In many respects, Facebook takes the limelight when it comes to looking at how an airline is engaging with the community. However, over the past couple of years Twitter has inadvertently become the public helpdesk for brands around the world. Many airlines have been quick to establish a presence here to ensure that where ever there are questions and praise (and to some extent, complaints) a representative is there is respond in 140 characters.

US airlines, like many other US brands, have been quick to build their Twitter teams and are blazing a trail for many other global airlines to follow. SimpliFlying and Unmetric decided to dig a little deeper using the Unmetric platform to see if there is a clear leader or whether all airlines are doing a similar job. We collected and analyzed the data for the last thirty days to discover the benchmarks around which other airlines can compare themselves.

Volume of Tweets

JetBlue is often held up as the darling of Twitter but when it comes to raw number of Tweets, both DeltaAssist (Delta’s dedicated customer-service channel on Twitter) and American Airlines beat them hands down. The customer support channel for Delta handles more than twice the number of questions than JetBlue. In terms of raw numbers, all seven airlines sent a total of 11,398 tweets in the last 30 days – that’s an average of 16 tweets per hour.

Fingers on the Buzzers

The aviation industry has some of the best response times of any sector but blazing a trail for others to follow is Delta Assist. The Twitter team at Delta managed to respond to 4,235 questions in the last 30 days with an average response time of just 11 minutes. They’ve either got some speedy typers or an army of people with their fingers on the buzzers waiting to reply.

Both US Airways and United are using their Twitter accounts to provide customer support but are not able to match the likes of Delta and JetBlue at the moment. It’ll be interesting to keep an eye on their response times to see if it comes down in the next few months.

Round The Clock Service

Out of the seven airlines we analyzed, only JetBlue and Delta Assist appear to have 24/7 operations. We used EST as the reference time and when we aggregated all the tweets it produced the revealing graph below. Clearly for most airlines, their Twitter support is a 12 hour operation. It’s possible that the data is skewed a little bit because the airlines will have their Twitter teams in different timezones, but most seem to be operating between 9am and 6pm EST.

With US Airways’ 8 hour response time, it crossed my mind whether their operations are in the right timezone. If most of their customers are from the West coast they could have a long wait if they post in the afternoon as the Twitter team will have all gone home for the day.

A Tweet By Tweet Breakdown

It’s interesting to see that nearly all US airlines are using Twitter as a customer support channel rather than a platform to promote themselves. Only Virgin America and Southwest Air are actively putting fresh content out on Twitter while the other 5 are focused almost exclusively on replying to customers. Delta have gone down the same road as Dell with road of one account for brand news and one purely for support and with the volume of tweets they send it’s probably a good idea. As more and more brands create dedicated support accounts on Twitter it might only be a matter of time before JetBlue and American Air decide to set up their standalone ‘support’ account.

Most airlines certainly seem to know that in order to manage their reputation online they need to be where the conversations are happening. Delta Assist are, in our opinion, laying down the benchmark for the sector with their lightning quick response times while sending the most number of tweets. JetBlue has always been the poster child for brands that get Twitter, but if Delta Assist continues to set the benchmarks, we might have to hold up a new king of Twitter.

Find out more about how Unmetric can help your airline benchmark its social media prowess here. Or drop us a line directly at unmetric@simpliflying.com. Look out for even more exciting stuff from our collaboration with Unmetric in the days to come!

You can see previous posts by Unmetric here.

• Airlines on Twitter Monthly Report for July 2011 reveals that more airlines have Twitter accounts than loyalty programs
• Delta Assist brings airline customer service to Facebook
• How airlines and airports can dramatically increase engagement on their Facebook Pages through one simple action
• Airlines on Twitter Monthly Report for August 2011: Cebu Pacific joins the big league and scores high!
• Airlines on Twitter in June 2011: Delta Airlines is the breakaway “listening and talking champion”

Throughout the past year airlines have suffered massive financial losses due to record high fuel prices, a weakening global economy and declining demand for airline seats.

