Editors sit down with former airline executive Chris Chiames, who now works for a major cruise ship company, to explore the air transport industry through the lens of cruising, navigating rewards program strategy and managing customer expectations at 35,000 ft. and on the open ocean.
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Karen Walker: Hello everyone, and thank you for joining us for Window Seat, our Aviation Week air transport podcast. I'm ATW and Aviation Week Network air transport editor-in-chief, Karen Walker. I am delighted to welcome you onboard. Now this week I am very happy to be joined by two fascinating guests who each have huge experience of the air transport industry, but who also have other knowledge that I think will make for a great conversation that will look at airlines and airline passenger service from a different perspective. So let me first introduce Chris Sloan, who is an ATW senior editor and is based in Florida. Chris has more than 25 years of covering aviation and is the former managing editor of Airways Magazine and the owner and president of 2C Media. And indeed, he's a multi-Emmy Award-winning TV producer, executive and entrepreneur. So great to have Chris back on.
And then we have another Chris, and I'm really excited about this. Chris Chiames is chief communications officer for Carnival Cruise Line. He joined Carnival in 2018 and has a strong track record of communications leadership across the travel industry. Indeed, I first got to know Chris because before joining Carnival, he held executive positions at Airlines for America, American Airlines, US Airways and travel and distribution companies like Orbitz and Sabre. So that's a clue to the topic of our conversation today, which is how do airlines compare with cruise ship companies when it comes to service and passenger experience? What might airlines learn from cruise line companies about loyalty programs, delivering great service to thousands of customers, and most important, maybe making it right when things go wrong? Hands up, I love being at airports and on planes and I know that not everyone feels that way, but I am also a longtime and frequent cruise passenger.
So I also love being on ships. I know a lot of people are also skeptical about cruising. I've done well over 80, maybe closer to 100 cruises since 1995 and never had anything other than a fantastic experience. So Mr. Chiames, as I said, fantastic to have a representative of Carnival with us today. I can truly say welcome aboard to Window Seat. With all your experience in both airlines and cruises, can I begin asking you just what some of the key similarities and differences are? I'm not naive enough to think that at least some airline leaders haven't looked to the cruise experience to see what customer service lessons might be learned, but there are operational and regulatory constraints in both industries. Can you just talk to that a little, please?
Chris Chiames: Sure, Karen, and it's great to see you and be with you and Chris this morning. I had never been on a cruise ship until I joined Carnival, so I had a lot to learn. I still consider myself an airline guy even though I've been out of the business for almost 20 years. But I used to think what could be more complicated than defying gravity every day, which airlines do. But the cruise industry is much more complicated. We're all 24/7 operations, but as a 24/7 operation times, in Carnival's case, 29 ships, we have 29 floating cities. And anything that can go wrong in the city of Tulsa or the city of London or any other small town can go wrong on a cruise ship. And so you have a lot of complicated operating factors magnified by the number of people you're trying to handle. And then the regulatory regime has similarities but also differences in that cruise ships are flagged in certain nations.
And so we are governed by the maritime laws of wherever a ship is flagged. We follow international maritime law much more closely than airlines might follow ICAO recommendations or regulations. So many countries implement the maritime laws that are in place. People are often critical that, for example, we Carnival or our competitors, Royal Caribbean and Norwegian and others, who operate from the U.S. that we don't quote flag our ships in the U.S. We are governed by very old, antiquated laws in the U.S. So for example, you can't flag a ship that has not been built in the U.S. There's not been a cruise ship built in the U.S. for decades, and it will be decades even if we wanted to start up again, it would be decades before they could be built and put onto the water. It's literally impossible to flag a cruise ship or any ship that isn't built in the U.S. And so that's a complicated answer to a nice sound bite that a senator or representative might throw out at a hearing in Congress. But the charge that we're not regulated by the U.S. laws if we operate in the U.S. or whatever country that we operate in are just not true. But again, because it's a complicated regulatory regime, how we're regulated is different than airlines, that it's a much more singular kind of point of contact in many countries as to regulation.
Karen Walker: That's really interesting. I understood, I could see, of course there were regulations and operational constraints on both sides, but to hear it spelled out like that is fascinating and that whole U.S. issue as well. Mr. Sloan, you know everything and anything about aviation, but you've also sailed on cruise ships as well yourself. When you get on board a ship, is there anything that you notice, that’s hey, this is different?
