The American consumer’s capacity for abuse is of great fascination to me. I grew up in an era when companies had to provide great service and treat their customers with tender loving care to remain in business. This will likely come as a huge surprise to millennials, but the mantra of all U.S. businesses once was, “the customer is always right.”
LHOL just thinking what would happen to a marketing person today for uttering that phrase to a CEO today. It would be worse than saying the N word.
The best marketing people today are those who can correctly gauge how to screw and gouge consumers every which way to Sunday and keep them coming back for more. I imagine at Harvard Business School every student must watch a classic scene in the movie “Animal House” where a character played by Kevin Bacon undergoes a fraternity hazing and is forced to bend over and get paddled. After each blow, he’s required to say, “thank you sir, may I have another.”
There’s an abundance of talented marketers working in the wireless, banking, and automotive industries but the unrivaled best work for U.S. airlines. I’m in awe how U.S. airlines have transformed themselves and were among the first to appreciate that being nice to their customers was a misguided business model.
The disruption began slowly with the introduction of fees to check luggage. Then there were fees to book window and aisle seats, to gain early boarding, to buy sandwiches and other food that would never sell below 35,000 ft., to talk to a person overseas to make a reservation, and then a fee for changing the reservation. It’s only a matter of time before U.S. airlines adopt a growing restaurant industry practice of tacking on a service charge for providing cabin crews and baggage handlers, much like an eatery where I recently dined that added a five percent surcharge for its kitchen staff.
As an aside, isn’t it time we started tipping pilots and flight attendants? If we are expected to tip someone just for pouring a cup of coffee, seems to me a cabin crew that safely flies hundreds of people across the country are deserving of gratuities.
Flyers of U.S. airlines like to yell and scream, and sometimes they go so far as threaten a boycott, which the managements of U.S. airlines no doubt find quite amusing.
Back in April 2017, an elderly Vietnamese American United passenger named David Dao was injured after some security goons beat the living daylights out of him because he refused to give up his “reserved” seat when the airline said it needed it for someone else. A video of the incident went viral, and the public was outraged. The hashtag #boycottunited trended on Twitter for days, with legions of twits vowing they’d never again fly United.
United subsequently reported stellar $2.1 billion in profits and then CEO Oscar Munoz crowed in an earnings release, “I am incredibly proud of how our employees delivered in 2017, achieving our best-ever operational performance. Reliability is an important pillar in our continued focus on further improving the customer experience.”
What’s allowed the airlines to get away with their abuses are their frequent flyer loyalty programs. American pioneered the first loyalty program in 1981, and at the time it was a brilliant idea. In those days, Americans had a real choice in airline carriers, with powerhouse brands such as Pan Am, Eastern, and TWA offering coast-to-coast and regional service.
Rival airlines quickly copied American’s innovation and soon the program was diluted. One no longer had to fly an airline to earn miles but could get them buying goods and services and charging them on credit cards.
Delta last week declared the rewards party was over. The airline announced sweeping changing to its SkyMiles rewards program, a revamping so monumental that Washington Post travel writer Chris Dong declared it dealt “a significant blow to the middle class of travelers.”
What’s gotten SkyMiles customers in a tizzy is Delta’s new metric under which elite status is solely determined by how much a customer spends buying tickets or other likely marked up travel services on the airline’s website. Another contentious issue is limiting to ten the annual number of visits customers holding Delta branded American Express cards can access the carrier’s airport lounges, unless they spend 75,000 a year, and prohibting visits when traveling on an economy ticket.
In a nutshell, the value of miles Delta flyers have been squirreling away for years will be severely discounted when the new rules go into effect.
“These changes are a giant middle finger to the flying middle class,” Conrad Close, a Chicago-based content marketing manager, told the Washington Post. Close said he has been loyal to Delta since status was “attainable,” even though the airline isn’t convenient. “I could fly direct on United for much cheaper, but I’ve always flown Delta; that’ll change now.”
Travel experts agree that Delta’s SkyMiles program has been severely devalued. In a recent CNBC interview, Clint Henderson, managing editor of The Points Guy, said Delta’s new rules are “extraordinarily high” elite qualifications.
“$35,000 for qualifying Diamond status on Delta? That’s crazy to me!” Henderson told anchor Brian Sullivan, who didn’t hide his displeasure with Delta’s revamped program. Henderson said he and his colleagues were going to go “free agency” and “buy the cheapest ticket that gets us there the fastest and then pay for the upgrades when we really want them.”
Perhaps I missed my calling as a travel and rewards pundit.
In April 2010, I penned this commentary for Forbes admonishing the publication’s readers that frequent flyer miles and hotel points were “fool’s gold” and recommended that travelers instead opt for credit cards with 2% cash back programs. Even more than a decade ago, I disliked awards programs that lacked transparency and made users dependent on the benevolence of ethically challenged companies who administered them.
Cash is king, particularly when it comes to airline travel. A traveler who agrees to pay cash for an upgrade when premium seats become available will always trump a SkyMiles holder hoping to use points. I charge everything, including a kitchen sink, on my credit card, and the 2% cash back is a very meaningful amount.
I’m delighted that even a points authority like Henderson has come around to my way of thinking. While I still strongly advocate for the 2% cash card, there’s only one that has the coveted Starkman Approved seal of approval: Fidelity’s Rewards Visa Signature Card.
While there are other credit cards offering 2% cash back, Fidelity’s card comes with no annual fee and the cash back is automatically swept into one of my Fidelity accounts. While you must have a Fidelity account to qualify for the card, unless you are a part of the one percent in need of some sophisticated investment services, Fidelity is far and away the best financial services firm around. (For more on why I admire and respect Fidelity, see here.)
A critical advantage of the Fidelity card is its customer service. These days, getting hacked or defrauded is increasingly likely and when it happens you want to deal with a company you can immediately contact and get results. Fidelity’s credit card customer support people are in the U.S.; in all the years I’ve had the card, I’ve always gotten someone on the phone within minutes. I also have what is supposedly one of the best premium credit cards available, and I prefer Fidelity’s customer support.
If I was Delta CEO Ed Bastian, I’d be very worried about the avalanche of negative publicity Delta is receiving these days beyond the revamping of its SkyMiles program, although admittedly Bastian must deal with more pressing issues than running an airline. My guess is that Delta’s management expected the bad SkyMiles press and their reaction to all the tweets from twits threatening to stop flying Delta is, “Yeah, whatever.”
Here’s my suggestion for those who might be truly fed up with the U.S. airline industry: Circulate a petition demanding that President Biden appoint, and Congress promptly affirm, my appointment as head of the Federal Trade Commission. If I ran the FTC I wouldn’t be going after Amazon for its Prime program, which I regard as a good deal, but rather the airlines.
As FTC chief, I’d promptly call a hearing scheduled for 6 a.m. but requiring airline CEOs to show up three hours earlier for security purposes. Upon their arrival to the hearing room, there would be a notice posted that the hearing was delayed three hours because of “equipment issues” but advising the CEOs to stick around in case the problems were resolved earlier. After several more postings about delays, the hearing would be rescheduled for the following week. For further details, the CEOs would be given a number to an overseas call center, where they would be greeted with this message, “Due to unusual heavy call volume …”
The purpose of the hearing: To watch the CEOs grovel and plead about why their companies shouldn’t be broken up. The meeting would be pure show, as I’d have already made the decision.