Buckling Up the Business Traveler

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Amy Baker Ward has been one of Midwest Express Airline's frequent fliers for the past year-and-a-half, shuttling back and forth between New York City and Milwaukee, Wisconsin, where she is working on a software implementation project. Ward, a consultant with Stamford, Connecticut-based Global Core Strategies, says she's tried virtually every major carrier-but likes Milwaukee's Midwest Express best.

"The two things I care about when I'm dealing with a hotel, a car rental or an airline," she explains, "are that I get to where I'm going and I'm not inconvenienced, and that I'm comfortable."

Midwest Express satisfies on both counts, Ward says. Flights are rarely late or canceled, but if there is a delay, the airline copes better than most. "They always keep me informed and are very courteous," Ward says. As for comfort, the airline's extra-wide leather seats are so generously sized that Ward, who is five feet tall, uses her briefcase to prop up her feet because they don't reach the floor.

The company's intimate understanding of who its customers are-and its detail-oriented attention to their comfort and convenience-has ensured not only the loyalty of business travelers like Ward, but also full planes. Midwest Express has turned a profit for a remarkable 11 consecutive years, and revenues are growing: $344 million in 1997, up from $304 million in 1996.

Analyzing the needs of business travelers is central to Midwest's marketing and research strategy, and with good reason: a May 1998 inflight passenger survey found that 55.1 percent of Midwest customers were traveling for work-related reasons. "That group is our primary target," says Tamara McClelland, Midwest's director of marketing services and customer satisfaction. The survey also found that 35 percent of the airline's fliers had an annual income greater than $100,000. More than 53 percent were between the ages of 35 and 54, and 57 percent were men.

An annual benchmark survey conducted via telephone concentrates on company image and reputation awareness among frequent air travelers. Focus groups, done roughly six times a year on subjects ranging from dining services to service glitches, also offer insight into the customer psyche. One recent group, for example, addressed possible service failures such as a flight delay, and asked participants to rate the appeal of various "recovery" strategies, such as food served in the gate area or giveaways of Midwest Express merchandise.

Two years ago, Midwest Express added customer value analysis (CVA) to its arsenal of market research tools. "It's the next generation of customer satisfaction research," explains McClelland. "Typically, you're looking at yourself and how well you're doing at satisfying your customers. With CVA, you look at yourself and your performance relative to the performance of your competitors." As part of its CVA analysis, Midwest Express asked customers what factors were most important to them in selecting an airline, and looked at how the company stood on these attributes against therest of the market. "We always had a really good feel for what was important to our customers," says McClelland, "but until we did CVA, we didn't understand the relative weight of those attributes." Now, the company can prioritize improvement efforts and tackle business travelers' biggest concerns. On-time performance tops the list.

Besides research, Midwest Express-a former subsidiary of Dallas-based consumer products giant Kimberly-Clark-benefits from decades of experience catering to finicky executive travelers. The company, which became a commercial airline 14 years ago, evolved out of Kimberly-Clark's corporate fleet of planes, dating back to the 1940s. In fact, Kimberly-Clark's former chief pilot, Timothy Hoeksema, is now Midwest Express' chairman and CEO.

Today the company has a fleet of 27 planes and maintains a firmly Midwestern focus: Milwaukee is its main hub; Omaha, Nebraska, is its second. Indeed, the airline nearly has the Milwaukee non-stop market to itself. "Midwest is truly an oddball, in the best sense of the word," says Edward Starkman, an analyst at Warburg Dillon Read. "For the most part, they've escaped the focus of other airlines because they lay low and are not aggressive pricers."

Creature comforts According to Leonard Berry, professor of marketing at Texas A&M University, Midwest Express recognizes "the importance of humane values in a company, the importance of a very strong service-oriented culture, the importance of knowing your customer and figuring out what that customer wants and giving it to them." The company's commitment to these humane values earned it a place in Berry's forthcoming book, Discovering the Soul of Service, to be published in February by The Free Press.

On Midwest Express flights, Berry says, "The passengers' experience is fundamentally and perceptually different than it is on other airlines." While Midwest offers only one service class-coach-lots of leg room and extra-wide leather seats give coach the look and feel of first class. There are no more than four seats per row, which means no passenger has to endure a trip in the dreaded middle seat. Flight attendants deliver hot, elegant dinners of salmon and filet mignon on china, not plastic trays, accompanied by linen napkins and complimentary wine.

Of course, the chardonnay isn't cheap-the airline spends $10 per passenger meal, more than double the industry average-but Midwest Express is hardly a company that is careless with cash, making the stock attractive to investors and Wall Streeters alike. Analyst Starkman points to the airline's highly productive workforce and its frugal equipment decisions. Rather than investing in expensive new airplanes, for example, it relies on carefully selected used aircraft.

Such cost-effective measures may help Midwest weather the turbulent times predicted for the business travel industry. An October survey by the National Business Travel Association of 450 Fortune 1000 companies found that 56 percent of respondents had reduced the number of employees traveling due to the general economic downturn that began last summer. The study also reported that 53 percent of respondents have replaced some travel with video and teleconferencing, while 36 percent have adjusted corporate travel policies to cut costs. Since there's usually not a long lead time for business travel bookings, analyst Starkman predicts the industry may not see a drop in ridership until early next year.

A focused marketing strategy will also steady Midwest's future direction. "We're looking for upscale men," McClelland says bluntly. To that end, the airline, which spent $1.9 million on advertising in 1997, according to Competitive Media Reporting, sponsors radio broadcasts of games for various sports teams, including the NFL's Green Bay Packers and a local IHL hockey team, the Milwaukee Admirals. The company's first-ever national cable television spot, "How to Build the Perfect Airline," is airing on ESPN, CNN, and A&E.

But despite its Midwestern base and small size, the airline can hardly be called provincial. Itsplanes now fly to Orlando, New York, Los Angeles, and other cities far from its hubs, and it is slowly accumulating new routes. Recently the company added Hartford, Connecticut-"very much a briefcase market," notes McClelland -to its flight schedule.

Don't expect Midwest Express to rest on its customer-service laurels anytime soon. To keep giving business customers the routes, service, and other amenities they want, the airline plans to boost its marketing research efforts even further next year. Rather than surveying travelers on its aircraft twice a year, or via phone once a year, says McClelland, "We're going to talk to them throughout the year, every single month, every single week." This is an airline clearly on course with its customers.

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