We posted here at the Urbane Lab a while back about our program, No Fair, No Fees at Urbane Apartments, While we do not have statistics like Southwest Airlines, the program worked well.
Jackie Huba over at Church of the Customer Blog wrote a great piece, Fees are Penalties Always, that we have re posted below and think is Spot On Target. Fees do Nothing to Enhance the Prospects Experience,
From Jackie’s post;
- Southwest reported an 8.8% increase in revenue passenger miles. Its load factor, the percentage of seats that were filled, increased 11% from a year ago, to 74.7% — a big increase for a month in which schools reopen and summer vacation travels stop.
- JetBlue saw a 9.8% jump in passenger miles. Its load factor rose about 1% from the prior year, to 77.6%.
Compare those numbers to other airlines.
- Delta: Down 5% on its mainline operation. It also cut capacity by 5%.
- American: Down 2.6% domestically. It cut capacity by 6.9%.
- US Airways: Down 6.8% domestically. It cut capacity by 5.9%.
- United: Down 6.1% domestically. It cut capacity by 8%.
What’s a key difference between Southwest and JetBlue vs. the others? No bag fee charges.
Before you say, “You can’t correlate those two things, Jackie!” let it be noted that Southwest has commissioned several studies that show the traveling public hates bag fees.
Southwest seems to be doing pretty well as angry passengers migrate away from the bag-fee chargers. Southwest is even running an ad campaign with this message, called “Why do they hate your bags?”
Those nickle and dime fees add up, the airlines will say, but really, they do little more than penalize customers with complexity and disguise the end price. It’s no different when a phone or cable company charges activation fees. May as well call them aggravation fees, as in “It’s aggravating to have a new customer.”
Little wonder passenger satisfaction with the airline industry has declined for a third consecutive year to a four-year low.
Wall Street analysts don’t like Southwest’s position on bag fees. They say the company is potentially losing $500 million per year in revenue. That’s OK. No one likes greedy, short-sighted Wall Street analysts, either.
Kevin Krone, Southwest’s VP of marketing, said it best : “If we’re trying to get people to travel, we should probably let people take their suitcase.”
Gotta love any company that keeps the obvious in perspective.
Eric’s background is rooted in the rental and real estate industries. He founded metro Detroit’s Urbane Apartments in 2003, after serving as senior vice president for a major Midwest apartment developer. He established a proven track record of effectively repositioning existing rental properties in a way that added value for investors while enhancing the resident experience.
He also established The Urbane Way, a social media marketing and PR laboratory, where innovative marketing ideas are tested. Eric has been featured in Entrepreneur Magazine and Business Week Magazine.
You can connect with Eric_Urbane on Twitter.
Eric also writes regular articles for the following publications;
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