American Airlines is working double-time to tell their discount passengers that they’re not welcome.  How?  They’re using the not-so-subtle additional charge for basic services.

Starting soon, AA is charging discount passengers a $15 fee to check their first bag.  This is on top of the $20 fee that most airlines are charging for a second checked bag.

Photo Courtesy of Flickr User

And while the news reports about this new fee detail the billions in losses the airline industry faces because of rising oil costs and several leading publications have looked at the effect this will have on the already pathetic customer service record of the industry, few have made any reasonable suggestions for how to fix the real problem.

What is the real problem?

You can’t be both a full-service airline AND a discount airline.

American wants to keep their full-service clients (business class, full-fare coach, AA Rewards members, etc.) AND nickel and dime their discount fliers.

So why offer a discount rate at all?  Because they want to compete with the discount airlines (Jet Blue, TED, Spirit, etc.) on price.

But buying a ticket from a discount airline means you’ve accepted the discount philosophy and you’re shopping on price.  You know that you’ll pay extra for a meal and to rent headsets.  You understand that there will be certain limitations on things like baggage and onboard amenities.

So why does American even offer discount tickets?  Why don’t they just forget the discount rates and focus on the customers who are willing to pay more for a better experience?

Because they’re afraid.  If they charge a reasonable fee for their services (meaning raising fares to cover their fuel bills) they might lose a lot of customers, even if continuing on their current path means losing a lot of cash – they lost $330 million in the first quarter of 2008 alone! – and alienating customers.

Seems to me that they’re already on a path toward jettisoning true discount shoppers by seeing how much the quasi-discount fliers will put up with.

A quasi-discount flier is someone who logs onto Travelocity or Orbitz and finds the cheapest flight listed that meets their time/date requirements without considering other costs.

Except a simple review of the types of people who buy airline tickets will show that, while true-discount fliers will never convert to full-pay or luxury customers, some quasi-discount fliers DO transition to a higher-paying customer.

Why, then, charge a fee that will alienate true-discount fliers AND annoy the quasi-discounters?

Because American Airlines is thinking short-term.  Because they need a quick fix to staunch the stock price bleed.

Everyone agrees that solving such a bold problem ($330 MILLION is a BOLD problem) requires a bold solution.

Here’s mine: 

Bow out of the discount ticket wars.  Make your planes the best in the business, with complimentary everything on every flight.  Find real perks to give first class, business class and frequent fliers (a pillow is not a perk).

Launch an ad campaign touting that flying is part of the “American Dream” and that they can fly the same way folks did in the golden age of air travel.

Run 30-minute infomercials that show off the new “American” way to travel. 

Push “green” initiatives by offering tips on how to pack light and how fewer pounds per passenger helps save thousands of gallons of fuel everyday. 

Banners and billboards would ask people to “Rediscover what it means to be an AMERICAN.”

(I’d love to make part of each plane the no-children zone, but I can imagine the backlash that would create.)

Funeral homes know that it’s just too hard to offer a full-service experience and a discount price at the same time.  True discounters don’t knock on your door if you advertise full-service, and most full-service buyers don’t want to go to a discount firm. 

It’s about time that the airline industry figured it out.  Before we taxpayers have to spend hundreds of billions of dollars saving their skins.

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