Chris Sloan: I have to say, I mean there's a real difference in the notion of the people. I mean, I think as Chris alluded to in our conversation, is that they're on vacation with us. And I don't know whether—as you were just talking about regulation, I mean obviously airline frontline employees and laborers that we encounter are union represented and people where for regulatory reasons, you're on a cruise ship and people are from all over the world, the crew front of house and back of house. And I think that there is an immense focus on customer service and interaction. And that human element, and I've wondered in talking to when you go on the tour, is actually talking to people below deck, as they say, and getting a real sense of what their lives are like. And they're like, we live here for nine months out of the year.
This is our life. I don't think I've ever encountered a surly crew member or somebody who is having a bad day and taking it out on the person, and I can't help but believe there's obviously a different notion the way they're represented as far as collective bargaining versus not. And I find that really fascinating, particularly when you hear a lot of these folks work six months straight and then go home. And it's actually I find very humbling. And just on a personal note, sometimes I feel guilty because I'm like, oh my, we should never complain because these folks really, really work hard and yet 24/7 keep up a smile.
Chris Chiames: They really do care. They really do. I mean, Chris is spot on. I mean, I like my colleagues shoreside, but I really am energized when I go on board, even for the day, dealing with the crew. And I kind of joke, I mentioned I'd never been on a cruise ship before I joined Carnival, but one of the things that attracted me was I had never worked someplace where your employees and your customers all like you. Because I have also worked at technology and we take the brunt of our customer complaints as well. And there are a lot of loyal airline employees, and I don't mean to, I say that somewhat sarcastically, but to Chris's point, the labor relations tensions are always kind of an overhang that not just in the U.S. but internationally. And the cruise industry has very loyal guests and very loyal employees, and it's a very different dynamic. That's a great asset to wake up every day and know that. So, it's been fun as a communicator to have those tools at your disposal.
Karen Walker: That's a really good point. I'm going to pick you up on that, Chris, on loyalty programs there that you've just mentioned. Obviously, the airline industry has loyalty programs. A lot of people credit Bob Crandall of American Airlines as really the founder of that, and now it's everywhere. But cruise ships, of course, have these too. How do, again, from your perspectives, how do these differ or maybe be similar? And it just seems to me that cruise line companies better understand or know their customers versus airlines. They're really good in my experience of actually saying things that you think, “oh yeah, no, that's right. That is what I want.” How's that work?
Chris Chiames: Well, we're in the midst of trying to change how it works for the cruise industry. I don't know if other cruise lines will follow, but we think that they will. The cruise sector has been slow in emulating what hotel and airline companies have done in their loyalty programs, which is more closely tie recognition to the spend you make with the company. And also there's a lot of affinity-related credit cards that allow you to spend and earn status and rewards as well. Cruise lines have typically recognized people based on the number of days that they have sailed, and that might've worked 15 or 20 years ago when you set the bar so high that very few people could spend 200 days on a cruise ship. It sounds like you got there pretty quickly with your cruise history. But what's happened is by not changing the rules or the guidelines, you have more and more guests who have achieved top-tier status and its lifetime status.
And our issue is we can't service all of them and give them the recognition that they deserve. So, things like priority boarding, there are many embarkations where we don't even offer priority boarding because we have too many top-tier guests. And as an airline passenger, we've all looked up at the board at the upgrade list and seen that you’re number 63, and there are only 12 seats in first class and you're never going to make it. And so we're trying to avoid that by again, changing the dynamics and changing how you earn status and keep status. It's not a lifetime thing, but typically that's been the biggest difference is how you earn status and how you got to keep it. Now, the other thing that airlines don't have the best ability to do is that instant gratification that we can do in the cruise sector with regard to either recognizing somebody doing something special or making things right. That's often—I grew up in a Greek ethnic family. Lots of family friends had restaurants. We'd sit there watching them operate, and I was always fascinated by how easily a restaurant could make things right with a free dessert or send over drinks or whatever else. And it's harder for airlines to do that.
Cruise ships can do that pretty effectively by, again, emulating what you do in the restaurant sector with regard to making things right or immediately refunding a tour that went wrong or whatever else. And airlines with the thousands of employees they put up in the sky every day, just don't have the ability to delegate that authority to tens of thousands of airline employees to make a refund or offer a free drink or whatever else. So, we've all been on a flight that sat on the runway for four or five hours with a delay, and you've wondered, why can't they just give us a free drink to apologize, and it's just not in their DNA to do that with regard to how they manage costs and how they manage consistency. And again, not being critical, but it's something that airlines don't do as effectively as they could.
