Airline Industry Woes and the Customer Service Slump

Opinions differ about the glories of the past, but the present consensus is that there isn't anything good to say about the state of customer service in today's world, especially in the airline industry.

The American Customer Satisfaction Index (ACSI) shows across-the-board declines in customer satisfaction in most industries.

Transactional Processes

While the decline in customer satisfaction, and in customer service, has been variously attributed to cost-cutting, outsourcing and competition, Mike Nichols, president of the American Society for Quality, attributes many of the problems to the complexity of "transactional processes."

He said that that in a typical manufacturing facility, "you can actually see the entire process from where the inputs come in the back door to where they went out the front door." That's not the case, for example, with a credit card application.

"Functional tasks and steps might not even be in the same country," he said. "A new card application process might start with a call representative in another country taking the information over the phone from the customer. A back office in another location might review the information and request a credit check from a third-party source. The data are then transferred to a third-party vendor that actually makes the credit card. Finally, another function must ensure the correct customer properly activates the card."

These processes, Nichols said, are difficult to integrate, and errors can occur at every junction point.

Sliding Scores

According to ACSI, service industries are the principal targets of consumer dissatisfaction. "... Canned food and household appliances score much better than banks, airlines and cable TV. Typically, the more service required, the lower the satisfaction."

But as badly as most service industries fare, airlines seem to be particularly prone to consumer ire.

On a scale of 100, airlines as a whole score 63, down 12.5 percent since the index's inception during 1995. Southwest leads the industry, with a score of 76, largely unchanged for the last 10 years, while United's score of 56, down 21.1 percent in a decade, is the nation's worst.

IRS Does Better

To put the airline scores in perspective, the Internal Revenue Service scored 65 -- nine points better than United, and two points better than the airline industry median.

"If a company has a score close to the IRS' score, something is awfully wrong," said Claes Fornell, the study director.

Jennifer Miner, who writes about luxury travel on Suite101.com, said that the airline industry competes on price rather than quality because it believes that customers make flying decisions based solely on price.

"There's all sorts of transportation available for travel, but if we want to visit foreign lands or even get across the country quickly, we have only one choice: airplanes," she said. "The airline industry knows this."

Mergers Hurt Customers

Airline industry consultant/analyst Mike Boyd agrees with Minor.

He said that the airlines are focused on improving their bottom lines, and that proposed mergers are just another way of improving profitability at the expense of passenger comfort and convenience.

Mergers, he said, will allow airlines to reduce flight frequency, increase fares and fill seats -- none of which will benefit their customers.

"There are no long-term positive effects (from mergers)," he said. "Offering less to the consumer when demand is high is not a positive."

Missing the Point

On its Web site, United embraces customer service, saying that "At United, the only acceptable customer experience is one in which you arrive at your intended destination safely, comfortably and on time."

But, Fornell said, that's precisely what United doesn't do well.

"Take Southwest, for example," he said. "They concentrate on providing at least the basics -- to get you and your luggage from point A to point B, so they score well on customer satisfaction."

Other airlines, such as United and Northwest, have more important things to think about than their passengers, Fornell said.

"I know that sounds strange, but in most hubs one airline will have some degree of monopoly power, and without competition, there's little incentive to change," he said. "Of course the industry has problems -- pilot seniority, fuel costs, congestion -- it's not an easy business . But they can do better."