In an attempt to increase their financial stability many airlines in the United States, and around the world, turned to the ancillary revenue generated by charging passengers for their baggage.   As angered as passenger have been regarding the checked baggage fees they have helped major airlines in the United States collect more than US$1,145,385,850 in revenue during 2008…and baggage fees weren’t even initiated by most airlines in the United States until the middle of the second fiscal quarter of 2008.

The fourth fiscal quarter of 2008 saw airlines pull in US$498,600,000 alone!

Checked baggage fees have always provided a significant revenue source for airlines, however prior to the past year this revenue was for excess baggage and overweight baggage. Airlines that do not allow any free-checked baggage, such as American Airlines, now consider all baggage on domestic flights to be ‘excess baggage.’

Airlines that allow passengers to check baggage at no fee, such as Southwest Airline and its policy to allow up to two pieces of baggage at no charge, still generate financial benefits of excess baggage fees. Southwest Airlines raked in US$25,226,000 in baggage fees during 2008, or approximately US$69,112.32 per day.

American Airlines, the first ‘Legacy’ airline to begin charging for all checked baggage brought in US$ 277,991,000 in baggage fees in 2008.  To break this down, American Airlines’ baggage fees bring in approximately US$761,619.17 daily from passengers checking bags.

Two months ago I addressed baggage fees here, 28/03/2009 – Checked Baggage Fees : Will They Go Away? Can You Avoid Them? , and stated I that I thought baggage fees were here to stay.  Looking at the overall baggage free revenue break down I am now absolutely sure these fees are here to stay.

Wonder how much your airline earned in 2008 collecting baggage fees?   Check out the info below from the US Bureau of Transportation Statistics.

American Airlines (AA): US $ 277,991,000
US Airways (US) : US$ 187,081,940
Delta Air Lines (DL)** : US$177,063,000
United Air Lines (UA) : US$132,994,000
Northwest Airlines (NW)** : US$121,599,000
Continental Air Lines (CO) : US$99,315,000
JetBlue Airways (B6) : US$35,307,650
AirTran Airways (FL) : US$29,400,960
Southwest Airlines (WN) : US$25,226,000
Alaska Airlines (AS) : US$24,773,000
Frontier Airlines (F9) : US$15,155,820
Hawaiian Airlines (HA) : US$11,627,180
Midwest Airline (YX) : US$3,977,840
Virgin America (VA) : US$ 2,568,560
Sun Country Airlines (SY) : US$1,304,900

**Delta Airlines & Northwest Airlines are now one airline, operating as Delta Air Lines, under the airline designator “DL”

With airlines earning roughly US$3,138,043.42 daily from baggage fees, do you think we’ll see them go away any time soon?

• Delta airlines excess baggage policy for US soldiers. Did they do a good job managing the crisis?
• Ryanair’s New Fee To ‘Check In’ & The Real Cost Of Some Low Cost Carriers
• Will Delta and Northwest merger bring back the glory of Pan-Am?
• Boston to New York for $7? Can someone explain why?
• Three economics tips for airlines, and why a baggage charge does not make sense

Charging the passenger for value-addition

A comment on the hotly debated article I wrote on RyanAir’s competition for charging passengers got me thinking. Here’s what Shyrose had to say:

“RyanAir should link up with the local taxi companies of the detination airports and agree a deal with them, whereby flyers can book their taxi on the plane so it’s ready and waiting for them the other side. Taxi companies give Ryannair a referral fee, and Ryanair will be positioned as offering greater value service for customers.”

And I think Shyrose is bang-on-target. Customers don’t mind paying for additional services they value. And this is especially true when the offer is in-sync with the brand expectation. There are ample examples of such value addition. Travel insurance and car rental are popular ones. The intelligent seating system I talked about in an earlier article is another. Singapore Airlines has “boarding pass privelages” for its flyers, where they get discounts at restaurants in major cities by presenting their boarding pass. And the airline probably gets a commission from the restaurant for this.

Such tactics are great for the legacy airline, since they’re anyway charging a higher fare for value-added service on-board, and the target customer would be the right one for such an offering.

