Airlines should reward customers instead of penalizing them

I ran across an interesting blog post this morning about how the airlines are treating their customers during these difficult financial times. The airlines are bleeding money, and their answer to stop that has been to create a bunch of new fees and to reduce the level of service to the customer.

That's all well and good from a financial perspective if the punishment of customers doesn't drive them away. The airline collects its fees, which chip away at the high cost of jet fuel, and their financial results look less bad.

But what would happen if the airlines instead decided to implement a sort of "reward" system for customers instead of this punitive system? I think this is an interesting concept that could build customer loyalty and leave them feeling better about their airline experience, even if they are paying more.

Rewarding customers means framing the charge for checked baggage differently. It costs airlines money when you check a bag because of baggage handlers and additional fuel to transport your pounds of cargo. Instead of charging an extra fee to those who check bags, why not reward those who do not check them?

Raise fares a little across the board, and when a customer doesn't check a bag, give them a small credit of $15 back on the credit card they used to buy their ticket. Now instead of angering everyone who checked a bag, those who didn't check them are getting a little "feel good" rebate and the rest of the passengers feel no worse off.

I think this concept has a lot of merit. You see, the airlines are trying to stop the financial bleeding in the short term, but I think they are making big long-term sacrifices to do so. Those who do well in the long run will be the airlines that treated their customers well even in tough financial times.

Take Midwest Airlines, for example. Its regular service offers two-across seating. I'm willing to pay a fair amount extra just to fly them because of it. Several years ago, it introduced its "saver service" with three-across seating for certain vacation destinations. It could offer more competitive pricing with this saver service.

Instead of making travelers lives harder now, it's making it easier. The planes used for the saver flights have now had the first several rows of seats replaced with the popular two-across seats. You can't reserve them. They're on a first-come, first-served basis on check-in. If one's available when you check in, it's yours. How's that for making your customers feel better when other airlines are taking away small comforts?

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
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