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A lot of people must only care about price when buying airline tickets.
Nothing else explains why there's not only travel websites such as Expedia but also one called CheapOair.com. Travelers can also search on Cheapflights.com, another called Cheapflightsfares.com and more than a few others that look pretty much the same.
People attracted to anything called Cheapo probably aren't Delta Air Lines frequent flyers, and Delta categorically rejects the idea that air travel is a commodity business where only price matters.
This is the story behind a decision that just made the news, this time as Delta extended its block on middle seats through the end of April.
It's about safety, too, as Delta is the last U.S. airline to keep the middle seat open as a way to lower the risk of spreading the novel coronavirus on board. But it's also a way to add a little more value to the experience of Delta's customers flying in a pandemic.
Price matters. So does how a traveler feels about their personal space at 35,000 feet.
This is a move worth paying some attention to for anybody in a business with plenty of competitors eager to make the competition only about lower prices.
The idea of air travel as a commodity is a little stretch of a common business term, as commodity means a product that's the same, no matter who provides it. No. 2 yellow corn is no different whether it comes from Iowa or Minnesota.
A pure commodity is pretty rare, yet a lot of markets have so many competitors and so few ways to sell a different product that no one can raise prices without expecting to immediately lose sales.
One trick in succeeding in a business with a lot of competitors trying to use low prices to win is elevating the service into an experience, considering the whole end-to-end process and looking for ways to make what you offer just a little different and a little better.
To decide if airline travel is a commodity business, imagine two airliners leaving the Twin Cities at 8 a.m., both scheduled to arrive at the same airport in Florida a little after noon. A ride on the red plane costs $350, and a ride on the blue plane costs $300.
All the customer wants is to be in Florida on time. So why would anyone pay more to fly the red plane?
As the novel coronavirus arrived a year ago, plenty of them did.
Delta is one of those companies that uses a measure called net promoter score, and a score of zero basically means the company has as many detractors as it has really happy customers.
Just before the COVID-19 outbreak in the United States began to upend life early last year, Delta had a net promoter score in the high 40s and low 50s. As the pandemic rolled on, Delta changed its food and beverage service, blocked the middle seat, stepped up cleaning and took other measures both to improve safety and help customers feel more comfortable flying.
It's net promoter scores moved up by summer into the 70s and has stayed there.
As described last week by Bill Lentsch, Delta's chief customer experience officer, Delta's customers got more of what they wanted. They wanted stepped-up cleaning. They didn't want traditional food and beverage service if that meant a lot of contact with onboard staff. And they wanted more of their own space.
"Our customer is sharing the feedback that it does matter," he said, alluding to things such as onboard entertainment and internet connections as well as measures implemented since the onset of the pandemic to increase comfort with air travel.
Having an empty center seat between fliers is likely safer than flying when the plane is full, yet going into an office building or supermarket is riskier than being on an airliner, an article in the Journal of the American Medical Association said.
Delta isn't suggesting the center seat is unsafe. It's suggesting customers should get the experience they want.
This can be seen working in Delta's yield, a measure of revenue per paying passenger per mile of flight. Airlines cut capacity dramatically after the virus hit, and fourth-quarter yield for American Airlines declined about 15% while at United Airlines it slipped 16.6%.
At Delta, unwilling to drop prices to fill more of its planes, its fourth-quarter yield was both a lot higher than competitors and was barely down at all from last year's fourth quarter. The customers are voting.
"Ours is a premium product, we position it as that," Lentsch said. "It's tailored more toward the business traveler but we'll take all travelers."
Dividing the market into business and leisure is just the first cut on the market sorting airlines do, which has led to some well-known industry practices such as offering cheaper tickets for a Saturday night stay. (Business travelers, unwilling to give up their weekends for the boss, happily spend more for a flight that leaves early Monday morning.)
Lentsch pointed out that Delta wants to give a customer on vacation a better experience in the back of the plane, too, but Delta hasn't given up on business travel even as it collapsed in the pandemic.
There is still no way of knowing what the market looks like once the pandemic fades, but one of Lentsch's observations is if work from anywhere really takes off, employees who moved hundreds of miles away from the office are likely to get called back into the office once in a while. They will be flying.
Even if you ignore what any Delta executive says and just watch what they are doing, obviously they think business travel snaps back with Delta having done nothing but strengthen its position in the market through the downturn.
Otherwise they would have tossed the old business strategy overboard by now, and any unsold seat in the back of a Delta plane would be showing up high in the search results on CheapOair.com.
lee.schafer@startribune.com 612-673-4302
