The Press, June 2009
Jetstar have had a nightmare debut on the domestic airline market. It shows how tough it is to launch a new offering into a mature, competitive market.
According to the Stuff website, in Jetstar’s first week half of their services departed more than an hour late. Subsequently they have rejigged their schedule, further disrupting thousands of travel plans of people who took up their cheap flights.
They made the cardinal error of refusing access to some Auckland fans who were trying to get to Wellington for the France-All Black test. Being Australian, maybe the Jetstar people don’t understand the importance of rugby. To paraphrase the legendary Liverpool soccer coach Bill Shankley, rugby is not a matter of life and death in New Zealand, it is more important than that.
Arch-rival Air New Zealand has been quick to jump in, offering $50 fares to disgruntled Jetstar customers. Those who miss a Jetstar flight by being caught out by their strict 30 minute check-in, or are delayed by more than two hours can take advantage of spare seats on our national airline.
Although I haven’t had the opportunity to fly Jetstar, I’m sure most of their offering is very good. Well maintained and comfortable aircraft, skilled and experienced pilots, efficient ground crew and pleasant flight crew. They’ve also run an effective promotional campaign, getting good exposure for their brand and attracting a lot of initial passengers. Their low cost pricing strategy is clearly expressed and obviously attractive to people.
But the mistakes made in the delivery of those services, being over-strict about check-ins with customers that aren’t accustomed to it, and running services late, has caused a huge and outraged backlash.
That’s because airlines are such a mature, competitive industry. We all know what to expect when catching a flight, and get annoyed when we don’t experience it. And when we have choice it becomes a real issue for a company like Jetstar.
Compare that to the early days of commercial airlines. Fares were horrendously expensive and the services were noisy, smelly and dangerous. In 1930 it took around 40 hours and many stopovers to fly from Los Angeles to New York (it now takes less than six) on an unreliable propeller plane.
Before the introduction of jet engines, failures were common on commercial flights. According to “The Airline Passenger Experience” by Daniel Ruse, TWA had up to 10 engine failures a day.
The early airlines were still able to attract a solid niche market. A core of ‘early adopters’ were willing to put up with the expense, danger and inconvenience for the thrill of trying a completely new way of travelling. It didn’t matter that it was probably still easier and cheaper to travel by train.
This model is common for any new industry. Think of cell phones. Remember those huge bricks of 20 years ago – they were expensive, heavy, had limited functionality and a narrow range. But there were a bunch of people who willing to put up with this because they understood the benefits of mobile communication. The rest of us just stared.
Cell phones have quickly moved into the mainstream. Moved from a small niche market of early adopters where it is enough for people to understand ‘what it is’, to a much larger, and more profitable, mainstream market where people need to understand ‘what it does for me’.
Companies, particularly in the technology sector, too often get this wrong. They launch their shiny new technology product into a mature market and wonder why they aren’t getting traction simply on the basis of their smart features.
A local example of company that seems to understand this is software company Xero. In 2006 they launched a new product into a mature market - accounting software for small to medium businesses. Trying to compete on the basis of features wouldn’t have been enough – small business accounting systems are very common and well understood. They had to deliver a complete customer experience that was better than that provided by competitors.
Although it is early days for Xero, they have done a good job so far. For example their product offers a more flexible delivery option over the internet, and they’ve linked in closely with banks and accounting firms. All making it easier and more efficient for the customer to use.
Jetstar have started to respond to their early difficulties. Media reports say they are now offering compensation vouchers to inconvenienced travellers, and ‘extra customer service trainers’ are being bought in to improve the experience they are offering.
It’s a tough lesson for them, and a good example to many others how important it is to get the whole customer experience right. 90% of what you do can be excellent but that is not enough in a mature market with powerful competitors. Not to mention denying Kiwis the right to see our beloved All Blacks.
