Comments on: The Baffling Airline Business: Both Sides to Blame? http://briansullivan.blogs.foxbusiness.com/2008/08/06/the-baffling-airline-business-a-play-in-two-acts/ FOXBusiness Fri, 20 Nov 2009 18:24:21 -0500 http://wordpress.org/?v=2.8.5.2 hourly 1 By: 1077 http://briansullivan.blogs.foxbusiness.com/2008/08/06/the-baffling-airline-business-a-play-in-two-acts/comment-page-1/#comment-680 1077 Tue, 19 Aug 2008 20:21:55 +0000 http://briansullivan.blogs.foxbusiness.com/?p=59#comment-680 I flew about 2 million miles in my life, on business and privately and I believe I have seen it all (or close to it). On my latest vacation flight I was supposed to connect in Chicago. On my route to Chicago there were 3 flights in the day. In order to ensure that I do not miss the connection, I asked to be put on the earlier flight: no deal because "a connection exceeding 4 hours is considered a 'lay-over' and cannot be booked". Arriving to the airport, there was a wheather delay. And the check-in clerk said that had I come to the earlier flight she would have let me on... Numerous emails to the airline, including letters to the top management could not accomplish what a desk clerk was willing to do. So it is not the people serving the public who are at fault but the bosses getting the millions of dollars in bonuses. Why is it so? Because the airlines have gotten too big to be managed efficiently. Just like governments, rules overrule common sense. The solution is to break-up the behemoths of the industry and let the well managed smaller airlines get rich and let the poorly managed ones go bankrupt. As simple as that. If you do not graso the concept I recommend reading Ronald Coase who lready in the 30's elaborated the theory demonstrating that a company can get too big for its own good, its customers' good and society's good. The extreme example: centrally planned economies. You do not need communists to run an inefficient economy. I flew about 2 million miles in my life, on business and privately and I believe I have seen it all (or close to it). On my latest vacation flight I was supposed to connect in Chicago. On my route to Chicago there were 3 flights in the day. In order to ensure that I do not miss the connection, I asked to be put on the earlier flight: no deal because “a connection exceeding 4 hours is considered a ‘lay-over’ and cannot be booked”. Arriving to the airport, there was a wheather delay. And the check-in clerk said that had I come to the earlier flight she would have let me on… Numerous emails to the airline, including letters to the top management could not accomplish what a desk clerk was willing to do. So it is not the people serving the public who are at fault but the bosses getting the millions of dollars in bonuses. Why is it so? Because the airlines have gotten too big to be managed efficiently. Just like governments, rules overrule common sense. The solution is to break-up the behemoths of the industry and let the well managed smaller airlines get rich and let the poorly managed ones go bankrupt. As simple as that. If you do not graso the concept I recommend reading Ronald Coase who lready in the 30’s elaborated the theory demonstrating that a company can get too big for its own good, its customers’ good and society’s good. The extreme example: centrally planned economies. You do not need communists to run an inefficient economy.

]]> By: Corey http://briansullivan.blogs.foxbusiness.com/2008/08/06/the-baffling-airline-business-a-play-in-two-acts/comment-page-1/#comment-674 Corey Thu, 14 Aug 2008 15:21:30 +0000 http://briansullivan.blogs.foxbusiness.com/?p=59#comment-674 I am one of the many people who simply fly only rarely, not based on hatred of airlines, but due to not wishing to pay the prices required for long distance travel. If I have to fly there, I just don't go, it's as simple as that. My wife and I have gone to weddings and flown, but only due to the low price fares. If fares go up, I will have no animosity towards airlines, I simply won't go on trips via air. One real problem is that in say, Atlanta, you have to go through the same TSA line for Delta as for Airtran, so Delta can only marginally improve your experience at the airport (my main reason for disliking air travel) without having their improvements benefit Airtran flyers. BTW, I would gladly pay a few dollars more for a flight to get free refreshements; of course, that could be due to business flight where I pay for refreshments but not the fare. :) I think the basic truth is that profitable air travel levels fall far below the present levels, so until the supply is reduced to match profitable demand, airlines will have to fly at a loss. Maybe larger seats in coach would work, as I frankly look very hard for flights with low occupancy in order to have more space. If having empty seats around people becomes of significant import, then larger seats would make a difference. I would pay more for an airline that had larger seats, though it would take a bit to get me to think of it as right to pay more for a larger seat on the same flight as people paying less for smaller seats. Actually, I would pay more (but NOT first class more!) for a slightly larger seat. Unfortunately, airlines do not seem to grasp this so all seats are sized for 100 lb 5 foot tall passengers. Oh well, my car has comfortable seats and I like to drive! I am one of the many people who simply fly only rarely, not based on hatred of airlines, but due to not wishing to pay the prices required for long distance travel. If I have to fly there, I just don’t go, it’s as simple as that. My wife and I have gone to weddings and flown, but only due to the low price fares.

