Airline Gripes: Rip-Off or Reasonable? IBM Consumer Travel Survey Reveals Most Reported Travel Inconveniences Leading Up to the Holiday Rush

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ARMONK, NY - 24 Nov 2008: In a new IBM (NYSE: IBM) survey, U.S. travelers report on the fairness of various airline fees, the frequency of "travel inconveniences" and industry practices that earn their loyalty in the current environment. Consumers cited the biggest airline "rip-offs" to be baggage fees (78 percent), additional charges for redemption of miles (76 percent) and first class ticket prices (58 percent). Surprisingly, 70 percent of travelers deemed general cabin ticket prices as reasonable, and half of all travelers thought fuel surcharges were valid as well.

The phone survey of 1,000 consumers nationwide provides a window into important areas of focus for travel providers vying for consumer loyalty. Among the most frequently reported travel inconveniences were restrictions associated with reward travel. Travelers ranked this as a more frustrating experience than suffering through "misplaced hotel reservations." Additionally, an important key learning was that consumers prefer paying the lowest possible price and choosing amenities a la carte.

The IBM consumer travel survey was fielded in order to better understand consumer insights. IBM works with clients in the travel/aviation industry to maximize the customer experience, and engender greater loyalty and brand advocacy among consumers.

"Travel providers must keep their finger on the pulse of consumers and be able to respond to their changing needs and demands, while balancing the associated business economics," said Bruce Speechley, Partner, Hospitality and Leisure Practice Leader, IBM Global Business Services. "Loyalty cannot be bought -- it has to be earned. That will only be done if travel providers can serve up a consistent, differentiated experience that is more valuable and relevant for individual customers."

In an IBM report released today in conjunction with the survey results, the company offers insights into smart strategies that can deliver a superior customer experience through innovative rewards structures. The report, entitled "Committed Customers or Captives?," from the IBM Institute of Business Value, focuses on how providers can replace reluctant customer allegiance with genuine loyalty.

IBM Travel Survey - Key U.S. Findings:

Analysis from the responses also showed that consumers are not looking for additional shopping or service "experiences" while at the airport; they are more interested in getting from Point A to Point B. Similarly, consumers expressed a lack of interest in redeeming airline miles in airport shops or for in-flight products and services. 68 percent of those surveyed expressed a lack of interest in redeeming airline miles for products and services in airport shops or in-flight. Responses showed that cost-conscious travelers are more interested in banking their miles in the hopes of saving money and receiving discounts on future flights.

How the Airline Industry Stacks Up
The survey revealed that travelers value one-stop loyalty rewards programs (across airlines, hotels, restaurants and retailers) and yearn for all-encompassing programs that consolidate multiple rewards. Consumers ranked the cruise and hotel industries as the most highly ranked industries for customer service.

Another one of the key findings of the survey revealed that airline troubles plague consumers twice as much as hotel or car rental. As consumers become more price-conscious with softening demand, airlines will have to redouble their efforts to engender greater loyalty and advocacy among customers.

Additional Highlights:

New Insights into Customer Loyalty
IBM's new customer loyalty report, like the IBM Consumer Travel Survey, revealed that customer expectations are falling with regard to their travel rewards programs. Research showed that 64 percent of travelers surveyed were likely to stay with a selected travel provider to cash in on the promise of future rewards, but only 48 percent were satisfied with the value of their rewards. Although the travel industry boasts some of the most populated rewards programs -- in 2007, a COLLOQUYtalk report found that airline rewards programs alone had more than 250 million members in the U.S., only 40 percent of travel memberships are considered active -- pointing to a gap in membership numbers and everyday usage.

The IBM report stresses the importance on improving the customer experience to deliver a compelling and consistent touch point across channels.

Key recommendations of the report include:

Survey Methodology
The IBM consumer travel survey analysis is based on the findings of a phone survey that was conducted by Braun Research among 1,000 U.S. adults age 18 or older from October 25-27, 2008. The total results reported are at the 95 percent confidence level with a margin of error of +/-3.1 percent. Respondents who have taken two or more personal or business trips in the past 18 months were included.

For more information on additional findings from the IBM Consumer Travel Survey and the IBM report: "Committed Customers or Captives?," please click here.

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