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
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.