Jet 2 and the Peak End Theory
Of all the much quoted behavioural biases, I've always been fascinated by Kahneman's 'peak-end theory'. The concept that a great experience at both the peak and the end of a journey has a disproportionate effect compared to everything else.
Having taken a cheeky break before getting started with Deep Blue Thinking, I was struck by just how much this applies in the travel and leisure sector. Ibiza has a lot to offer in the way of bars and restaurants and the ones who get it right seem to have this intuitive experience of where to invest this time. From the Peruvian restaurant describing the menu in lavish detail, evoking sounds and smells of street food stalls in Lima to the Italian restaurant, adding colour and drama to a choice of wine, these magic moments go a long way to creating a lasting impression.
For some this is just second nature; all part of being front of house. For others, like Cotton Beach, they have invested to go the extra mile - what better way of creating a lasting memory than offering diners an at table head and shoulder massage whilst they look out to sea. Surely a better final memory than the sharp intake of breath at the bill?!
However, away from the restaurant scene in Ibiza, it was our journey there which really brought this home. On the face of it, Jet 2 is very much like Ryanair - a low cost carrier constrained by low margins and short turnaround times. However, in the spirit of the godfather of all low cost carriers, SouthWest Airlines, they have realised that it's the softer factors that can make a difference.
I had already arrived at the airport impressed by Jet 2's digital offering. A simple app with boarding passes easily downloaded to Apple Wallet made the process easy and felt more premium than low cost. However, my early morning bleariness was confounded when I entered the terminal and saw the dreaded long, snaking queue for check in. Having flown with Ryanair out of Stansted regularly, this is an experience I have come to know and dread.
But something here was different... upon approaching the check in queue we were greeted with a smile and directed into right part of the queue. Not only that we were sent on our way with a cheery 'Have a great holiday'. At the front of the queue, the same again - we were directed to the right check in desk and again bid a 'lovely holiday!'. The lady at the check in changed some details on the booking which were incorrect, all with a smile and a sense that nothing was too much trouble.
The on-flight experience kept the same feeling - friendly, smiling air crew; an in-flight magazine featuring reviews from members of the Jet2 team; a sense that the offers being promoted from the shop were to save us money rather than trying to push scratchcards. Finally, you'll not be surprised to hear that the same friendly wave sent us on our way from the plane, again wishing us a fantastic trip.
Of course, being a geek, I had to check whether my experience was unique or whether other customers felt this way too. It seems I'm not alone - Jet2 is the highest ranked airline in the UKCSI index last year and the only airline ranked in the Top 50 , with the package holiday business Jet2Holidays ranking 4th. It seems a focus on the softer skills really does pay back for customers.
But does it pay back for the business? On the face of it the toplines look strong - the September interim results show a 41% growth in passenger numbers and a 34% increase in revenue. However, investment in new routes appear to have put profit under pressure and the 12.3% gross profit margin still sits some way behind Ryanair's c. 19% and rising fuel prices are likely to pressure this further.
It's at times like these where businesses face a stark choice - invest for the long term or trim back on the 'nice to haves' to sustain margins. . Whilst I'm sure the investment in training and culture must come with a hefty price tag, it makes such a difference to what, in the end, is still a service business. I hope that Jet2 can stay true to their values and help demonstrate that keeping customers happy leads to long term sustainable growth, particularly when focusing on those peak
moments of truth
I for one have eulogised to everyone I've spoken to about Jet2 - 'it's like Ryanair but with with a smile'...