An Open Letter to AirAsia and Firefly: Why LCC's should adopt "Standby"

To Tony Fernandes (CEO, AirAsia) and Eddy Leong (CEO, Firefly):

Hey, I have a question for you two. Are low cost carriers (LCC’s) interested in goodwill to customers? Should they be? After all, some might say a low, low price is goodwill enough, while others might say, you can never have too much of it from your customers.

I’ll get to the point. LCC’s are famous for one thing – low prices – but notorious for another – no changes. To be precise, both Firefly and Air Asia allow itinerary changes, normally 48 hours before departure, but charge RM50 for the privilege. If you want to change within 48 hours of your departure, too bad, you’ll have to buy a new ticket.

We don’t know how much LCC’s collect from such “punishment” fees, but it has left some of us feeling LCC’s have made it a point of profiting from people’s mistakes, a science of making passenger’s losses their gains. Its bad for customer goodwill, and I humbly offer a small way for LCC’s to regain some of it back.

Both your airlines have a standard industry practice of prices going up as capacity reduces or as time gets nearer to departure, based on a proprietary formula. The challenge to maximising revenue involves striking a balance between getting the best price per seat filled, and filling all seats, since your seats are 100% perishable – i.e. their value drops to zero the moment the plane takes off and their cost cannot be recovered. Selling empty seats just before the plane takes off, even at RM1 per seat, in theory, helps to offset the cost of that flight.

This trick is being used by, of all people, MAS, which unlike you two is a Full Service Carrier (FSC). MAS is using this argument to justify its RM0 promotion – just paying the fuel surcharge is helping MAS to offset losses from its otherwise empty seats. MAS is also saying that it is selling seats that would have been unsold anyway, presumably based on mined historical data showing spare capacity on such flights. It says it is therefore not cannibalising from its full-fare paying customers. I won’t go into the details of this perhaps arguable line of reasoning, but I will argue that just as MAS is taking a leaf from the LCC playbook, so can the LCC’s borrow a trick from the FSC’s sleeve. Its called “Standby”.

“Standby”, in the FSC sense, is a way of dealing with the problem of no-shows. No-shows are people who book flights but don’t show up, and is more a FSC’s problem than a LCC’s, since FSCs allow bookings without making payment, while LCC’s have no such thing. “Standby” passengers are people literally waiting at the airport for no-shows so they can get on board and fill those seats.

I would argue for LCC’s to adopt “Standbys”, but to adapt it to an LCC form of usage. I know what you guys are worried about: you’re worried people will wait until the last minute to book, taking a chance that prices might get lower by going on “Standby”. You’re also worried about not making enough from business travellers, who are willing to pay top dollar for last minute flights. I’m here to soothe your profit-making nerves. Just adopt the “Standby” rule for ticketed passengers only who want to switch to an earlier flight, and charge them a nominal admin fee for the privilege to do so (and by “nominal”, I mean less than RM50).

You see, people make mistakes one time or another. Why hold them to account, when you can help them rectify it, make a little profit and leave them happy? Allowing only ticketed passengers to go on Standby for earlier flights eliminates the purported fear of opportunists, helps to reduce losses from empty seats, allows you to re-sell seats that had been paid for, and generates goodwill for passengers who would like to fly a bit earlier and are willing to pay (within reason) for their mistake.

There are of course other questions, such as when precisely to open the Standby window, how far in advance can the ticket be, how much to charge etc. I’ll leave that to you smart guys. After all, I’m just a poor passenger, writing this at the Coffee Bean in Bayan Lepas after having waited 5 hours for my flight because Firefly didn’t let me board an earlier one even though it was clearly not full. 5 hours which robbed me of any goodwill I might have had flying to and from Subang, but which enabled me to finish this column giving you guys free, unsolicited advice.

Just another passenger’s loss turning into your gain, I suppose.


As seen in theSun, 25th June 2008. PDF version here.