If fares go up, I will have no animosity towards airlines, I simply won’t go on trips via air. One real problem is that in say, Atlanta, you have to go through the same TSA line for Delta as for Airtran, so Delta can only marginally improve your experience at the airport (my main reason for disliking air travel) without having their improvements benefit Airtran flyers. BTW, I would gladly pay a few dollars more for a flight to get free refreshements; of course, that could be due to business flight where I pay for refreshments but not the fare. :)

I think the basic truth is that profitable air travel levels fall far below the present levels, so until the supply is reduced to match profitable demand, airlines will have to fly at a loss.

Maybe larger seats in coach would work, as I frankly look very hard for flights with low occupancy in order to have more space. If having empty seats around people becomes of significant import, then larger seats would make a difference. I would pay more for an airline that had larger seats, though it would take a bit to get me to think of it as right to pay more for a larger seat on the same flight as people paying less for smaller seats. Actually, I would pay more (but NOT first class more!) for a slightly larger seat. Unfortunately, airlines do not seem to grasp this so all seats are sized for 100 lb 5 foot tall passengers.

Oh well, my car has comfortable seats and I like to drive!

]]> By: Rick Seaney vs. Brian Sullivan… « Inside Cable News http://briansullivan.blogs.foxbusiness.com/2008/08/06/the-baffling-airline-business-a-play-in-two-acts/comment-page-1/#comment-671 Rick Seaney vs. Brian Sullivan… « Inside Cable News Tue, 12 Aug 2008 19:41:08 +0000 http://briansullivan.blogs.foxbusiness.com/?p=59#comment-671 [...] Fare Compare.com’s CEO Rick Seaney fisks FBN’s Brian Sullivan over the latter’s article on the airline business and who’s to blame, and throws an unexptected small elbow at Sullivan [...] [...] Fare Compare.com’s CEO Rick Seaney fisks FBN’s Brian Sullivan over the latter’s article on the airline business and who’s to blame, and throws an unexptected small elbow at Sullivan [...]

]]> By: Phil Hutchison http://briansullivan.blogs.foxbusiness.com/2008/08/06/the-baffling-airline-business-a-play-in-two-acts/comment-page-1/#comment-665 Phil Hutchison Fri, 08 Aug 2008 05:43:37 +0000 http://briansullivan.blogs.foxbusiness.com/?p=59#comment-665 Thank you for an excellent article, looking at the other side, it seems that it has now become a game to impress your friends, amazing I only paid xxx for my flight. There are so many high cost items which have been inherited from the before deregulation days, such as pilot salaries,an overhang from the heroes of the battle of Britain ( captains only travel in first class ), ATC charges, landing fees and associated airport charges. In many cases the only persons you meet and represent the airlines are the check in people and the cabin crew and if you have a good flight or not depends on them. Unfortunately they are taken for granted and are really cheap labor and a requirement from the relevant Civil Aviation Authorities. Southwest have got this right, the cabin crew are important, they sell your next ticket, not the pilot and if the next ticket is not sold, you soon will not need the pilot. Perhaps the airlines should incorporate a Little lateral thinking, things have changed since the days of B.O.A.C, Panam, Transworld Thank you for an excellent article, looking at the other side, it seems that it has now become a game to impress your friends, amazing I only paid xxx for my flight. There are so many high cost items which have been inherited from the before deregulation days, such as pilot salaries,an overhang from the heroes of the battle of Britain ( captains only travel in first class ), ATC charges, landing fees and associated airport charges. In many cases the only persons you meet and represent the airlines are the check in people and the cabin crew and if you have a good flight or not depends on them. Unfortunately they are taken for granted and are really cheap labor and a requirement from the relevant Civil Aviation Authorities. Southwest have got this right, the cabin crew are important, they sell your next ticket, not the pilot and if the next ticket is not sold, you soon will not need the pilot. Perhaps the airlines should incorporate a Little lateral thinking, things have changed since the days of B.O.A.C, Panam, Transworld

