Airlines: How An Industry Became A Troublemaker

Airlines Are Competition

While we may not be remotely aware of it, the airline industry is bustling. A few years ago, only a handful of budget airlines existed. They held a monopoly of inter-and-transcontinental flights with prices that matched their seemingly Goliath grip on the industry.

In the second decade of the twenty-first century, an industry grew out of the rise of middle-class income economies, and the airline boom was born.

The airline industry is a multi-billion dollar industry, whose seamless rise over the past 5 years has attributed to a leap in dubious business practices.

According to online statistics website, Statista (https://www.statista.com/statistics/232513/net-profit-of-commercial-airlines-worldwide/), since 2014 airlines worldwide have kept their margins consistent. While this is no cause for alarm, the exponential rate at which those profits have occurred, is. In 2011, airlines were worth a meager 8.3 billion, while within 8 years that number has sworn 300%.

In North America, profits double that of other regions alone. While the standard margin hovers around 8.27 dollars per customer.

An Unregulated Industry

There is no denying the elephant in the room as the airline industry has expanded. But perhaps it’s not the profit margins that passengers are most concerned about. According to a recent survey in Forbes magazine, a 2018 ACSI report confirms that the airline industry has a customer satisfaction score of 73. Which puts it near the bottom of the list, in line with cable and health insurance providers.

With a 3% decline on the 2017 results, the industry consistently remains a blight on the retail landscape. It has sat near the bottom of the list since the ACSI’s inception 20 years prior.

The airline industry is remarkably its own worst enemy, as each company battles to outmaneuver its competition. At the forefront of this battle lies the customer, an exploited pawn in this game.

According to Skytraxx, the online hub for the airline industry, the top 10 complaints include: lost luggage, delays, and meals. Alarmingly, this also includes a number of affairs, such as: hidden fees, refunds, and fare terms. And this is where perhaps the airline industry is profiting the most.

 

Airlines Are Greedy

While many customers think that their 10 dollar flight from London to Budapest is a winner, what they fail to notice is the hidden fees and smart ways that airlines are profiting off their passengers.

Consider the costs involved in adding extra luggage, or receiving a special meal. If you do not declare your luggage before arrival, there’s a cost for that to. Surprisingly, in recent years passengers are charged exorbitant fees for checking-in at the airport desk. All of these ensure airlines remain a major con.

While it may seem to be a relevant sticking point, airlines are cunningly trying to offer customers what they really want – value for money. And how do you get that? Through offering what seems like a bargain, a 10 dollar flight (with hidden extras), is a much smarter way to package your product, then a 70 dollar flight.

Customers are as much to blame as the airline industry itself is. While the companies bore the brunt of a rise in competition, they were scheming ways to target passengers with cheaper airfares and discount plan options.

This led to a rise in decisive action to give customers what they truly wanted. As the middle class grows in regions like Asia and Eastern Europe, discount airlines are on the rise to cater to those who are looking for a cheap weekend getaway. As customers became blinded by the low rates, airlines were cottoning onto the idea that they could go deeper.

Eventually, airlines realized they could charge for anything, so they began to discount everything. And airlines began to see their profit margins increase exponentially.

Case Study: The Airline Refund Policy

Airlines offer customers a range of titillating options, including non-refundable tickets. The aim is to keep prices low for the customer with the hopes of booking your ticket in advance. While in practice, this seems to be harmless, in reality it is something else.

As online intermediary sites expand their global dominance, online shoppers are searching for the best offers to commit to. Skyscanner is the world’s leading flight intermediary site, and for good reason. The website offers customers an easy-to-use platform in which to book their tickets. But it comes at a cost.

Often Skyscanner and its competitors Momondo and Kayak also use a second intermediary which acts as a buffer between the airlines themselves. This is where the real art of the deal takes place.

Sites such as Bravo Fly and Kiwi work in tandem with airlines to offer cheap tickets which trap their customers in a sea of deceit.

Customers have complained of factors such as being denied boarding a flight through Indian airspace (with Spice Jet), because there was no transfer visa. While the ticket had no mention of such an event occurring.

There is a remarkable amount of denial within the airline industry. Customers who have been unable to travel due to unforeseen circumstances have been denied refunds (Air Italy, Singapore Airlines). While it is pertinent to note, that there is no limitation on how an airline can offer customers refunds. It is simply at the discretion of each case. This sets a dangerous precedence for the industry as a whole.

What Is The Future For Airlines?

The industry is rife with negative factors, but while it stands to reason that a guiding body needs to be established. Customers also have an important role to play in all of this. They have allowed airlines to bloom and rise to the occasion of meeting their needs.

Without passengers buying tickets, there would be no business. While a discounted ticket may seem appealing, the additional costs involved far outweigh any benefits.

As the larger more domineering airlines such as Qatar, Emirates and Air New Zealand begin to expand by offering services not unlike a luxury hotel. The demand for quality over quantity will expand the market in the right direction.

But before we can benefit from the golden era of travel, we must first tend to the elephant in the room and push him out.