[A-List] The Unfriendly Skies

[Bill Totten]

by James Surowiecki

The New Yorker (September 03 2007)


In the summer of 1999, after a series of highly publicized
customer-service debacles, the nation's major airlines collectively
promised Congress that they would revamp their operations, offering a
"service commitment" that they dubbed "Customers First". Eight years
later, airline passengers are waiting in vain for any sign of that
promise's being kept. They're also waiting in vain, period. This summer,
nearly a third of all flights have been arriving late, more flights have
been cancelled, many planes are overbooked, and, in June, reports of
baggage problems were up twenty-five per cent from last year. A service
commitment like this should probably be called "Customers Last".

The airlines' explanation for the sheer misery of flying is that the
important problems - bad weather and an antiquated air-traffic-control
system, resulting in overcrowded runways - are out of their hands. But
those unavoidable difficulties have been exacerbated by the airlines'
strategic choices, most notably their decision to cut the number of
workers they employ and the number of big planes they fly. Over the past
six years, airlines have laid off more than a hundred thousand workers,
around a sixth of their workforce, and six major carriers have shrunk
their fleets - planes are expensive not only to acquire but to maintain
- by twenty per cent. From an economic point of view, this was sensible.
Making money in the airline business has always been tough - Warren
Buffett has said that if capitalists had been present at the Wright
brothers' first flight they would have been well advised to shoot the
plane down - but the years following 9/11, in which the industry lost
more than thirty billion dollars and several airlines filed for
bankruptcy, were especially brutal. So airlines moved aggressively to
cut the fat out of their business, trying to insure that each of their
planes flew as many flights, while carrying as many passengers, as
possible. The strategy was so successful that, even as business has
recovered, the airlines have chosen to stay slim. As a result, planes
today are more crowded than before - last year, the airlines filled
seventy-nine per cent of their seats, compared with sixty-five per cent
in the mid-nineties - and forecasts suggest that the industry as a whole
may clear four billion dollars in profits this year.

The lean-and-mean approach may have saved the airlines, but for
passengers it's made an already bad situation worse. If something goes
wrong with a plane, servicing it will likely take longer than it used
to, and there's less chance that another jet will be available to get
passengers where they need to go. And since the planes the airlines do
own are flying more flights, the ripple effects of delays have been
magnified: a third of all flight delays are due simply to the fact that
the plane was late arriving from its previous flight, and often the
effects of a mid-morning flight's late arrival can still be felt that
evening. According to the Department of Transportation, more than a
quarter of all delays in June were due to "air carrier" problems.

Oddly, none of this seems to have hurt the airlines - more people than
ever are flying, and ticket prices remain relatively stable. In part,
this is because, for many trips, there's no meaningful alternative to
flying, which limits the power that fliers have as customers. They can
make certain choices - they consistently go for the cheapest flights,
making it hard for an airline to raise prices - but anyone who vows
never to fly with a particular airline again will likely have an equally
bad experience on a rival carrier soon afterward. Like consumers of
regional utilities or like drivers who tolerate bad traffic day after
day, fliers have accommodated themselves to misery. It's little wonder,
then, that the air-travel market rarely punishes an individual airline
for failing to get people to their destination on time: consumers
assume, with good reason, that the options are interchangeably awful.

The airlines could improve the current system by investing more money in
planes and staff, reducing the number of segments each plane flies in a
given day, and increasing the number of direct flights. So you might
expect that free-market competition would have thrown up at least one
major airline promising reliable on-time arrivals in exchange for higher
ticket prices - like a toll road in the air. The trouble is that
although things like bad weather and air-traffic-control problems are
easy excuses for the airlines' failures, they're also real problems, and
any airline dedicated to keeping its on-time arrivals high could easily
find its efforts, in the short run, stymied by storms or by high volume.
And the punishment for an airline that explicitly promised excellent
performance and failed would probably be much harsher than if it had
promised nothing at all. (When JetBlue experienced huge delays this
winter because of bad planning, it was savaged in the press, precisely
because it had always insisted that it was different from other
airlines.) Furthermore, in the short run more competition could actually
make things worse for customers: it would mean more flights, a greater
burden for the air-traffic-control system, and possibly more delays.

In other words, we're stuck with the current system, because it isn't
really in any airline's interest to try to change it. As long as no
airline makes a dedicated effort to distinguish itself from the pack,
all the airlines can stay lean, even at the expense of quality. In that
sense, the most honest thing about the airlines may be their
advertising, which tends to emphasize the flying experience - lulling us
with talk of leg room and fully reclining seats. You may end up waiting
on the runway for a couple of hours, the message seems to be, but at
least you'll do it in a comfortable chair.

http://www.newyorker.com/talk/financial/2007/09/03/070903ta_talk_surowiecki


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