do with such a commodity service, and one that has deteriorated so badly?
Then I was inspired by Steve Baker at Business Week, who asked, “Why hasn’t aviation benefited more from Moore’s Law?” Maybe it’s not Moore’s law that can reform airlines but Jarvis’ First Law — give the people control and we will use it; don’t and you will lose us — and Zuckerberg’s commandment — give your people elegant organization — plus a bit of Googlethink about networks, platforms, and wise crowds. For Burda’s upcoming DLD event, one airline, Lufthansa, is asking what they should be in 15 years. Here’s one scenario of how they can change in far less time….
Start here: Most passengers on airlines today are connected to the internet on the ground and soon we will be in the air as airlines return to the idea of adding wireless internet to jets (see an AP roundup from yesterday here — I can’t wait). Getting us connected will be good for the airlines, not only because they have something new to sell — if they don’t try to gouge us — but also because we’ll be busy — engaged, entertained, connected — and less likely to grumble and revolt at delays. Busy passengers are happier passengers.
Once airplanes’ passengers are connected with the ground, that enables them to get connected with each other. It would be easy for the airlines — or, failing that, the passengers themselves — to set up social networks around flights and destinations. The possibilities are endless:
* At the simplest level, we could connect while in the air to set up shared cab rides once we land, saving passengers a fortune.
* We can ask our fellow passengers who live in or frequently visit a destination for their recommendations for restaurants, things to do, ways to get around.
* We can play games.
Note that this requires not only wifi internet access at a reasonable price but also electric plugs at every seat. The first airline to do this will gain the loyalty and appreciation of a huge number of wired road warriors.
* Now think back to the earliest 747s with their lounges where you could socialize with fellow passengers, something that still goes on even in the cramped quarters of today’s jets, though every inch is filled with a seat and though the cabin crew is less often the object of the flirting. The idea is coming back on Virgin and in the 787 Dreamliner and A380. So now imagine if on this onboard social network, you could find people you want to meet — people in the same business going to the same conference, people of similar interests, future husbands and wives — and you can rendezvous in the lounge.
* This is the key to decommodifying the airline: What if you chose to fly on one airline vs. another because you knew and liked the people better? What if the airline’s brand became its passengers? What if the airline even found ways to encourage more interesting people to fly with them because they knew that would attract and retain passengers (they could offer discounts and benefits to people who are active and popular in the social network)? Right now, all you offer is seats and miles: commodities. How much richer this would be if you offered small societies. Yes, we could still get stuck next to a talkative bozo — but not if we could meet people and arrange our seats before the flight thanks to the social network. Next to the right person, I might even tolerate a middle seat.
So these social networks should be opened before the flight. And that enables not only these on-flight connections but also a new economy:
* The airline can set up an auction marketplace for at least some of the seats: What’s it worth for you to fly to Berlin next Wednesday? You could bid and buy a seat from a passenger who already holds one. This could solve some of the airlines’ overbooking problem and reduce the cost of bumping customers if late-booking passengers can buy seats from fellow passengers in an open marketplace. You can bet that once a social network around a flight exists, we’ll compare what we paid. So why not be open? Yes, speculators could arbitrage seats, but so long as they’re nonrefundable, what problem is that for the airline? They become market makers. Besides, this sets a new market value for seats that in some cases will be higher than the airlines’ existing fares.
* The airline could also use this to predict and maximize load. What if there’s a sudden surge in demand for a destination the airline can see because bids appear in an auction marketplace for a certain route around certain dates (because of a new conference or festival or good media coverage for a new getaway or bargain)? The airline can add capacity, which keeps the airlines in control over arbitrageurs; the airline is always in control of supply and now it would know more about demand. Similarly, what if a flight is light and the airline starts offering passengers alternatives at great discounts to enable the airline to cancel a flight and reroute the equipment long before departure? The airline increases efficiency and profitability; the passengers get a dividend; and the environment gets a break. These things can be done in an open and flexible marketplace.
* While you’re at it, why not turn frequent-flier miles into an open market? In miles, the airlines have created a virtual currency with far greater reach and value than those on Second Life or Facebook. But they’re essentially illiquid. The airlines make it impossible to get frequent-flier seats with them unless you’re flying to Krakow on Christmas Day a decade hence. And the other deals they offer us — use your miles to buy a TV — are bad deals. This, in turn, devalues the virtual currency to the point that it offers an ever-decreasing incentive to choose one airline over another; it no longer acts as the decommodifier the airlines intended. So open it up: Let us bid on frequent flier seats with our miles. Let us trade and barter our miles with each other — I’ll sell you this iPod for miles I want to use to get my vacation. This will again add value to the currency.
* The main reason we go for miles today is to get silver or greater status so we can jump lines and board first. But I’m not in control of how much I travel; my employers are. So what you really want is my loyalty; you want a large marketshare of me. So let me earn privileges in other ways. Open this up, too. Let me bid miles or money for these benefits: create a market value for boarding first.
