For a change, American Airlines is making a good business decision. Instead of whining about how it cannot run profitably, it is doing something about its bottom line: raising its prices. There has been lots of news coverage about the $15 fee which American Airlines is charging for the first piece of checked luggage. Good for them. It’s not personal; it’s just business.
When a business is losing money, as most airlines are doing, the business gets to do at least one of a very few things:
- Increase revenue
- Reduce costs
The airlines have reduced costs, sometimes admirably and sometimes ruthlessly, to such an extent that anything even vaguely resembling customer service has largely vanished from the entire industry. Everyone I know who flies commercial airlines dreads the experience.
For the last several years, the airlines have been trying to increase revenue by a) waging a price war and hoping to make up the difference in volume of tickets, and b) pleading with the US government for more tax relief. With luck, yesterday’s announcement marks the beginning of a new airline industry phase, one in which the airlines charge enough for their products that they can
- safely transport passengers,
- in comfort,
- while fairly compensating their employees.
Yes, it can be done and charging a fair price for the product delivered is a key piece of the puzzle. Here’s hoping that they improve product quality while raising prices. It’s about time.
Let us see if the public perceives an improvement in quality and accepts that it’s worth the price increase. That is of course every company’s great fear….