ast week in this space, I wrote about United Airlines and its woes. Since that time, it has asked the government for $1.8 billion in loan guarantees to see it through its current hard times.

While that short-term fix (and concessions from its unions) may help it through the present cash-flow crisis, the airline still hasn't revealed what, if anything, it's doing to address its more fundamental dysfunction.

United's not alone in its problems -- the major carriers are suffering from malaise, and admit that they're prisoners of their complex pricing structures and, perhaps, outdated business models.

A Wall Street Journal lead story the week before last suggested the problem might be that airlines weren't fitting in with the "Wal-Mart era," where low price seems to be king.

Or is it?

Gary Hoover doesn't think so. When he read that article, all he could think was that the WSJ reporters were missing a bigger point.

Hoover once worked as a buyer for Federated Department Stores (Bloomingdale's, Macy's), as head strategic planner for Mays Department Stores (Lord and Taylor, Foley's) and as a retail analyst for Citibank.

As an entrepreneur, he launched the world's first book superstore (Bookstop, which was sold to Barnes and Noble for $42 million), founded a profitable internet company (Hoovers.com, the business information service, which went public a few years ago) and created Travelfest, a travel superstore, which managed to open three outlets but eventually failed. He also wrote a book on entrepreneurship, "Hoover's Vision," in which he devotes a chapter to airlines and the travel industry.

As he read the Journal article -- in which airline chiefs groused about union costs and reporters suggested that passengers were heading to Southwest and JetBlue because of lower prices -- Hoover thought everyone was failing to see the obvious.

Yes, Wal-Mart is successful, and has low prices. Likewise, in the computer industry, Dell. Yet Kmart and Gateway tried to compete on price, and those two companies only suffered.

Hoover believes the answer involves not just price, but differentiation and trust. "One of the big problems that United, American and Delta have is that you could fall asleep on any of them, wake up and have no idea which carrier you're on," he said.

That's not true of Southwest, JetBlue or Virgin Atlantic, which he believes combine "good value and style."

Furthermore, he points out that despite its reputation as a low-cost airline, Southwest frequently doesn't always have the lowest fares, yet customers remain loyal. "The majors have created a pricing structure that is an insult. Southwest may not always be the lowest, but it has a pricing structure that people trust," he said.

Hoover's dismay with what he was reading in the Journal turned to delight at the end of the article when he came upon the comments of Continental president Larry Kellner, who said he hoped his airline could end up like retailer Target, distinctive enough to command modest premiums in a price-sensitive world. Continental chief executive officer Gordon Bethune chimed in his support of the concept as well.

"Yes," Hoover thought. "Target. Great stores that can go head-to-head with Wal-Mart. Target."

Gordon Bethune, Gary Hoover wants to talk with you. He thinks he understands your airline and where you want to go. He thinks he can help. And he wrote to me to ask if I could get your attention on his behalf.

While I can't guarantee that Hoover will better your chances for long-term survival, it's my opinion that he's right on, well, Target. Consumers need more than price -- they want a package of things that represent style, convenience and value. They appreciate companies that have their own rhythm.

It's not only about pilot pay, or the hub system. It's about understanding the consumer, and working on how to make them love and trust you. If Hoover's book is any indication, he understands these things.

Gordon, take Gary's call.

Comments

From Our Partners

2020 NTG Webinar Series
Travel, Our Future and Yours A Series of Conversations with Industry Leaders
Register Now
American Queen South
American Queen Steamboat Company
Read More
2020 Club Med Webinar
Let’s Escape Again with Club Med
Register Now

JDS Travel News JDS Viewpoints JDS Africa/MI