Airline loyalty, does it still matter?
Aug 28, 2014, 11:30 am
#16
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I too wonder why those two you mention (B6 and VX) are often lumped in with LCCs. Do they operate at a lower CASM than others? (The investment community sometimes defines LCCs purely on this, whereas many others define it on the fare and/or service side of things.)
I think of B6 and VX as marketing a better experience and trying to capture high fares for it. Since I don't fly them, I don't know how true the "better experience" part is, but if I had to choose either of them vs. flying a legacy as a non-elite, I think it would be an easy decision in their favor. (Although Jetblue's operational meltdowns might worry me a bit on a winter trip.) But that decision - paying a high fare to get a less-bad service - doesn't meet the traditional definition of an LCC.
I think of B6 and VX as marketing a better experience and trying to capture high fares for it. Since I don't fly them, I don't know how true the "better experience" part is, but if I had to choose either of them vs. flying a legacy as a non-elite, I think it would be an easy decision in their favor. (Although Jetblue's operational meltdowns might worry me a bit on a winter trip.) But that decision - paying a high fare to get a less-bad service - doesn't meet the traditional definition of an LCC.
Aug 28, 2014, 9:05 pm
#17
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Kind of, is right. I don't even know what a US LCC is anymore. The term keeps getting applied to B6, WN and VX when they're often more expensive than the legacies. Southwest hasn't been a reliably low-fare alternative for years. We don't have a RyanAir analogue in the North American market although NK is heading down that road.
United is trying to run a no-frills LCC-type product and a premium experience for GS types within the same fuselage, and it's proving a very tough go. But management seems to believe that for most people, service, amenities, and operational reliability matter less than low fares. I do not think it is a coincidence that SFO-based VX swung to profit right when UA began deteriorating under new management. Low fares are not the be-all and end-all; these days UA typically comes up first in my fare-based Kayak searches, but I delete the UA search returns unless it really doesn't matter when and how I get to my destination, which is seldom.
Reliability trumps loyalty, too. I have tons of miles and vestiges of status on United, but still avoid them these days.
United is trying to run a no-frills LCC-type product and a premium experience for GS types within the same fuselage, and it's proving a very tough go. But management seems to believe that for most people, service, amenities, and operational reliability matter less than low fares. I do not think it is a coincidence that SFO-based VX swung to profit right when UA began deteriorating under new management. Low fares are not the be-all and end-all; these days UA typically comes up first in my fare-based Kayak searches, but I delete the UA search returns unless it really doesn't matter when and how I get to my destination, which is seldom.
Reliability trumps loyalty, too. I have tons of miles and vestiges of status on United, but still avoid them these days.
As for LCC, I think maybe a better new definition is low operating cost for the airlines but high fares for the passenger. I think that is the reason why LCC is getting diluted with the legacies. Whereas before, the main selling point for LCC is low fares and no frill service, nowadays, the legacies are adopting that model (at least for cattle class), such that there is little to distinguish a legacy carrier and a LCC. And now the there is little real difference in how much you pay between a legacy or a LCC. So maybe a LCC-dominated world is "right" after all, only its low cost for the airlines, but high cost for the passenger.
Last edited by WindowSeat123; Aug 28, 2014 at 10:18 pm
Aug 29, 2014, 4:33 pm
#20
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But analysis I have seen in projects (sorry, these are proprietary studies for Clients and not published works) shows that customers who fly infrequently do not always choose the cheapest carrier. Other factors such as schedule, provision of IFE and general brand awareness as well as the loyalty benefits themselves also contribute. This can be true for both business (e.g. if the CEO "likes" Virgin Atlantic) as well as leisure passengers.
For example, Airline A has flights leaving at 6:15am and 9:45am, priced at $200 and $225, respectively. If the later one arrives at an acceptable time, a lot of travelers will say, "I'll pay the extra $25 so I don't have to get up at 4am." They are not simply choosing the cheapest flight. It's more like they are choosing the cheapest comfortable flight.
Example 2: Airlines A and B both offer service to the destination. A flies nonstop and is $25 more expensive. B offers connecting service that takes 2 hours longer. Most travelers are capable of judging whether or not it's worth spending $25 to save the time and frustration of making a connection.
Aug 29, 2014, 6:03 pm
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Aug 30, 2014, 9:46 pm
#22
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Not in my opinion, not with credit cards at least. If I fly whomever is cheapest and most convenient and buy Economy Plus/Comfort/Main Cabin Extra combined with the airline CC I'm basically low tier elite. Flying when I want for the price I want to pay beats being captive to an airline that doesn't give a toss about me.