The Skift Airline Innovation Report is our weekly newsletter focused on the business of airline innovation. We will look closely at the technological, financial, and design trends at airlines and airports that are driving the next-gen aviation industry.

We provide insights on need-to-know developments in passenger experience, ancillary services, revenue management, loyalty, technology, marketing, airport innovation, the competitive landscape, startups, and changing passenger behavior. The newsletter, sent on Wednesdays, is written and curated by me. We will look closely at the technological, financial, and design trends at airlines and airports that are driving the next-generation aviation industry. You can find previous issues of the newsletter here.

On a Southwest flight from Los Angeles to Atlanta last week, the aircraft’s flaps malfunctioned, forcing the pilots to circle for about 20 minutes to decide how to proceed. Eventually, they landed faster than usual, causing the 737-700’s brakes to overheat.

It was the kind of minor mechanical issue that happens every day at every airline. Passengers were not in danger, and other than a slight delay on the ground while waiting for the brakes to cool, there was little inconvenience.

I was on that flight, and thought little of it until the next day, when I received an email from Southwest. It explained what happened in surprising detail, and said, “Thank you for your patience during this delay, and I hope you will accept my sincere apologies for any uneasy feelings you may have had about the overall situation.” The airline sent a $100 travel certificate.

It seemed odd the airline would send $100 to passengers for what amounted to a 45-minute delay. But it is standard practice, Southwest Chief Revenue Officer Andrew Watterson told me in a series of messages. He said airline travel is a repeat purchase business, and noted $100 isn’t much to keep a customer loyal — even if that passenger flies only once a year. “Keeping customers coming back is far cheaper than acquiring new ones,” he said. “But we do both.”

These emails come from what Southwest calls its proactive customer service team. Team members follow problems with flights, and try to keep passengers updated, Southwest spokesman Brad Hawkins said. After a medical emergency, he said, the team’s email might say, “We’re happy to let you know the gentleman paramedics transported via ambulance is doing well.”

Most airlines have teams handling customer service issues, but this group seems more engaged than most. And if agents are handing out vouchers daily to customers that might not even have complaints, it must get expensive quickly. With 143 seats on the plane, this standard mechanical problem might cost Southwest as much as $14,300 in future revenue.

What do you think? Should airlines reach out to customers so soon? Or is it better for an airline to wait until it receives complaints to send vouchers?

Send me an email at bss@skift.com with your thoughts. Or tweet me. Or even send me an Instagram DM. 

Brian Sumers, Airline Business Reporter

Stories of the Week

IAG Is Bringing Discount Airline Level to Paris: Goodbye, Open Skies. In 2008, facing competition from all-business transatlantic airlines, International Airlines Group bought Paris-based L’Avion and changed its name to Open Skies. Now, the threat is low-cost carriers, and IAG no longer needs Open Skies. It said this week it will close the premium airline as it expands its new discount brand, Level, to Paris Orly, with flights to New York, Montreal, Guadeloupe and Martinique. Level is positioned to thwart expansion from Norwegian Air.

Lufthansa to Offer Revamped Business Class With Seats 7 Feet Long: Lufthansa has had an uncompetitive business class for more than a decade, but by 2020 when new Boeing 777s arrive, that will begin to change. Last week, it unveiled pictures of its new cabin, which eventually also will be used by other Lufthansa Group airlines. What’s interesting is that Lufthansa is not making all seats identical. Some will be longer, and some will be more spacious. Passengers can choose which they prefer, though if some seats end up being more desirable, Lufthansa likely will charge extra for them, or hold them for elite frequent flyers.

American Airlines Extremely Bullish on the Future: American President Robert Isom is not as quotable as his predecessor, Scott Kirby, but he knows how to stick to talking points. Here, Isom hits most of them, telling the Associated Press American’s plans for basic economy, premium economy and on-time performance are on-track. Also, he said, American will make money in good times and bad.

Best Airline and Hotel Innovators in 2017 From a Business Traveler’s Perspective: Colin Nagy, Skift’s business travel columnist, chooses his favorite travel brands, and he leans heavily toward brands he calls, “friction free.” They include Silvercar, the all-Audi car rental company, Trunk, a new boutique hotel in Tokyo, and Alaska Airlines.

Pilot Shortage? Airbus Explores Development of Single-Pilot Autonomous Plane: Someday this will probably happen, though pilot unions will do all they can to stop it. When might that be? Who knows.

A Good Night’s Sleep Is the Latest Front in Airlines’ Battle for Highest-Paying Customers: Why did it take so long for many airlines to understand what premium customers want most is a good night’s sleep? Most customers probably don’t fly in business for the food, which is often fatty and salty. Or even the wine, since it doesn’t taste the same as on the ground. Customers fly up front so they can arrive reasonably well-rested. Conor Shine of the Dallas Morning News explains how many carriers now make sleep and bedding a priority. Related: Read my September interview with a vendor who helped British Airways find its new premium class bedding

The CEO of the Oldest Airline in the World Explains the Major Mistake the Industry Made 20 Years Ago: KLM CEO Pieter Elbers shouldn’t feel bad. His mistake is the same one almost every executive in Europe made. He underestimated the threat from short-haul, low-cost carriers. “My personal view is that for especially the first decade of their existence, network carriers like ourselves sort of underestimated, ignored — almost arrogantly ignored — the rise of low-cost carriers,” he told Business Insider. For another perspective, read my interview with Elbers, published over the summer.

News and Notes

This and that: American Airlines is constructing five new gates at Chicago O’Hare, and American spokeswoman Leslie Scott toured the construction zone, saying the gates for regional jets will open in Spring 2018. They’re the first new gates for any airline at O’Hare since the “new” international terminal opened in 1993, according to American. … Air Canada is rewarding elite frequent flyers with free Gogo subscriptions, but let’s hope the systems have the bandwidth to support them. … United Airlines is asking flight attendants to improve hawking the airline’s credit cards, promising a $50 pre-tax bonus for each approved application. “It’s our goal to win against other airlines, and new credit card accounts is an area that is currently a competitive disadvantage for us,” United told flight attendants in a message. … Delta said it completed the five-day Thanksgiving period — Wednesday to Sunday — without canceling a mainline or Delta Connection flight. … Meanwhile, United said more flights departed on time or early on Nov. 24 than any day in its history. … Someone paid $3,800 on Ebay for a pair of business class seats removed from a United Boeing 747.

Radio Gig: I’m the new airline analyst for “The Opening Bell,” a morning radio program on WGN in Chicago. We’re taping 10-minute segments, airing Friday, about what’s new in the airline industry. You can listen live, or catch one of the segments on WGN’s website.

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Skift Airline Business Reporter Brian Sumers [bss@skift.com] curates the Skift Airline Innovation Report. Skift emails the newsletter every Wednesday. Have a story idea? Or a juicy news tip? Want to share a memo? Send me an email or tweet me.

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Photo Credit: Southwest is working on its proactive customer service approach. Pictured is the new check-in lobby in Los Angeles. Southwest Airlines