Un-bundling the product and service

People mention RyanAir and easyJet as champions when it comes to earning ancillary revenues by charging the customer for everything other than the seat – 16% of easyJet’s revenues are from ancillary sources. But another airline that has done a good job with un-bundling the product is Air Canada. You can choose the fare based on your preference of the level of in-flight amenities.

Where this approach gets ugly is when airlines start charging for everything from a cup of water (US Airways) to even the loo (RyanAir?)! And this is where the whole resonance with the brand becomes important.

How far can the brand be stretched?

Everyone knows that RyanAir is a low-cost airline and you’re only paying for the seat. You can look at a simple chart of all additional fees on their website. RyanAir is very, very transparent about what you have to pay for, and what’s included in the fare. And this transparency only strenghtens the brand promise further – that of the cheapest seat.

Unfortunately, this is a something even legacy airlines are doing, but without the transparency. For example, information on additional charges is spread all over the American Airlines website, and you’re bound to learn of an additional charge at the counter. This creates a lot of confusion in the travelers mind and erodes brand loyalty.

Here’s a simple model I feel airlines should follow: legacy carriers should largely go for providing value-added services and then charging for them, and budget carriers should mostly un-bundle their offerings so that passengers can get some additional comforts, other than the seat. Of course, they should learn from each other. But at the same time, should avoid doing something absolutely detrimental to the brand. Need an example? Singapore Airlines charging $100 for a round-trip flight for choosing an emergency-exit row seat! I know for a fact that this move has annoyed even the most loyal customers!

What do you think? How can airlines earn ancillary revenues without resulting in a conflict with the brand? Does the solution I proposed make sense? Any examples of airlines doing this well?

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Here’re three reasons why bankruptcies are good for the industry overall.

1. Increases industry revenues. Many airlines are not making money because fares are too low, compared to costs. More bankruptcies mean less price competition for the remaining airlines. They can then raise fares with less fear of undercutting. This would help them cover costs, and increase profits for the industry overall. Cathay Pacific was able to optimize flight times between Hong Kong and Vancouver after Oasis HongKong went bust.By contrast, in mergers, the new combination of airlines takes long to rationalize routes, and when they do, they still charge low rates since fares never really increased the way they could have, due to sudden disappearance of competition from a route.
2. Dramatically lower costs. When airlines close for business, they lay off a large number of people. These people increase the labor supply in the market, and are hired by other airlines at lower wages. This reduces the overall wage component of the costs. When airlines go bust, they also get rid of their planes at very low prices. They are sold to other airlines, which can then put them on their under-serviced routes. Again, reducing the cost of the equipment. AirAsia is a great example of an airline, which inherited two planes with just a $0.50 down payment, and  was able to tap on the abundance of cheap labor, right after 9/11.
   

   In a merger, however, lower costs through economies of scale can take very long to achieve, if at all. This is because the newly merged airline often finds it difficult to manage staff homogeneity. This has been a thorn in the US Airways and American West merger, as well as Air India and Indian Airlines merger. Both the airlines’ staff still maintain different seniority levels, different pay scales and often fly their original routes only, resulting in hardly any cost reductions through rationalization.

3. Survival of the fittest improves service. When fewer airlines operate a route, and make more money on that route, service inevitably improves. This is because these profits can be pumped into improving customer service, on the ground and in the air. Once a couple of airlines have gone bankrupt, the surviving ones generally take the “honor” of being the fittest, and the service often notches up a bit. Not only that, remaining carriers often come to the rescue of the stranded passengers of the bankrupted airlines, as they see a ripe opportunity for acquiring new customers.

At the end of the day, if the industry overall benefits from the perishing of some airlines, isn’t that better than going through the cumbersome merger process which is fraught with the risk of failure anyway?

Ponder that!

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Links:

1. Cathay Pacific reschedules Vancouver flights
2. US Airways and American West pilots feuding
3. AirAsia starting up by with only $0.50 downpayment

• Why a Qantas and British Airways merger is good (and why Qantas + Cathay Pacific will be even better!)
• Are airlines with stronger brands less likely to go bankrupt?
• Boston to New York for $7? Can someone explain why?
• Thoughts on the United and Continental merger – as quoted in the press
• Five reasons why budget airlines in Asia are successful