MARKET FOCUS <b>Airlines</b>: Straighten up and fly right

The battered airline industry needs to try harder to spread positive news.

The battered airline industry needs to try harder to spread positive news.

The US aviation sector is clouded in an atmosphere of negativity. Despite steady increases in passengers, many air carriers continue to be haunted by security issues, management shakeups, labor unrest, falling revenues, and even bankruptcies. And along with all their economic and operational struggles, the airlines also must contend with an incessant press that is not shy about spotlighting sector problems. "Media coverage of the airline industry is massive, and it focuses more on its economic condition and security matters than on the positive things," says David Fuscus, CEO of Xenophon Strategies, the Washington, DC-based PR agency of record for the Air Transport Association, whose members carry 95% of the country's passenger and cargo traffic. "Airlines might want to focus on safety, or something new in customer service, but it's difficult getting those stories out when the sector is being given such a critical look." Increasing the wattage of this spotlight is the fact that there is a shortage of potential targets. Legacy carriers, including United Airlines and US Airways, are still trying to regain their financial footing after filing for bankruptcy; Southwest and other carriers are in protracted labor negotiations; airport security measures continue to inconvenience passengers; and the increasing popularity of low-fare airlines threatens to cut deeper into the revenues of full-service carriers. "It's almost like the media is predisposed to hearing bad news, and that makes it hard to get the good news out," says Tad Hutcheson, director of marketing for AirTran Airways, an Orlando, FL-based low-fare carrier. "On the same day that we reported first-quarter earnings and announced that our profit doubled year over year, US Airways reported a massive loss. And that loss was all that made the press." Yet the airlines' effectiveness in conveying messages on topics such as finances, customer service, and safety to the media, employees, the public, and other stakeholders will play a large part in determining their long-term viability. Airlines seeking wage concessions from workers, for instance, must convincingly illustrate why such givebacks are essential. And with more carriers entering the low-fare sector, airlines are challenged to not only offer amenities that help to differentiate them from competitors but to persuade journalists that such announcements are newsworthy. Positive coverage is especially crucial at a time when long lines at security checkpoints, flight delays, cutbacks in meals, and other inconveniences are increasingly alienating passengers. The search for credibility "The industry is losing credibility among consumers," says James Boyd, director of public relations, North America, for Los Angeles-based Singapore Airlines. "Flying used to be a special experience that people got dressed up for. Now folks don't look forward to flying as much as they try to endure it." To garner greater credibility - and more favorable reporting - carriers need to provide journalists with an unfiltered look at their inner processes, Boyd says. "Airlines can talk from here to Timbuktu about their great service or tasty food. But no one is going to believe it unless you provide proof." Singapore Airlines courts the press by inviting journalists to observe how the carrier's chefs perform their regularly scheduled, two-day process of preparing, tweaking, and revamping menu dishes. Because the event is "authentic," Boyd says reporters more easily become advocates of the food. "Showing the preparation process helps to back up our claims about food quality, and the journalist convinces himself that it's true," Boyd notes. "It is important to prove yourself rather than simply communicating messages." Credibility also is an essential element for effective dialogue with workers, particularly at a time when airlines are seeking wage and benefit concessions. Chris Chiames, SVP, corporate affairs, for Arlington, VA-based US Airways, says his airline furnishes its employees with analyst and news reports, internal documents, and other data to provide an honest picture of the company's health as well as the economic challenges facing the sector. "We talk in terms of labor costs being higher for legacy carriers, and that it is difficult for us to compete with five-year-old, low-fare airlines that are rewriting the books on how to operate," explains Chiames, whose company is undergoing a corporate restructuring. David Siegel, former president and CEO of US Airways, resigned in April and was replaced by Bruce Lakefield. Indeed, the popularity of low-fare carriers is continuing to affect many of the major airlines that are saddled with high-salaried senior workforces and hefty fixed expenses, making it difficult for them to offer discount pricing. According to Chiames, US Airways' average one-way fare last year was $125, yet its average cost of delivering the service was $140. "Legacy airlines are going to have to innovate and find ways to differentiate, or consolidate