Toffee Aussies

This might seem a touch wanky but I am going to put a disclaimer on this one as I feel I might be sticking my neck out.

This post contains my own individual opinions and views on the airline industry. It in no way reflects the views of my employer. The airline that employs me makes every effort to meet the demands of its customers, whilst keeping its airfares at a level that enables more Australians to fly. I do not wish to disclose my employer in this post, however, should that come to light in any manner, I wish to stress that this is me analysing the market in my own words having the experience I have within the industry, which is extremely limited, and that in no way does it reflect the attitudes of the organisation I work for. This blog is intended to be light hearted and the comments made in this post should not be taken seriously.

As I said, that probably is a bit pretentious on my part. I doubt anyone of any real importance will ever read this blog, but just in case the wrong person came across it who didn't understand what we do here, I wanted to make this clear to them.

When I worked in a Low Cost Carrier's call centre I received a great many complaints that left me scratching my head. I ended up working in the Customer Care department and my days were filled by aggreived customers appauled at the lack of service they had received on our flight.

Every time I sat there listening to someone who was horrified that the food trolley had run out of food, or their seat didn't recline properly, or they didn't get the seat they selected online I thought to myself, you do realise this is a budget carrier don't you? The industry stopped calling itself "Budget" a while ago because they thought it gave off the image that it was cheap, instead opting for the "Low Cost Carrier". But ultimately, you can call a shovel a spade, but you'll get what you paid for.

I think Australians failed to understand this concept with the introduction of the Low Cost Carrier niche in the Australian market. I understand the real complaints that people had and often found it difficult to deny someone's request based on policy alone. I dealt with a number of passengers with genuine complaints and, believe it or not everyone I worked with in that setting would make an honest attempt to assist in anyway possible.

These scenarios aside, there is an this image that certain low cost carriers are just out to cheat everyone and passengers are willing to argue for everything and anything they can. The people who will call up and say "I booked this flight a month ago for 200, now its on sale for 100. I want you to refund the difference." which is a call I took once must be kidding themselves surely. In a less "professional" setting I would like to have retorted this by saying "Alright fuckwit. You try that in Myers or Woolworths and see if that works. Why do you come to us and expect it to?" These airlines face a continual stream of complaints that if they were directed at any other business would be laughed at. The Australian low cost carrier market is still relatively young and so it is still being defined by its buyers and suppliers. We are seeing passengers demanding a high level of service from something that traditionally had none. Ryanair in England is the grand father of low cost carriers and is renowned for being cheap and nasty. It has its eyes set so heavily on its bottom line and away from the concerns of its customers, that it applied to the aviation safety authority in Europe to allow it to offer standing areas for its passengers. This is where low cost carriers came from. Buy the ticket, get on the plane,
shut the fuck up, get on your way, we'll see you next time.

In Australia on the other hand the attitude of passengers is laughable. "Excuse me. You mean to say that I paid $200 for an airfare that previous to the collapse of the Ansett/QANTAS duopoly would have cost me $400 and I have to use my legs to walk on the aircraft? I don't think so laddy boy. Wheres my gold chariot? Why isn't someone carrying me?" An exaggeration? Yeah probably, but I have spoken to passengers with such an air of entitlement that it wouldn't have surprised if someone had requested this.

What is happening in Australia is an airline like Jetstar and Tiger, who came into the market expecting to behave in the same vein as its fore fathers, have been forced to adapt to a market with much higher expectations. Each has had to implement a Customer Resolution department to meet the high volume of customers who are unsatisfied with the service they received. Now in economic terms we call these sophisticated buyers demanding a higher quality product. But think about it for a moment. The Low Cost strategy is just that, low cost. The idea is to sacrifce quality in order to control costs. When quality is demanded, something must give. And what we have just seen in Tiger is a healthy helping of give.

When a company has to introduce such a strategy, and the strategy doesn't have a direct impact on revenue, this increases the cost of operating the airline. By bitching and griping about every little misdemeanour experienced on these airlines, you have made it more expensive for these airlines to operate. When this happens, the airline has two options. They either attack the shit out their bottom lines to recover the costs from elsewhere, or they start to move away from the Low Cost Carrier market, into the murkier, unclear waters of the MCC (an industry joke meaning More Complex Carrier). We have seen Virgin for the last couple of years make an interesting transition through this stage and now its not quite sure what it is any more.

