Keeping passengers happy is not what makes airlines profitable, study finds

More airlines, like Southwest, are opting for slimmer seats to squeeze in extra customers.

More airlines, like Southwest, are opting for slimmer seats to squeeze in extra customers.  (AP Photo)

Airlines are struggling to keep customers happy but according to a new survey from the International Air Transport Association (IATA), those efforts may not result in higher profits.

IATA surveyed 60,000 fliers from around the world and measured their satisfaction across 75 “individual passenger experience factors” including crew interactions, available services and products for 30 major airlines.

The data did not show any relation between customer satisfaction rates and airline financial success, reports Skift.

“Initially we thought this presentation may also include a link between passenger satisfaction and commercial success,” Tim Jasper Schaff, Director Marketing and Sales for IATA told attendees during a special session on Cabin Trends during the recent IATA World Passenger Summit in Hamburg. “There is academic evidence, across various industries, where they found strong links that if your customers are happy, you’ll be successful. You can measure that, by share price and so on.”

So why does the airline industry differ?

Schaaf attributes the problem to something he called the “spiral of spoilage” in an industry where the bar is constantly being raised by other competitors in the field.  

“The significance of [cabin] attributes moves all the time. For example, flat bed in business class. If you had that 10 or 15 years ago, it was clearly causing passenger satisfaction and people were happy,” said Schaaf.

But when such a feature becomes ubiquitous, passengers take it for granted and it becomes a rat race to keep up.

“If you don’t have it, people will be unhappy. It has moved from driving passenger satisfaction to driving passenger dissatisfaction. It’s a given. Probably we will see similar effects for onboard Wi-Fi, etc. When it’s innovation, when it’s first introduced, it’s a wow factor. Then it’s taken for granted, and if you don’t offer it you’re in trouble. Some people would call it the spiral of spoilage going on in our industry.”

The IATA survey data indicated that airlines may be more profitable by opting for innovations that at first strike, may not be so appealing to customers. Slimline seats, for example, weigh less, allowing airlines to pack in more passengers per square inch. Turning previously free food and beverage items into a more expensive extra is another example.

From a flier’s perspective the results may be pretty grim if more airlines decide to follow the “no frills” model low cost carriers have adopted. But Schaaf says the findings shouldn’t deter airlines from considering passenger satisfaction.

“You can look at it the other way around: that it doesn’t matter whether your customers are happy. That’s not the message, but we couldn’t really prove this strongly.”