Will Willie Walsh’s pay packet improve customer experience?
There was a time when British Airways called itself “the world’s favourite airline”. This was an unfortunate tagline implying that it delivered a better customer experience than other airlines. In fact, it was a statement justified by the number of international passengers it carried, which at the time exceeded those of other airlines. The slogan was introduced in 1989 and removed in 2004.
The trouble is, British Airways began to believe its own PR. It thought that the chummy service crews with their cut glass British accents could compensate for late departures and rattling old planes. They relied on those old codgers whose tickets were paid for by their companies and who boasted “Of course I only fly with British Airways”.
BA cut its costs in many ways. The free grub has been whittled down and is now an option on short haul flights that is only available on the presentation of a plastic card. It abandoned many routes as we in Manchester found to our chagrin. Fortunately they left a vacuum for making money which was quickly filled by Virgin, United, Emirates, Qatar, Etihad, American, Singapore and, of course, all the low-cost brands.
All too often we see cycles in the business psyche of companies. After years of mergers and acquisitions under Willie Walsh, IAG, the owner of BA, has decided that customer experience is really important. So important in fact that 15% of Mr Walsh’s annual bonus is based on the company’s Net Promoter Score. However, customer experience isn’t BA’s forte. In IAG’s annual report, which has just been published, we learn that Mr Walsh’s total pay package fell by almost a quarter to a measly £3 million in 2018. This was partly because the Net Promoter Score fell 0.5 points to 16.3. The target was 20 points.
A net promoter score of 16.3 is pretty poor. The target it was hoping to reach was 20 which in itself isn’t good. Bear in mind that the average NPS across a range of different businesses is close to 30. Car manufacturers have average NPS scores of 50, restaurants have an average of 42, and supermarkets come in at 29.
Airlines have diverse NPS scores but they can satisfy customers. Southwest Airlines, a company we frequently mention in our blog as exemplary in providing great customer experience, has an NPS score of 62. Virgin America has 48. The larger airlines struggle. United has an NPS of 10 and American Airlines has a lousy 3. This is part of the problem. If an airline has a stranglehold on a route, customers don't have a great deal of choice and the airlines don’t have a huge incentive to deliver customer satisfaction. Monopolies have never fared well in delivering great customer experience.
We live in hope that things are changing. When the delivery of great customer experience begins to affect the income of its CEO, we are in with a chance that improvements will be on the way.