Archive for May, 2008

Air travel today (part 2) – what are CEO’s thinking?

In my last post I lamented at the state of the airline industry today from a passenger perspective as compared to in years long past.

Perhaps someone can indulge me here, but what in the world are airline CEO’s thinking? As I stated before, today jets are sleeker, faster, quieter, more efficient, and more technologically advanced than ever before. It stands to reason that air travel should be getting better rather than worse. But the average traveler is concerned with one thing, and that is getting from point A to B as quickly and cheaply as possible. Why are the airlines so intent to oblige us on this?

Most people are quick to blame de-regulation. When the airlines were regulated the government controlled which airlines could fly certain routes. For instance, the government would only allow Delta and TWA to fly Atlanta-Boston, and only TWA and PanAm to fly New York-Los Angeles. The “legacy carriers” (American, Delta, United, Northwest, Continental and a few defunct ones) were formed under business models that presumed they could charge really high fares. The only way they could really compete was based on service. Offer a better experience than they next guy. (A trip through the TWA/Airline History museum at Kansas City downtown airport offers a neat step back in time to this era.) After de-regulation was introduced anyone could fly anywhere, so in come Southwest, AirTran, JetBlue, etc. who operate on a low(er) cost basis and thus charge lower fares. The legacies have aircraft leases, airport leases, and labor and fuel contracts which were negotiated under a higher revenue stream. They cut fares to compete, but still have high costs, thus bankruptcy is required to get out of those old contracts. This is grossly over-simplified, and there has been plenty of mis-management involved as well (the legacies were slow to adjust)… but that’s the short of it.

The problem is, it ain’t cheap to run an airline. Those airliners cost upwards of a hundred-million (maybe less for the regional jets), and suck thousands of dollars in gas just to get off the ground. Basic economics should tell you that you can’t make money if you’re charging a really low price for a product that has a really high cost basis. So what are CEO’s thinking? Losing money hand-over-foot, why are they still trying? I wonder if the legacy carriers had made the decision years ago to stick to their roots of providing excellent service rather than competing on price, would the discounters have gotten a foothold? For sure, the legacies would be in better financial shape today. Cheap air travel is an oxymoron, and the dirt-cheap fares are not sustainable.

What I really don’t understand is why the meals, blanket, pillows, and other in-flight amenities have been cut. Charging for extra checked bags I can understand. American Airlines did a study a few years back, and they figured if they could drop 100 pounds from each of their flights they’d save a million bucks a year in fuel. Those extra bags are heavy, so I can see trying to re-coup the cost of extra fuel.

But catering is cheap. It costs $125 or so every time a catering truck services a mainline airliner… that’s about a buck a passenger assuming a full flight. Those snack boxes costs less than a dollar a piece, maybe $5 for a full meal. Those pillows and blankets are cheaply made, and not everyone uses them anyways. For an extra $10 per ticket (per segment) you could easily cover the costs of providing those items.

Even worse, now we’re seeing the airlines alienate some of their best customers. Delta is closing several of their Crown rooms (private members-only lounges where elite travelers can rest between flight away from the chaos of the rest of the airport), and United just announced a significant change to the way frequent-flier miles are earned.

Perhaps I mis-understand the American travel market, but it seems to me that good service (this includes on-time performance), decent amenities, and immaculately clean and functional aircraft would go a long way towards building a loyal customer base. An airline that provided these things by selling tickets based on the actual operating cost of the flight and by hiring only the best people (there is a huge pool of quality people who are dying for flight attendant, pilot, and mechanic jobs). Wait a minute… that sounds a lot like United, TWA, and PanAm in the good old days.

Which again makes me wonder what the current airline CEO’s are thinking. If you want to salvage your airline, go back to basics. In the near future there is no question that the size of your operation would be drastically reduced as your lower-priced competitors gobble up your market share. That’s a tough cookie to swallow. Yet I really do think that such an airline (or any business for that matter) could hold it’s own. Over time, if you stuck to your commitment to competing on product and service, you’d build a loyal customer base. And as the airline industry shakes out, I think you’d be in a position to succeed.

