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Business

Flying Blind

Bill Brubaker has a really great article in this morning’s Washington Post on Delta Airlines’ SimpliFares pricing changes.

It was only last month that Delta’s Grinstein stood before a group of airline professionals in New York and predicted imminent change in the financially troubled industry.

The reason the major airlines have been losing market share to low-cost competitors such as Southwest, he told his audience at the elite, private-membership Wings Club, is because travelers no longer think they’re getting a good deal from the big carriers.

“I recently came across the mission statement for Costco, the membership warehouse company,” Grinstein said, according to a transcript of his prepared remarks. “Their goal is to ‘continually provide our members quality goods and services at the lowest possible prices.’ ”

The failure of major airlines to meet that standard “caused us to lose the trust of our customers,” Grinstein continued. “Passengers no longer believed they were receiving the highest quality at the lowest possible price. And they were right.

The article goes on to note how Southwest and JetBlue have established high levels of trust with customers because of their “everyday low pricing” ala CostCo and Wal-Mart. The emergence of those new competitors with different approaches to how they treated their customers combined with the transparency on fare pricing made possible by the Internet has resulted in the major, high-cost carriers like Delta being driven to the wall.