Thursday, March 10, 2005

So I'm a little cranky at the moment. No doubt a large part of this has to do with a significant lack of sleep, as well as traversing six time zones twice in three days.

But the distemper is also due to what I think is a fairly valid complaint: namely, the ridiculousness with which many major airlines continue operating as if the deep structural problems within their organizations are not of urgent concern to their customers.

At present, that negligence has led to a severe disconnect between quality and cost. The fact that the price is the same for a transatlantic flight on British Airways and US Air is laughable: an economy seat on the former typically entails a personal video monitor and quality-controlled meals, while the same seat on the latter will likely involve craning your neck to see the screen twenty rows up and summoning the courage to eat a slab of bread that seems to have been baked before you were born. If hotels were run like airlines, you'd be paying the same for a room at the Hilton as at a Motel 8.

So why exactly is the market so skewed? As far as I can figure, there are three main causes:

1) The fact that the major airlines are, again, so negligent with regard to their structural problems. These include past overexpansion and flawed executive compensation, but the principal problem is clearly their pension accounts. Regardless of exactly how this problem is resolved, it needs to be resolved soon if the market is to have any chance of being stabilized in the near future.

2) Governmental interference. After 9/11, the government bailout was understandable. But since then it's become fairly obvious that the downturn following the attacks was as much a result of a significant shift in the standard business model for commercial aviation. The major airlines simply cannot continue to be as massive and monolithic as they are if they hope to compete with smaller, more flexible, and more innovative airlines. Congress has begun to realize this, but when it comes to regulating air travel it needs to be even stricter.

3) Fluctuations in the oil market. Since the margins for aviation are so slim to begin with, variations in gas prices can turn a profitable flight into a loss with alarming alacrity. As far as I know, Southwest is the only carrier currently able to hedge against this, by purchasing future fuel at fixed prices. (Small airlines are too small to do this effectively, and large airlines are typically too weakened by the pension deficits mentioned above.)

What the collective solutions to these problems are I'm not sure. But I trust that the industry itself is innovative enough to come up with them -- so long as the government keeps its hands off it and thus provides the airlines with an incentive to do so.

I don't mind lousy service, but I do mind being forced to pay extra for it.


Post a Comment

<< Home