American Takes Flak Over Bag Fee, Despite PR Strategy

Airline Says Fuel Crisis Leaves Few Palatable Options

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NEW YORK (AdAge.com) -- American Airlines is reducing capacity as much as 12% and laying off thousands -- moves The Wall Street Journal characterized as "drastic steps" that "many view as a greater threat to U.S. airlines than the industry crisis triggered by the Sept. 11 terrorist attacks." Yet those shifts were all but lost in the media coverage and PR backlash generated by a third move it's making: instituting a first-checked-bag fee of $15 each way.
Flying solo: So far, American Airlines is the only carrier levying a fee for a single bag.
Flying solo: So far, American Airlines is the only carrier levying a fee for a single bag.

Coming at a time when customer satisfaction with airlines declined for the third straight year, American knew what would be unwelcome news and tried to get out ahead of it with a detailed communications plan centered on talking points such as the impact of fuel prices, increasing competition, a detailed breakdown of the increasing cost of business and its fuel-conservation programs. Monitoring of the blogosphere also got under way immediately.

"We understood that consumers would be frustrated with another fee," said Mike Flanagan, senior VP at Weber Shandwick, American's public-relations shop of record. "Precisely for that reason; we did our best to communicate the full impact that oil is having on our business." Predictably, the public had little sympathy. Al St. Germain, director-airline practice at Landor, said that "the fuel crisis is so staggering for them internally that they have to take the PR hit." He added: "It's almost a no-win situation because customers don't want to hear about the problems of a giant corporation."

Regardless of American's honesty, consumers were still angered by the fee. "It's only a matter of time before airlines begin charging for our carry-on bag," wrote one commenter on Chris Elliott's travel blog. Blogs such as Sky Talk gauged traveler reaction, including a flier who said that "they're trying to nickel and dime us for too many things." Mr. Flanagan, who felt media coverage of the announcement and on some blogs was very fair, said American injected itself into conversations online only when inaccuracies were being reported. He said American hopes to have its own corporate blog operational within the next two quarters.

Not much to lose
But getting its message out may become tricky as fuel prices could also result in cutbacks of budgets or staff of American's communications and marketing departments. Mr. Flanagan said Roger Frizzell, American's VP-corporate communications and advertising, expects some type of impact on everything in his department. "However, it is too early to say where and how that will happen," Mr. Flanagan said.

It doesn't seem the image of airlines could sink much lower these days, anyway. Claes Fornell, professor-business at the University of Michigan and head of the American Customer Satisfaction Index, said customer satisfaction with airlines has dropped to its lowest point since 2001.

Though American should be applauded for being upfront about the fee, "publicity-wise, I just think it's terrible," Mr. Fornell said.

To help put a positive spin on the situation, he suggested that American launch a marketing campaign that promotes the benefits of packing light. He offered the possibility of a marketing partnership with the likes of Onebag.com, a packing instructional site.

Passing storm?
Landor's Mr. St. Germain said he won't be shocked if other carriers rolled out similar initiatives in the coming weeks. The AP has reported that United Airlines is "seriously studying" its own fee for first bags. United was the first to start charging a $25 fee for a second checked bag and was eventually followed by others. He likened it to the time when airlines started charging for meals. "There will always be that initial backlash," he said.

Ironically, ACSI's 2008 first-quarter report shows American's score improving 3% over last year to an index of 62, meeting the industry average. But the ACSI notes that the study was conducted before the major cancellation crisis in early April and last week's announcement about charging for the first checked bag. According to the study, US Airways and Continental Airlines plummeted the worst, with the former nose-diving 12% to 54 and the latter dropping 10% to 62.

Out of the 17 industries listed on in the first-quarter report, the airline industry received the lowest score, 62.

Mr. Fornell said consumers' hopes for a positive airline experience have become so diminished that the business plan for any airline wanting to distinguish itself from the competition needs to follow is a simple one. "Bring your passengers to their destinations on time with their luggage," he said. "Nobody has higher expectations than that now."
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