What We Can Learn from Airlines About Product-Market Fit

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Essays

The airline industry is a useful case study on product / market fit. There are infinite features airlines can provide, and there are as wide a range of plane travelers as one could imagine. Virgin America, Spirit Airlines, and Southwest are three good examples.

Virgin America has consistent WiFi, plays nightclub music and has sexy mood lighting. Anecdotally, the tech community reports on experiences flying Virgin America far more than other airlines. Customers love it. In fact, Virgin America has won more awards since their founding than any American airline. But TIME magazine recently reported that

since 2007, Virgin America has posted a net loss of $671 million and an operating loss of $446 million.

Nobody likes Spirit Airlines. They are cheap. They nickel-and-dime at every possible turn, and offer a stripped down version of travel that feels a little bit like a Chinatown bus in the air. Their flights are consistently the cheapest at face value, but they offer very little personality, or charm, and hide fees down to charging for water on their flights. They are the anti-Virgin America. And they are killing it. According to Wall Street Journal, they are 

pound for pound, the most profitable airline in the U.S.

All bags fly free on Southwest. Unlike Delta or United, Southwest prefers point-to-point flights, so you don’t have to connect in Charlotte, or Atlanta, to get where you want to go. Southwest does not have WiFi, and they have first-come first-served seating, like a bus or train. Their goal seems to be less about maximizing profits, like Spirit. They don’t want to coddle their customers, like Virgin. They seem to care most about what the customers want – cheapest possible travel. And in an industry that has been losing money for a half century, Southwest has been profitable for 39 consecutive years.

I went to the corporate websites of these three airlines to try and learn a bit more about why each of them has chosen the path that they’ve chosen. I found “About Us” pages that could not have been more different, and even surprising.

On Virgin, unsurprisingly, they list their amenities and awards:

 

On Spirit, they describe their “ultra low fares” and “fee-based” optional upgrades:

But on Southwest, they describe a mission and set of values:

Each of these airlines is winning in a big way against its competitors because of how they have built their feature set. Nobody can touch Virgin’s experience. Spirit’s profits are the envy of the whole industry. Southwest has a no-nonsense transparent experience. But I’m struck by how the airlines think of themselves, and that’s where I think the real lesson lies. If you are looking to build a business to last you a long time, you need to do more than listen to your customers, or to your shareholders, like Virgin and Spirit. You need a mission that makes sense, and the discipline to build your business outward from it.

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