The Big 5 Conspire To Ruin Your Air Travel


Want to know who to blame for your airline hassles? Here are “The Big 5″ conspiring to ruin your air travel:

1. Congress. In an ill-conceived attempt to legislate a “one-size-fits-all” solution to largely anomalous and often anecdotal reports of airline tarmac delays, Congress enacted a law effective April 29th mandating multi-million dollar fines for airlines with aircraft delayed longer than a specified time, hoping to lessen passenger delays. But the law will have the opposite effect: instead of freeing passengers from tedious hours-long delays, this bill will create indefinite delays and cancellations of flights, stranding passengers enroute and at origination airports (for an in-depth analysis of the downside of this disastrous bill, click here).

Continental Airlines CEO Jeff Smisek said his airline will be forced to cancel flights rather than risk fines in the millions for an extended tarmac delay. The ultimate impact of this unavoidable cancellation for the traveler?

You will find yourself along with hundreds of other on the stand-by list for the handful of open seats going to your destination. And there can be only a handful of seats–and they’re not going to be cheap as a walk-up fare–because of number 2 below.

2. Alfred E. Kahn.

Known as “The Father of Airline De-Regulation,” economist Alfred E. Kahn was Jimmy Carter’s Chairman of the Civil Aeronautics Board. His blueprint for airline de-regulation was based on a flawed economic model, and was as misguided as economist John Kenneth Galbraith’s assurance to Lyndon Johnson that the Viet Nam war would be short and wouldn’t affect inflation. Kahn proposed complete de-regulation of airline routes and fares, positing that the marketplace forces would drive down ticket prices and provide the American public with cheap and plentiful airline seats.

What he failed to consider in his economic model is the fact that not only is the product–an airline seat–not inexpensive to produce, it is also linked to energy costs which are both volatile and unpredictable. “Cheap airfares” for the public are incredibly expensive to produce, forcing in the progressive “unbundling” of the airline product: now passengers must pay for each component of the flight–a checked bag, food, beverage, amenities like a pillow or a hard-copy ticket–and the revenue still only marginally covers the price of the product, with the airline industry losing billions nonetheless. Consumers insisted on paying less for an airline ticket, so now

You wanted your ticket for $10 less, now you hand that over to McD's instead.

they can cough up for food and drink at airport prices between flights. Everything must yield revenue or there is no airline, and nothing with revenue potential on board can be simply given away.

Further, Kahn didn’t foresee that many airlines would use bankruptcy as an operating shield for years (thank #1 above for not amending bankruptcy laws) to gain an unfair advantage over the few airlines that didn’t. This abuse of bankruptcy law dealt a financial beating to carriers that paid their bills but still had to compete head-to-head with many who simply walked away from their debt.

3. Airline Capacity. Every airline that intends to survive the high production cost and low revenue stream has cut capacity to the bone. This is common sense: empty seats are an unrecoverable loss and waste, and airline planners have analyzed traffic and passengers in order to minimize such waste and loss. For the traveler, this means less empty seats–seats which are vital when a flight is cancelled due to #1 above, or for the more common cancellations due to weather or equipment. Used to be that the percentage of empty seats was higher, allowing the system to absorb passengers from a cancellation or delay. Such margins are a luxury of the past with airlines having to deal with out-of-control fuel prices with an ever-shrinking revenue stream.

True, Kahn’s brainchild did spawn new entrant airlines–but they don’t have a seat surplus either, or they simply go out of business.

4. Airway Infrastructure. There are only so many take-offs that are physically possible at 5pm at LaGuardia. Although Alfred Kahn’s model says the marketplace will regulate itself, if everyone wants to sell a competitive 5pm departure, it is clearly predictable that there will be massive delays, which are the rule at airports like LaGuardia and many in the northeast, as well as from airports inbound to those airports. Kahn’s leverage, unfortunately, is you, the passenger, and the delays and misconnects you will suffer as a result. But in a free market, what business can afford to not compete in the market that customers demand? And when they do, how do they deal with number 1 above? As Continental CEO Jeff Smisek promised, there will be rampant cancellations and stranded travelers as a result.

