Excessive Airline Fees are Turning Customers into Enemies

Last Updated Mar 17, 2010 9:52 AM EDT

If you've traveled by air recently, you're painfully, painfully aware that most airlines are charging you for everything from extra baggage to excessively blue eyes. At least it feels that way.

The New York Times captured the experience quite well:

"In the space of 18 months, the concept of a plane ticket has been transformed from an all-inclusive purchase to a pay-as-you-go plan, turning the relationship between airlines and customers increasingly sour."
And you thought Airplane! was a comedy!

The piling on of fees smells like an industry clawing to stay alive. They've hit the ceiling, more or less, on how much they can charge for tickets, and business travel remains down. So charging for services that previously were free is the no-brainer approach to get more coin to fall to the bottom line.

But it truly is a no-brain approach, argues Harvard Business School professor Frances Frei, an expert on service management. As she writes on her blog, Decision to Lead:

"As airlines chase each other down the fees rabbit hole, customer goodwill is likely to follow. Customers hate being nickled and dimed in-flight, particularly those who fly regularly. So why do so many airlines think they'll prevail by giving their best customers a reason to hate them? It feels like an entire industry is throwing in the towel."
Note to airlines: With time-consuming (and soon-to-be embarrassing) security measures, planes frequently behind schedule, parking hassles, and long check-in lines, air travel is already a chore. Top that off with fees-a-rama and snarly airline employees fed up with unhappy customers, and you get more reasons not to fly.

That's why Frei believes the way out of this death spiral is for the industry to begin competing on service, not against it. "Competing on service can increase the size of the pie and make everyone better off (customers, employees and owners), even in low-margin businesses."

Read her post Airline Fees: A Race to the Bottom to learn why the airlines will have difficulty pulling out of this nosedive.

How do you feel about air travel these days? Do you blame the airlines, or are they just doing what is necessary to stay alive?

  • Sean Silverthorne

    Sean Silverthorne is the editor of HBS Working Knowledge, which provides a first look at the research and ideas of Harvard Business School faculty. Working Knowledge, which won a Webby award in 2007, currently records 4 million unique visitors a year. He has been with HBS since 2001.

    Silverthorne has 28 years experience in print and online journalism. Before arriving at HBS, he was a senior editor at CNET and executive editor of ZDNET News. While at At Ziff-Davis, Silverthorne also worked on the daily technology TV show The Site, and was a senior editor at PC Week Inside, which chronicled the business of the technology industry. He has held several reporting and editing roles on a variety of newspapers, and was Investor Business Daily's first journalist based in Silicon Valley.