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Earlier this week, I read a very interesting piece by Ian Altman about the airline industry. He lambasts United Airlines (UAL) in particular, and the airline industry in general, for failing to serve customers well. He claims that poor service will impact loyalty and that chasing profit through ancillary fees and the elimination of benefits is short-sighted. He cites Southwest (LUV) and JetBlue (JBLU) as the “enlightened” carriers that still offer benefits such as free checked bags, no change fees (for Southwest) and free satellite TV (for JetBlue).
It’s perhaps natural to think that treating the customer well is the route to building a successful business. Generally speaking, this is true. In the airline industry, however, there’s not much evidence to support this idea.