and liquidate," notes Richard Mintz, chairman of US public affairs for Burson-Marsteller who until recently ran the firm's aviation and airline practice. "They must manage costs more aggressively to remain competitive, and that means asking for concessions from labor or limiting wage increases. It will require using internal communications to align employee expectations with the economic realities of the industry." Indeed, keeping airline workers apprised of their companies' finances and operating strategies - which help to soothe labor negotiations and improve morale - is becoming an important PR tactic. Atlanta-based Delta Air Lines provides its 7,000 supervisors with briefing sheets containing detailed information on significant company issues. These "leaders" are encouraged to share the data with subordinates. Delta CEO Gerald Grinstein, shortly after assuming his post in January, also held employee "road shows" to learn their concerns. "It is important to raise worker consciousness, and to see that they understand where the business is going," says Catherine Stengel, Delta GM, corporate communications. "Employee morale affects our customer service, which has to be at its highest during tough economic times. Customer service will keep us alive." Improved customer service also gives full-service carriers a positive method of distinguishing themselves from the increasingly crowded field of low-fare airlines. Low-fare players typically can undercut the legacy airlines on price because of their significantly lower operating expenses. AirTran, for instance, one of the aviation sector's few profitable carriers, cuts down on maintenance expenses by only using newer aircraft and having its workers perform a variety of functions. In preparation for a flight, for instance, the same employee often covers the ticket counter, cleans the aircraft, and manages baggage carts. Such cross-utilization can make the job more interesting for workers and it enables AirTran to use just five ground-operation employees for a flight, compared to 20 for some major carriers, Hutcheson says. "The low-fare, high-cost carrier is a recipe for disaster," he notes. "Costs have to be kept down to keep fares low." Atlanta-based Song, a Delta-owned low-fare carrier that began operations in 2003, lowers its unit costs by keeping its planes in the air an average of 12.4 hours a day, says Stacy Geagan, director of public relations and communications. The airline also is increasingly leveraging self-service technologies, including sophisticated message boards with more flight information and check-in kiosks, to reduce its need for ground workers. Playing the low-fare game Yet, as competition intensifies within the low-fare space, carriers also are searching for ways to further enhance their services. Song is offering 24 radio channels, video on demand, organic health foods, and seats with added legroom. AirTran provides a business class and large overhead bins. And Dallas-based Southwest Airlines, the low-fare leader, emphasizes its 31 consecutive years of profits and nearly 60 destinations. The company this month began service to Philadelphia. "With the low-fare rung getting crowded, we need to find new methods to set ourselves apart," explains Linda Rutherford, Southwest director of public relations. "An airline's financial strength is important to the customer because they want to know that we will be here tomorrow." The carriers often use grassroots promotions to take their messages directly to consumers, while still trying to garner press coverage. Song, for instance, operated "concept stores" in New York and Boston earlier this year to enable the public to simulate its flying experience. Consumers were able to recline in airline seats, sample food, and operate touch screens. Southwest passed out chocolates, key chains, luggage tags, and other trinkets on Philadelphia streets, and in March it invited key reporters to accompany chairman Herb Kelleher, a Philadelphia-area native, on a bus tour of his childhood haunts. Kelleher also spoke to the World Affairs Council of Philadelphia. Legacy carrier Continental Airlines, meanwhile, positions its in-flight magazine as an important vehicle for reaching consumers. Key components are a monthly CEO letter and "notebook" section that provides company and travel news, including details on the airline's partnerships and destinations, website enhancements, service offerings, and employee profiles. "The magazine is used to push the airline's agenda," says Diana Pohly, president of Pohly & Partners, the Boston-based publisher of Continental magazine. "It is difficult to get positive stories in the press. But the reader knows that this information is credible and unfiltered by the media." As the aviation sector struggles to rebound, enhanced communications strategies that are designed to deliver more effective messages both internally and externally will continue to grow in importance. "What won't work in the airline industry is gimmicky stuff," Fuscus says. "The reporters are far too experienced and knowledgeable. You have to use good old PR and try to influence things with facts and the truth."

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