Afraid of Competition? U.S. Airlines vs. International Competitors

March 24, 2017 at 6:04 pm | Blog

Last blog post,  I wrote about the disintegration of loyalty programs, specifically mentioning Delta and Marriott hotels. This is a trend happening across industries. When a company provides a diminishing return of rewards to loyal customers, shouldn’t that company be concerned with how they are perceived and how they deliver customer service?

 

In other words, if loyalty programs don’t provide a carrot, then how must companies rebalance the scales? Perhaps they make up for it with terrific service if they are to sustain some level of competitive advantage. Or, they make every effort to block the good service from competing.

 

You may have seen the news last week that “the 25 member NY and NJ Congressional delegation asked the President to stop a Gulf based airline from starting a roundtrip between Newark and Athens. This is not the first such battle. U.S. airlines and their unions are trying to put the brakes on low-cost carrier Norwegian as well as airlines of Emirates, Qatar and Etihad as they battle for further expansion competing with U.S. carriers

 

So, what? You may ask. One big concern is that U.S. flag carriers don’t want to compete on price with Norwegian, nor on the much heralded five-star service of the others who chip away at long-haul markets to the Middle East and Asia. I am not taking a position one way or the other on whether the U. S. should offer valuable market share to foreign airlines. Perhaps the number of travelers has grown substantially so more service benefits the flying public. This is how it was decades ago when there were more than 3 or 4 major U S carriers.   Today they simply compete for who is less unpleasant.

 

Competition is healthy for any industry. It generally raises the bar for all who serve in it. Too many companies rely on lower prices, big investments in marketing and advertising, and/or various price-based promotions. This pushes companies into a commodity corner. In our study at Smart Advantage of over 275 companies, more than 80% do not measure, support, or promote the things most valued by customers. If they did, they would be differentiating themselves without relying on industry blockades, price wars, or limited ROI advertising.

 

Airlines today have limited competitive advantages; they have turned themselves into commodities with so few exceptions. Has that happened in your industry? How do you stand out? Can your employees articulate your differences? It is imperative for good corporate health.