I think the best contrast to draw is Tiger Australia and Jetstar. Virgin has forever been the teflon man of the skies in Australia, shitting rose scented golden eggs in the eye of the consumer. Jetstar and Tiger are a great example of what is happening because they have always been seen as the cheap and nasty options. In other words, they are Low Cost Carriers. This is an awful joke, but I recall sitting on a flight back from KL with Hailz on board a Tiger flight quipping that this might be the last thing we ever do. She asked what I meant and I said well low cost airline are perceived as being not that safe (this is not entirely true given that Jetstar has never experienced a safety issue, whilst its full service parent Qantas, well you know the story.). Then I asked "isn't it ironic, don't ya think?" she asked, "ironic? Dancing Davey Dave, whatever do you mean" and I replied "well, its like raaa-iiii-aaaiiinnn on your wedding day, its a free riiiii-e-iiiddeee when you're already there". She then beat me savagely for the next five minutes or so before a flight attendent asked us to remove ourselves from the flight and discuss the matter with airport officials. The laughs keep coming. I'd not long been in Singapore and was down the pub for a manly pint (Thanks "How Not To Live Your Life) and met a few of the locals. They asked what I did for a crust and I informed them I'd moved to Singapore to work for an airline. They asked if that was a LCC and I said yes, we're so cheap we don't fit our planes out with navigation equipment, we just give the pilots a pair of binoculars and a compass. I think my Australian flavour of humour was lost on them as they, despite their obvious concern over this fact, whole heartedly accepted this as a way of doing business in the budget world. I did manage to clear that one up and hope that they continue to enjoy our services in the future, safe in the knowledge that we do indeed fit our aircraft out with the latest in navigation attire.

Why Tiger and Jetstar make such an interesting comparison is that you can actually see that these are two airlines faced with very similiar dilemmas but they attacked it in a different manner. Tiger went with targeting the bottom line. Sure they still put in a customer service department and have added more customer friendly products to their range (which isn't really aimed at improving the customer experience, but rather the revenue stream), but overall they have continued to try and offer the cheapest package they possibly could. They have only just upgraded their reservation system last month, a system that has been outdated for nearly three years. Their website has not changed in their seven years of operation (beginning in Singapore) and it shows.

The thing is, with rising fuel costs and increased demand for higher levels of service, something had to budge. Unfortunately it was the aviation safety authority, who took the action of grounding them. We are still waiting at this stage to see if Tiger Australia ever take the air again. They have never made a dollars profit in their three years on Aussie soil and, given the impact this will have on their reputation, they probably never will. Don't be suprised though if they stick around in the market despite the continual loses.

I say this because Tiger's main share holder, despite making it evidently clear that they have nothing to do with the running of the airline, is Singapore International Airline. Call me cynical, but I'm sure, whilst SIA and the Tiger establishment saw the Australian market as being potentially profitable, I think there is also a bit of cat and mouse being played out with Qantas having pushed its way into Singapore with Jetstar Asia and rumours surrounding a Qantas full service international carrier based out of Singapore (Don't ask me if thats true because I have no idea), not to mention SIA's new long haul international Low Cost carrier beginning operations next year. One could easily suggest that SIA and Tiger's willingness to lose money in the Australian market whilst seriously undercutting Jetstar might have something to do with taking Qantas' focus off the rapidly growing, highly lucrative and more understanding of the budget format, Asian market.

Jetstar on the other hand have begun the transtion you asked it to take. It long ago threw up the white flag at being the cheapest airline in Aus, instead contenting itself with having the highest "Price Competitiveness" Index. This is a score awarded to the airline based on a range of features, not just price alone. As they increase their services, this increases their complexities and ultimately increases their price.

This is what we've done as consumers. We've all but driven the cheapest offering out of the market by making it unsafe and unreputable and made all other combatants head for the safety of the MCC category. This might be what we as customers want, a higher standard of service. But just remember that when you're on line looking to book your week away to Bali to stock up on Bintang singlets and knock off Ray Bans, that the air fares are likely to be much more expensive as a result of this. Don't call up the airline complaining about how expensive the fares are because we did it for you. We hope you enjoyed your flight today.