Karen Walker: I agree. And again, something like that, when you're trying to, when something's going wrong, it's usually with an airline, you're going to have to wait and see, find out sometime later if you're getting a refund or a credit or something like that. So the point of anger and frustration, if you like, is when it's happening and it's not really being addressed then, whereas you are right—on a ship, there's so many options that they will turn to. Mr. Sloan, do you have thoughts on that?
Chris Sloan: Well, I had a question as you talk about some of the differences and two things that struck me as different, and I wanted to understand maybe the evolution: You talk about an airline loyalty unless you hit a pretty high threshold, you have to requalify every year, where you're discussing one of the advantages and differences is once you receive the silver, gold, platinum, it's lifetime. And I'm curious, as you adjust your loyalty toward more of a spending model, how that overall affects that? Because on American you have to hit 2 million miles and that's it. Or United, you hit 4 million, and you can get some equivalent of a very high end or Global Services, but for the most part you requalify every year. And then the second notion, I'm curious as a difference is how you handle where the airline industry has become so reliant on revenue from loyalty, as you overhaul Carnival Rewards if incremental income and revenue is going to play a role from loyalty versus just engendering loyalty as a revenue center?
Chris Chiames: All good questions. I'm not going to suggest that it's been easy when you're telling hundreds of thousands of your top-tier guests that they're going to no longer have their lifetime status. There's been a little bit of noise.
Chris Sloan: Oh, you're saying they actually are pulling it back?
Chris Chiames: Yes, we announced in June, this past June, that we're making these changes to our rewards program next June to give people a chance to learn about the new program and if they want to earn higher status entering into the new program to do that. I mean, one of the differences too in an airline passenger versus a cruise guest is airline passengers are usually more frequent. A top-tier airline passenger is probably on a plane every week, and a top-tier cruise guest might be cruising three or four times a year. So, the ability to earn points and status and rewards and things is at a different pace. And so we've adjusted our expectations accordingly. But what we've said is that our very top-tier diamond guests will keep their privilege for life. The next tier, the platinum, they'll enter the new program with a two-year extension of their status, and then they'll have to earn it every two years.
We're on a two-year cycle, again reflecting the frequency differences between airline passengers and the like. And then it'll also be tied for the first time to a credit card. We do have a Carnival credit card, but you earn points for gift certificates. So this will be a different kind of a rewards program. You'll earn a currency, if you will, to pay for a shore excursion, a steak dinner, the sushi Karen loves, use it towards your cruise fare, whatever else. But you'll accumulate points to convert to a currency to spend with Carnival. So there will be an upside as far as the financial benefits of that, as our credit card becomes much more powerful for our guests and for the company as far as tying loyalty to spend. But educating our guests is a big hill to climb because again, we're not just changing the requirements for the levels, but we're also changing how you earn and keep status, which is very different from a lifetime status.
So this is September, so we've been in a three-plus-month conversation with our guests that will continue through next spring when we convert at the end of May. But some of our guests are responding very favorably, some not so much. But again, that's our responsibility to bring people along and convince them that this new program really gives them more in their pocket beyond the status because the benefits on board might be minimal, but the rewards you could earn and spend how you like, we think is a much more powerful tool for the consumer relationship.
Chris Sloan: Can I just ask, have you encountered that in the cruise industry? Are there status matches or are other competitors taking advantage of this and saying, okay, well if you've just lost, this is a prime time to try something, an entire new series of brands, how are you competing with that? Or does that exist?
Chris Chiames: Oh yeah. Cruise lines duke it out just like airlines do. And they're kind of standing over at the side of the pier with watches in their overcoats and status matches as a little bonus. My inbox is littered with people who said, “I tried it and I tried that other line. I was unfaithful and I'm sorry.” So people are loyal to their cruise line in a very emotional way, and maybe that's why some of our guests have reacted so emotionally to the change, and I get that, but at the same time, they end up cruising a particular line more than others because they like the atmosphere, they like the crew, they like the varied entertainment. Carnival's the biggest family cruise line. I mean, people think of Disney, but we sail a lot more kids than Disney does. And we also say we're not for everyone. If you want a quiet experience for 14 days cruising the Mediterranean, that's probably not Carnival. But if you want to come on a ship where everybody has something to do and the kids can entertain themselves and we have upscale dining and there's again something for everyone, we appeal to that kind of customer. So I'm rambling, but yes, to your question, cruise lines have tried to match or borrow our guests—I'm not going to say steal—borrow our guests, but the library books are often returned pretty quickly in the context of I tried that other line and it's not for me.