LaGuardia’s delays are emblematic of the entire national air route system: despite Kahn’s academic model, the airways are saturated at all of the commercially viable times when passenger demand dictates the competitive environment. Which leads to more delays–and in the face of congress’s newly enacted financial penalties, cancellations and misconnects for you, the passenger.

5. The Big Box Store.

The heyday of the discount “big box store” gave rise to a consumer expectation of all products and services for steep discounts. Everything from home electronics to auto parts to furniture is now sold in bulk at drastically reduced prices by wholesalers with only minimal investment in buildings and equipment.

A new aircraft, by contrast, costs upwards of $50-$100 million per aircraft, and hundreds of such aircraft are required to produce a fleet with a competitive route structure. Further, each aircraft has to earn revenue daily despite upturns and downturns in the travel market, as well as drastic fluctuations in fuel costs which follow oil prices. Face it: the cost of an airline round trip is not the same as a set of tires or a Cowboy’s football game–but the public paradoxically expects to pay less anyway (more details–click here).

Still not convinced that cheap airline travel is an absurd expectation? Ask yourself why “cheap surgical hospitals” aren’t also a consumer demand.

Does anyone really think flight at 7 miles up and the speed of a 22 caliber bullet is any less risky than surgery? Does anyone demand the cheapest bare bones surgical “product?” Is airline pricing too high? Read this and decide.

Regardless, there remains an unrealistic expectation among consumers that somehow ticket prices should fit their budget rather than the actual cost of the product. Part of that stems from the low-overhead “big box” pricing that is the norm on other big ticket items, part from Alfred Kahn’s unrealistic promise to consumers of cheap pricing on an expensive product, and part due to congressional unwillingness to address the disparity between the two.

You tell me. These “Big 5″ items have changed air travel from a Nieman-Marcus experience to a K-Mart Death March. Further, the airport and airway infrastructure are badly in need of technological upgrade.

The traveling public can make changes in #1 and #5; it’s time to junk #2, and it’s time to force #1 to make the needed upgrades to #4. The airlines themselves will take care of #3 when that happens.

Until the public and congress fix this, at least now you know whom to blame for your airline woes this travel season.

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17 Responses to “The Big 5 Conspire To Ruin Your Air Travel”

  1. Personally I blame #5 (or more in general, the consumer) more so than any of the above…I happened to be at my travel agent while a customer was complaining that their flight to Detroit ($300) was more than their $274 flight to San Diego and back, and that the $300 was ‘highway robbery’.

    Now, on one hand, the customer is right. It SHOULD cost less to go from Phillly to Detroit than to San Diego. However, in reality, NEITHER of those trips should be $300 round trip!

    The mass travel population wants food, big planes on every route, extra legroom, unlimited luggage capacity and great service but is not willing to pay for them. And the airlines are being driven to the bottom by their own unwillingness to stand and set fair prices, because god forbid another airline should undercut them by a buck so they lose #1 on the search engines!

  2. Joe Bowen Says:

    The truth is self evident…..But it is paramount that the airlines beat labor…the public be damned

  3. Dennis Magnusson Says:

    You state the problems succinctly and clearly show the linkage. Thank you.

  4. Well said…and from someone who knows….I’ve been wondering about JFK, but La Garbage is a good enough illustration.

  5. Social comments and analytics for this post…

    This post was mentioned on Twitter by Chris_Manno: The Big 5 Conspire To Ruin Your Air Travel: http://wp.me/pMIKO-ka

  6. Napalm in the Morning Says:

    Well said is an understatement Captain. A lot of time has passed since the birth of the airline industry which Ernie Gann described so well in Fate Is The Hunter but you have picked up right where left off.