I’m one of the many who would no longer be able to afford to fly as often if fares go through the roof. But if those fares were accompanied by an increase in service and quality, it would be worth it… to resurrect the prestige, respect, and wonder that is the marvel of flying.

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Air travel today (part 1) – Yesterday vs. Today

Recently I came across some old photos of the lounges – yes, lounges – found years ago on widebody airliners.  Along with those, I  found some old TV commercials which advertised those lounges.  Sadly, I am too young to have ever enjoyed those sorts of amenities – growing up, we loved to go hang out at the airport and watch the planes, but we didn’t have the resources to afford a ticket.  Most of my flying these days is on modern jets – an increasingly unfortunate reflection on the status of the business.  On a recent American Eagle flight out of White Plains, NY, my comfy window seat was “stuck” in the reclined position, and the overhead bin above my seat was taped shut, a sign advising that it was out of service.  On an earlier Eagle segment that week, there was no soap in the lav – rather a bucket of wet wipes tossed in the sink.

I often wonder if airline flying has taken a step forwards or backwards over the past eighty years.  In the 1930’s and 40’s when passenger airlines were first born, the mighty DC-2 and DC-3 prowled the skies.  They were slow and those big radial engines were loud (I imagine earplugs were a part of the amenity kits back then.)  But flying was an event – enjoyed mainly by the rich.  People dressed their best for a flight and the passengers were treated like gold (often treated to low-altitude passes of famous landmarks en-route).

Over the years as the jet was introduced, airliners became faster and nicer.  The flight attendant was introduced – young, sexy and classy to be sure, but their primary function was to make sure the passengers’ every need was met.  Hot meals of lobster tail, chicken cordon bleu, and a glass or two of wine were the norm… all served on fine china with real silverware and cloth napkins.  Hot towels, coat check, lounges, and even piano bars were among the other amenities offered to airlines passengers.  Those tickets cost a fortune, and dressing up was the expectation.  Flying was an experience to behold – as much a tribute to the wonder of it all as well as a sign of respect for the multi-million-dollar machine and the highly trained pilots who commanded it.

What happened?   Today’s airliners are packed with as many seats as the airlines can safely install.  Amenities are scarce.  Gone are blankets and pillows, and you’ll pay to check that second bag now.  Flight attendants are often surly (seriously, I just about tipped the guy on my last O’Hare-Lexington flight just because he was nice!) and even coat check is a first-class feature now, if they remember.  You want food?  You’ll pay for it – I actually got excited about the little snack box on a recent Miami-Port au Prince flight, and the only place you’ll find fine china these days is at flea markets.  (I have a very nice set of Delta china on my bookshelf right now.)  On many routes flip-flops and tee shirts outnumber the business suits, and increasingly you’ll find useful amenities such as power ports, lavatories, and galley coffee makers inoperative.

It’s actually rather embarrassing that in the country that basically invented commercial aviation, we have to look at overseas airlines to learn how to do things right.  Look at who’s winning the awards these days for primo cabins and best flying experience.  Singapore Airlines, Air France, Royal Jordanian, Cathay Pacific (Hong Kong), Lufthansa (Germany) and Emirates.  Many of the entertainment options being installed on US airliners now have been used to years overseas, ditto with the lie-flat beds and mini-compartments being installed in business class cabins on the major US carriers.

Today’s jets are sleeker, faster and quieter than ever before.  By all measures of common sense, air travel should be getting better rather than worse.  However people are demanding cheaper and cheaper flights.  (The Concorde was the odd exception.  They were fast, but surprising cramped inside.)  Flying has lost its mystery and prestige in this country.  We want one thing – to get from point A to B as cheaply as possible.  And for reasons unbeknown to me, the airlines are happy to oblige us.

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