Karen Walker: If I could ask in terms of some of the big congestion points at both airlines and ships … yes. I mean, ships these days can be boarding thousands of people, but all got to be boarded on the same day typically and all get offloaded on the same. And then there are other congestion points, and of course airlines are going through that every hour for most days, but with relatively smaller numbers of people, unless it's an [Airbus] A380, but even then it's not thousands of people. But it still seems to me like it's incredible, the experience I've seen of how the ships manage that process. People—they just get them on and get them off, do it cheerfully, and it's quite incredible. Do you have any thoughts as to why the airlines can't find a better way to board and disembark people?
Chris Chiames: Well, I think that they have tried multiple ways. Again, it's somewhat different in you're moving people through a little tube with a small portal like you're going into the lair or exiting the tunnel. So it's a different experience and usually people getting off a plane are all in a hurry and getting on the plane, they're kind of in a hurry as well to get that overhead space. So you just set up a situation where there's tension. In a cruise situation, people want to get on board and have the fun begin or get to the pool or get to the bar, or they want to get off in a destination and start their day, but it's going to be there all day, right? You're not running to the connection. You're not running to get to a meeting. So it's a different kind of environment. The other thing though that's somewhat different, and I'm kind of switching gears here, is airports are for the most part off-site.
And so tens of thousands of people are coming into a community every day and they're arriving and they're getting into downtown in different ways and going different directions. What the cruise industry has working as a disadvantage is we dock often, like, let's use Dubrovnik as an example. We dock right there and then thousands of people get off and swarm, according to some local officials, kind of swarm the city. And so we are often the biggest topic of overtourism because it's a very visible thing of our guests moving off the ship and into the community where airports are bringing many more people into a city every day, but it's very dispersed and you don't feel the impact of, again, thousands of people into downtown or taking over the local market or whatever else because it's a throng of people right there. So that's something that we have to work on a lot harder. There's a lot more communities, with the exception of Amsterdam and I think they've kind of piped down a little bit, who are trying to cut back on air service. Very few are trying to cut back on air service, but there are still many communities where they want to limit cruise ships coming in every day.
Karen Walker: That's interesting because what I hear of course often, especially when it comes to the eco side of things, the environmental side, we know that the airlines are getting the message out about what they're doing, but they're also repeating the message all the time about the huge benefit economically that they bring. If you've got an airport, a well-connected airport and a good airline service, that's a big economic driver for your city and community. A little different for the ships, because as you say, the ships are really floating cities in their own right, that they take the economy with them. Does money play a part in this in terms of what you can do for customer loyalty and experience? I'm thinking in terms of all of us know the tiny, very fragile margins that airlines operate under and it can so quickly go the wrong way. The cruise industry, I believe is more profitable, but it's also one that you have to invest heavily in. Ships are certainly not cheap, but does it make a difference when you have more money that you can invest in?
Chris Chiames: Well, the competition more and more is on the hardware of the ship and the ship becoming as much of a destination as the destinations we visit. So yes, ships are getting more expensive, they're getting more elaborate. Our last class of ship has roller coasters on the top deck. Yes, it's an expensive proposition. And again, getting back to the loyalty conversation, the need for cruise lines to be able to encourage spending and reward our guests based on not just who's on the ship the most, but who's spending the most, right? So many of our top-tier guests have sailed for a long time, and you may not spend a lot, and that's okay. We're glad they're with us, but we can't disadvantage those guests who are booking a suite and spending three, four, five times as much as the other guests just because of their longtime business. So we've got to strike that balance. I don't want to suggest we're not recognizing long-term loyalty. We want to be able to do that, but again, the top guest is defined in different ways on different days. So how you balance that is the challenge I think the cruise industry is going to be facing moving forward.
Karen Walker: Interesting.
Chris Sloan: Yeah. So I want to ask you, when you're talking about the guests and brand loyalty, I'm curious the segmentation on an airplane where if you're Lufthansa, I don't know, you have what, 50 different cabins at this point on a single tube? Maybe it's a bit of an exaggeration in Allegis, but the way you segment, there's obviously you have various brands in your, and I don't know you what, nine or 10 in the Carnival worldwide from mass market up to extremely high end and Seabourn in that notion—I'm really curious the segmentation differences on an individual ship as well as moving people through your portfolio of brands and how that interacts. Because obviously there's a very different type of customer on say, a Carnival versus the Seabourn, but also there's the segmentation within the ship itself. So it's just a fascinating, a branding exercise as well as a segmentation exercise.