    This is an oversimplification on my part but I think de-regulation was not a bad thing. For a while it significantly removed one form of “government” and a boatload of shoe clerks from the equation. Unfortunately, they were all too soon replaced by another boatload of shoe clerks like Ted Kennedy and others who supported charlatans like Frank Lorenzo every time someone made a profit or fares went above $19 bucks. Since that time they have morphed into and army of bureaucrats who couldn’t identify an altimeter two out of three times yet they investigate, investigate, investigate and demand, demand, demand.

    Fast forward to today. The obvious answer is competition on a level playing field, much less government involvement and a restructuring of the bankruptsy laws. The serious airline types like Juan Trippe, CR Smith and yes … even Bob Crandall would then reappear,regenerate and recreate.

    In the meantime … as always … the crews will pick up the load.

    Lead on Captain!

    • That’s a very good point: love him or hate him, innovators like Crandall created radical new ideas and re-engineered the airline industry when opportunity and peril alike impacted the business. Today we have thoughtless, heartless bean counters asleep at the wheel. That make the future questionable.

  7. Weary Traveler Says:

    Why don’t more airline employees spread the word as you have? At least they could educate their family and friends. It makes sense as you explained it.

    • Not sure why–many airline employees are just trying to make a living under reduced pay and benefits and no retirement. Also, some airlines discourage employee blogs and in that regard, I should reiterate that all of the ideas I post here are my own and they don’t necessarily reflect the opinion of my employer.

  8. Napalm in the Morning Says:

    Then we have the relatively new Federal entity the TSA. The level of destruction this poorly thought out agency has already wreaked on the industry and the flying public is simply beyond logical thought. I shudder to think what they will eventually morph into with their ever-changing crackerjack “political” leadership.

    The flight crews have to pad around in their sock feet before every flight yet the “Flying Imams” get a pass and a multi-million dollar settlement from US Airways.

    Can anyone say “What in the Wide Wide World of Sports is Going on Here?”

  9. Airlines are partly to blame: impossible business models contribute to a sine-wave of consumer expectations and failures to meet those expectations. Aircraft are buses that move fast. Period. Transport-category aircraft are not cruise-ships or limousines.

    • Good point. Impossible biz models are eventually doomed. There’s a part of this situation though that is skewed because the federal government is treating air travel like a public utility such as the broadcast airwaves or the rail system, but not supporting it as such.

  10. Hey Chris,
    Love reading your blog! Well-written, funny, true-to-life, self-effacing – great stuff!
    Found it through a link on Holly H’s blog.
    I’m a 23yr airline pilot with brand X in PHX and a 20yr Boeing captain with a master’s degree from ERAU.
    Your day in the life series cracks me up – so true!
    I’ve added your blog to my faves!
    Well done, Chris!
    Pete

  11. [...] Manno, Chris.  “The Big 5 Conspire To Ruin Your Air Travel.” JetHead, 18 March [...]

  12. Chris, Re #1… the downside of this law was obvious, for the reasons you state. Too bad Congress didn’t have the sense to recognize it. We all agree passengers should not be held hostage on a plane for nine hours, that is not in dispute.
    Last summer I was scheduled on a flight (EWR-SAV) that boarded 2 hours late, then we sat on the runway for 3 1/2 hours waiting for a break in the weather to the south, and a slot for take-off. The crew was up against crew rest requirement rules, and the flight was eventually canceled for that reason. Most of the passengers were really ticked off..lots of cursing and swearing at the customer service staff. I thought the crew and the airline did everything possible to get the flight out. I thanked the crew and apologized to the customer service folks for my nasty fellow passengers behavior. BTW, I was one of three passengers rescheduled on the first am flight the next (saturday) morning….the rest waited until Monday or Tuesday, LOL!
    As for the price of tickets? I have no idea how the airlines stay in business. I can purchase a ticket EWR-MoBay for $350, the same as I paid in 1976. Everyone wants a free lunch.
    Love your blog!

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    [...]The Big 5 Conspire To Ruin Your Air Travel « JetHead's Blog[...]…

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