When Profits Supersede Customers

Profits are crucial to any company. Profits allow companies to stay in business; to expand and grow; to innovate; to invest in people and ideas. Despite idealistic notions that can attempt to demonize the concept of profits, there is indeed nothing wrong with making a profit.

Smart companies like General Electric or Procter & Gamble or Unilever don’t have profits as the end goal. No, they follow a better model. They seek to take care of customers and their needs first. And they believe at their core that in doing so, the customer will “reward” them with their business and their loyalty. And with customer loyalty comes profit.

In simple terms, “If you take care of your customers, the profits will take care of themselves.”

This is how great companies operate and ultimately deliver. This is how Apple made it to the top. How Amazon has overtaken brick-and-mortar retailers. It starts with serving customers. Winning them over. And if you do this well, the profits will come.

There are, unfortunately, companies and, in fact, entire industries that don’t follow this model. For them, it is all about profits. Profit is the only goal. And they will abuse customers, piss them off, in fact, in the pursuit of profit. It’s a shaky model at best. They may be in business today, but are they going to be tomorrow?

I wouldn’t bet on it. Not in today’s world, where disruptive innovation is waiting to take you out.

If there was ever an industry that has lost its way, it is the aviation industry, particularly in the United States. It’s all about money. And who gives a damn about the customer?

The sad thing about this is, all of us have become conditioned to accept mistreatment by airlines, particularly in a post-9/11 world where so much inconvenience is couched under the classification of, “it’s necessary to keep us all safe.” But shame on many of these carriers, who hide behind the shroud of “security” to rip off customers every single day. And so many of the “profit-first” behaviors have absolutely nothing to do with security.

Here are three classic examples of how the aviation industry, particularly in North America, put the customer a distant second to profit.  Well, maybe the customer is not even second!  And just to show how conditioned we have become to the mistreatment, I have benchmarked it versus the hotel industry just to bring to light how ridiculous it has become. Both the aviation and hotel businesses are part of the same leisure and travel industry, so the comparison is relevant.

1. Overbooking flights. This is an incredibly unethical practice. Yes, the airlines will say, “We put it in the fine print on the ticket,” or “Overbooking is legal practice.”

So what? Nobody reads the fine print on an airline ticket and they damn well know it. And who cares if it is legal? Honor killing, i.e. killing your own daughter if she dishonors the family, is legal in some countries, yet this doesn’t make it right. Legality is a poor justification for anything. Is it right to do? Sell a ticket to more people than the airline can accommodate, and then know full well you will have to go to passengers and kick them off a flight they paid for? And doing this knowingly, screwing people who have paid money for a given flight? Making them deplane. Making them waste their precious time. It’s morally reprehensible, all to make a few extra bucks.

Imagine a hotel now doing this same conceptual thing. You check into your hotel. You go to your room, and you undress and get in bed. Suddenly there is a knock at your door, and it is security telling you that the hotel is “overbooked” and that “some algorithm has chosen you to give up your room.” You are ordered to leave your room and get out of the hotel. Now, imagine this for a moment. How long would this hotel stay in business? Why the hell do we accept this practice? It’s downright dishonest.

2. Cutting queues. When I got my first job at 18 years old working as a cashier at a supermarket, on my first day the manager took me out to the parking lot. I will never forget it. He said to me, “Jim, you will be the first to arrive at the store early in the morning. The lot will be empty. See these spots here in front? You never park in them. We reserve the best spots for our customers. So even if the lot is empty, I want you to park the farthest away, 300 meters out. We save the closest spots for customers and we do the walking.”

Now, that is a customer-oriented attitude! And our store was very successful indeed. I am thus always shocked at an airport when I am standing in line to go through a security check and suddenly a whole crew from an airline just jumps to the front, cuts me off, doesn’t utter a word like “Thank you” or “Excuse me” and just marches on through like they are above the rest of us paying customers. WTF? Who the hell is the customer and who is paying whom? In a customer-oriented world, they should queue up like the rest of us, and if this means more time is needed, well, tough s**t — show up earlier at the airport!

So let’s go back to the hotel corollary. You check into your hotel. You are tired and just want to go to your room. You are waiting for the elevator. One finally arrives and the doors open. At that moment, 10 staff of the hotel cut right in front of you and fill the elevator so there is no room for you. They don’t say a word. And they take the elevator and leave you standing there to wait for the next elevator! How long is this hotel going to stay in business treating people like this?

3. Nickel-and-diming customers. I am wondering how long it will be until some US carriers charge travelers to use the toilet. I can see it now: “Use our nice onboard toilets for a small fee: $2 for a simple urination, and only $3 for defecation.” I am sure they have talked about it. It’s becoming a joke. A person already pays a huge sum of money to fly. Then you get onboard and it is nickel-and-diming people to no end. You want earphones? That’s $5. You want a pillow and blanket? That’s another $5 to rent them. It’s utterly pathetic and all about how to squeeze customers to make more money, no matter the pettiness or inconvenience.

Imagine again going to a hotel. You check in. You go to your room. And when you turn the TV on you see it doesn’t work. So you call down to the front desk and they tell you it’s an extra $5 to activate the TV. So you decide to instead go to bed. And you find there are no sheets and pillows! So you ask again and find out you have to “’rent” sheets and pillows for an extra $5. To ask the same question again, how long will this hotel stay in the hotel business?

It’s a shame the US market has somehow been conditioned to just accept this kind of approach — abusing customers under the guise of “security” or “every other airline does the same” and getting away with it.

There are airlines out there trying hard to be different. I give a ton of credit to Turkish Airways for the efforts they put forth. Truly a delightful flying experience. Also kudos to Emirates and Singapore Airlines and a few others. The US carriers complain about Emirates as an example of unfair competition due to government support. That’s not the case at all. They charge more and they get it. People will pay for Emirates.  Emirates beats a US carrier because they are better. They still care about the customer. It’s not rocket science. When United Airlines beats a passenger and drags him out of the plane — a 69-year-old senior citizen — and the CEO defends the action, well, it’s clear how screwed up things have gotten. A message to the CEO of United Airlines: You are losing not because of unfair competition; you are losing because your approach to the customer sucks.

This is an industry that is screaming for a disruptive business model. A shakeup like what Uber has done, or Amazon or Airbnb have done. Out with the old, in with the new.

Time to call the broker and sell all the US aviation stocks.