Chris Chiames: Well, I talked earlier about cruises being a much more complicated business. There's also a much more complicated product to buy. To your point, there's different segments of the industry as far as ships and cruise lines and the like. And that's why cruise lines still work much more closely with travel agents than other parts of the travel industry in that it's a complicated purchase. Some consumers need some guidance and would prefer to have that expertise. And we also think it's very important that if you've never cruised, you get on the right cruise line. So, if you're a 70-year-old couple who was sailing to celebrate retirement, you may not want to be on a Carnival cruise line in the summer with lots of kids, and we will be the first to admit that. Or if you're sailing with your family, you probably don't want to go on Seabourn and have those teenagers bored out of their mind.
So getting that expertise either on your own or working with the travel agent is really important because if you put a consumer on the wrong cruise line the first time, they'll probably not come back to cruising at all. Right? And so it's a complicated purchase, and that's why we rely on travel agents much more than other parts of the travel industry because people do need guidance. Some people rely on word of mouth through their friends [if they, for example] cruise Royal Caribbean or whoever else all the time, and they love it and they try it. Others need that guidance or especially on a complicated itinerary of two or three weeks, what's the best ship, what's the right kind of cabin to book, what kind of excursions, all those kinds of things. So travel agents play a very important role for the industry.
Karen Walker: I'm going to have to pick you up on something there you said earlier about having the roller coaster. I don't think we're ever going to see the day when you get on board your plane and there's an offer of a roller coaster, or at least if it is a roller coaster ride, it's not the one that you want.
Chris Chiames: Right
Karen Walker: Turbulence. But that does take me back a little bit to when the A380 was first coming into service, and I remember it was just a marketing pitch, but it wasn't just Airbus. It was also some of the airlines were saying, Oh, this'll be the plane where there'll be a gym and a bar and a shopping mall. And of course it never happened. They've done exactly what they have to do. But what you would expect is that every bit of space is used for seats and a ship is different. You can use all that space, and that's exactly what they do.
Chris Chiames: But we can also, there's lots of revenue-making opportunities in the space beyond the cabins or the equivalent of the seat. So the restaurants, the bars, the other features, but you're clearly looking to maximize and you're also having to think about how to flow, especially large ships, [how to] design ships so that they don't become crowded in anyone's space. So it's a different way of viewing the design as well.
Karen Walker: I've sailed, like I said, a lot, but on small more boutique ships and right up to the very large ones. And everybody, just always the skeptics, they'll say to me, oh, I would hate that, all those crowds. And it's quite incredible. You never feel crowded. You always just find the things you want to do without the crowds. It's an incredible process and experience
Chris Sloan: I have to find. Can I just say, I find it fascinating where you never sit on an airplane and have people talk about just passengers? Oh, the A380 with its 25 pitch, and the dinner conversation on the ship is all about, as you said, the boat. And it's like everybody becomes a boat geek and people sign up for the behind-the-scenes tour, and that's, you better get that. That's going to sell out three weeks in advance. The passion, I think when you said the brand was like a hardware arms race, that really hits home because you become obsessed with the ship. And people talk more about that than the destinations or the weather.
Karen Walker: Most people are not talking about the aircraft. I mean, people are amazed when I sort of say, oh yeah, this is an A350, this is the 900 version, and it's got Rolls-Royce engines. And people looking at me like, what on earth? What is her problem? But people do talk about the ships, the ship names and the facilities and everything, and they do talk about the crews. The crews are always immaculately turned out, always have a smile. Even the engineers, they'll always turn and say hello. That is quite a discipline across the industry.
Chris Sloan: What's the phenomenon of people. And whenever I go on ships, people have literally decorated their doors and wear family T-shirts with the brand and they're like—
Chris Chiames: If you're familiar with the comedian Kathleen Madigan, she's got a very funny bit about her cruise experience, and she concluded that guests decorate their doors so that they can find their cabin when they come back drunk every night.
Karen Walker: Good point.
Chris Chiames: It's just a long hallway that, it all looks the same.
Karen Walker: Again. People are on vacation, whereas people are flying for a multitude of reasons and some not so joyful as going on vacation. So it is different. Exactly. Thank you so much both of you. I'd like to bring this topic up again because there's a lot we could explore here. So I hope you could both join us at a future date and I'm going to be on a ship next week on Monday. Yay.
Chris Chiames: Have a wonderful trip!
Karen Walker: I will. I know that. So, thank you again. Like I said, a nice sideways look at airline operations and service through the lens of the cruise industry. Thank you also to our producer Cory Hitt, and of course, a huge thank you to our listeners. Make sure you don't miss us each week by subscribing to Window Seat on Apple Podcasts or wherever you like to listen. This is Karen Walker disembarking from Window Seat.
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