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Columnist: H. James Harrington

Photo: Scott Paton, publisher


Losing the Service Market

While U.S. airlines take a nose dive, international competitors thrive.




During the past several decades, the United States has lost its manufacturing sector and, as a result, has turned to the service sector. Today, we're losing the service sector as well.

In my October and November columns, I wrote about losing my luggage on a trip with American Airlines and Emirates Airlines. Now let me fill you in on how these two airlines reacted to my complaints after I returned to the United States.

American Airlines contacted me three times. They first sent a postcard stating, "We're currently experiencing a higher-than-normal volume of correspondence, and consequently our response to your letter may take a little longer than usual." I next received an e-mail telling me that American Airlines was investigating my complaint and would be getting back to me later. The e-mail was even copyrighted and warned that I couldn't reply to it because my response would be rejected. I finally received a second e-mail, an obvious form letter, that didn't address my particular concerns but told me the company was sorry I'd had a problem and would add 10,000 miles to my frequent flyer account. Note that I've flown more than four million miles on American Airlines and its alliance carriers.

I tried to answer the second e-mail, but my response came back along with a message informing me that I'd have to correspond with the airlines by filling out a form that required all the information I'd previously provided.

I gave up. American Airlines just doesn't care. (Editor's note: See American Airline's response in the "Letters" section.)

I also contacted Emirates Airlines, providing the same data I gave to American Airlines. Emirates Airlines took a very different approach.

I was in China on another business trip when I spoke with the company's representative, John Ford. He apologized about the inconveniences I'd experienced on Emirates Airlines and explained how the problem occurred. It was obvious to me that he had an excellent understanding of the specific problems I'd had on that particular trip. He asked me to send copies of the bills I'd incurred so the airline could reimburse me. Ford followed up our 15-minute phone call with a two-page letter, explaining dates, times and exactly what happened to my luggage. The letter stated that Emirates Airlines would reimburse my out-of-pocket expenses and upgrade my business-class status to first class on my next Emirates Airlines flight. Ford had even taken the time to find out I was flying back to the United States on Cathay Pacific and apologized for not being able to upgrade me on my return flight.

While airlines in the United States cut back on quality and languish in bankruptcies, other international airlines are expanding quality and service, realizing that's the way to profitability. Emirates Airlines plans to offer private suites on all its A340-500 planes, complete with private dining tables and massage-enabled leather seats that convert into beds. For meals, the airline will provide a seven-course meal served on bone china.

I recently stopped over in Frankfurt, Germany, flying on Lufthansa. When I tried to check in, I was whisked off to the airline lounge in an S-class Mercedes. I was processed through security and customs while in the lounge. The lounge was spacious and included private bedrooms for travelers who wanted to take a nap or a shower. I was offered a marvelous meal in a plush dining room and was assigned a personal assistant to look after my every need. I had problems getting online with my computer, and immediately a computer specialist was at my side, working his magic and correcting my problem. When it came time for my flight, my personal assistant escorted me to a waiting limo; I was ushered from the lounge straight to the plane without going back into the airport. I felt just like a rock star. Reinhold Huber, Lufthansa's vice president of innovation, says, "The key word is differentiation--between our competitors and between our customers."

The premium customer is the most profitable, and to attract these passengers, airlines must offer them the best. "Our survival depends on them," states Joe Ferry, chief designer at Virgin Atlantic Airlines.

A competitive new airline, EOS, has a fleet of 757s with just 48 passenger seats instead of the craft's usual 210-person capacity. The airline will be flying between New York and London this fall for fares that run 20-percent lower than British Airlines premium-class rates.

Another airline, Gulf Air, caters to its customers by having a top-notch chef on board to discuss food preferences and timing. Danny Barranger, Gulf Air's vice president, notes, "We're talking about the kind of personalized dining experience that you'd expect in a five-star hotel."

We in the United States must wake up and realize that quality drives profits. Cutting back on quality in service to increase profits is a downward trend that leads to bankruptcy and, eventually, going out of business.


About the author

H. James Harrington is CEO of the Harrington Institute Inc. and chairman of the board of Harrington Group. He has more than 55 years of experience as a quality professional and is the author of 22 books. Visit his Web site at www.harrington-institute.com