* The airline should find ways to involve employees in the network. They can also offer tips. They are the airline’s representatives to the community. And the airline should want to learn more about its employees through the network. Those who make the flight more pleasant and more social are an asset and should be rewarded. Besides, it’s hard to get nasty with cabin crews when you feel as if you know them.
* The airlines can also learn a great deal about their service from the network of passengers. We’ll tell you about the food and what’s worth paying for. I’ll start a movement to save my knees from the bozos who slam their seats into them. You’ll see which employees are your best marketers.
There are many subtleties to this. For example, in some cases, I won’t want to reveal my true identity (telling people I’m out of town), for others I will (doing business). If seats are being traded, real identities and credit cards must be in the system for security. And so on. But this would be easy to pull off with existing social software (Ning, Drupal) and links to existing social networks (Facebook, Linkedin) and existing auction markets (a walled-in eBay). The beauty is that no marketing is required; you’re simply serving, connecting, and organizing the customers you already have. Yet this act alone rebrands you as the social airline. (Better get there quick, before Virgin does.)
So brainstorm with employees and passengers. Imagine what it takes to be the open, social airline — a platform for travel — and then imagine the good that comes of it. Your customers will give you value if you trust them and let them.
: LATER: Ross twitters: “the social airline already exists, try the last flight to Vegas on a Friday night.”
Air travel may be the first industry based on a business model of kidnapping and imprisonment. It is the least open industry possible. You are trapped with the airline that controls your home airport or destination. And now, far worse, you are trapped in their planes for three to five hours. And why? Well, yes, we can blame weather and bad air-traffic control for some of this. But the essential reason is that that don’t want to let you loose and lose your fare. So they hold you captive. Amazingly, they are allowed it. And, of course, this yields just the amount of resentment and seething hatred it deserves. So no one thinks positively of the industry or the brands in it. It’s so bad that it’s making clearly inferior competitors — driving for hours, Amtrak, ferchrissakes, and maybe even soon the bus — look better. That’s bad. The entire industry and its relationship with its entire customer base is broken.
The attempted solutions so far are all nonsolutions: Attempts to regulate and limit our imprisonment — to still obviously unacceptable levels — have failed. Attempts to sue airlines into civility have not worked. Even the White House finally recognizes the problem but its solutions are aimed at reducing the flights that are already over subscribed; gee, that helps.
It’s time to turn the thinking around. If, for once, anyone in the industry or the government would think like a customer, the solution would be the reverse of imprisoning us in airplanes until they can take off:
Jets should not be boarded until they have a take-off — and landing — slot.
That leaves us, the passengers, free to walk around in the terminal — and, yes, free to seek competitive means of transport (other airlines, cars, trains) or to go home. In no sane world should we be held in captivity and prevented from that free choice. We would have the services of airports at hand — which, in the long run, would improve because there’d be business to be made there; demand for beers yields supply of beers (the mixed-nut marketplace shifts from the jet to the terminal). The airlines would compete to make us comfortable to keep us at their gates. The jets would not be sitting on runways burning incredible amounts of fuel and producing incredible amounts of carbon for hours on end. Onboard crews would not be stressed dealing with righteously angry customers. People might actually decide to fly more often. Oh, yes, this shifts some of the logistical burden of air travel from taxi and air traffic control to the terminals — fine. It also shifts the pain in this relationship from the powerless customer to the people who are in a position to fix the situation. If the airlines want to imprison us, they still have the tool of the nonrefundable ticket, though the market will in the long-run dictate whether we choose to pay for this discount with the risk of captivity.
It’s hard to imagine an industry — other than prisons themselves — that is less open to openness. It’s much easier to imagine how media, retail, consumer products, and entertainment can spawn Cluetrain companies. But if you simply turn around and ask how customers would run these companies, you will get an answer like mine, not like the industry’s or the government’s. The problem is that, deregulation aside, it’s not a competitive marketplace. It’s worse today than telecom. So it’s not as if one company can break away from the pack and think like its customers; it’s not in control of its relationship with us, end-to-end. How do we get from here to there?
The only thing that is new is our empowerment as customers on the internet. We can coalesce and gang up on the airlines. There is also market pressure. The horrid shoddiness of the mainstream airlines is just what has opened up the market for Eos, Silverjet, et al to offer independent, quality competition and take away the big airlines’ most profitable customers, who are all turning their backs and saying nya-nya-nya to their former wardens as they leave the prison gates. But, of course, that marketplace is limited. It’s a much bigger mess than that. And it won’t be cured until the industry starts thinking like its customers, which will only happen when the customers shout so loudly, now that we can, that the industry can’t help but hear.
In the end, the ability of companies to make a business by telling customers what they cannot do is over. It’s only a question of when and how it is replaced.
: I should add that when I flew to Austin this week to see Dell, my Continental flights were ontime both ways — though I saw a chart yesterday (can’t find it now) showing Continental as the current leader in passenger imprisonment. I was lucky to get a first-class upgrade both ways, which improves one’s outlook.