]]> By: Joe Hunt http://briansullivan.blogs.foxbusiness.com/2008/08/06/the-baffling-airline-business-a-play-in-two-acts/comment-page-1/#comment-661 Joe Hunt Thu, 07 Aug 2008 17:09:41 +0000 http://briansullivan.blogs.foxbusiness.com/?p=59#comment-661 It sounds like this article is making excuses for poor service and trying to justify it. I have no problem with cutting the amenities or charging extra for them. Like any other industry, they have to have a business model that will allow them to make a profit, but get the basics right. I am not willing to fly if it means using three connections and long delays in-between. Although not always possible, I would rather drive and suffer the inconvenience/time, than accept poor service. What other industry considers bad service as an acceptable model, and expect their customers to accept it? It sounds like this article is making excuses for poor service and trying to justify it. I have no problem with cutting the amenities or charging extra for them. Like any other industry, they have to have a business model that will allow them to make a profit, but get the basics right.
I am not willing to fly if it means using three connections and long delays in-between. Although not always possible, I would rather drive and suffer the inconvenience/time, than accept poor service. What other industry considers bad service as an acceptable model, and expect their customers to accept it?

]]> By: Shan http://briansullivan.blogs.foxbusiness.com/2008/08/06/the-baffling-airline-business-a-play-in-two-acts/comment-page-1/#comment-660 Shan Thu, 07 Aug 2008 16:18:00 +0000 http://briansullivan.blogs.foxbusiness.com/?p=59#comment-660 I agree with most of the argument here and yes they can raise the fare to keep up with the oil since they are running a business to make a profit. But they should also be responsible with the profit they make. They should try & re-invest the money they make to improve the service at the same time maintaining a reasonable profit margins. When we talk about living within our means it means you got to spend within what you earn, same should also apply for the business. So we cannot entirely blame it on the Oil price & Inflation. They could have hedged the oil price like southwest or they could have saved some money they earned after coming out of bankruptcy as a cushion for these circumstances. Many airlines after they emerged from Bankruptcy rewarded their CEO's with tons of stock options & bonus worth millions of dollars while pay cuts for employees<strong>(US Air - $6Million,United - $40Million,Northwest - $26Million)</strong>.Of-course these are stocks that were to vest over a period of time. But I am not saying, don't reward your CEO, but be reasonable. When stock holders & Board reward the management when they are doing good, they should also pull their leash when things go wrong rather than reward them again. Continental CEO's are taking pay cuts now,its not that they are starving to death or working for low wages. But Continental is serving free sandwiches on its flight!Maybe there is still room to run your business efficiently and make some profits. I agree with most of the argument here and yes they can raise the fare to keep up with the oil since they are running a business to make a profit. But they should also be responsible with the profit they make. They should try & re-invest the money they make to improve the service at the same time maintaining a reasonable profit margins. When we talk about living within our means it means you got to spend within what you earn, same should also apply for the business. So we cannot entirely blame it on the Oil price & Inflation. They could have hedged the oil price like southwest or they could have saved some money they earned after coming out of bankruptcy as a cushion for these circumstances. Many airlines after they emerged from Bankruptcy rewarded their CEO’s with tons of stock options & bonus worth millions of dollars while pay cuts for employees(US Air – $6Million,United – $40Million,Northwest – $26Million).Of-course these are stocks that were to vest over a period of time. But I am not saying, don’t reward your CEO, but be reasonable. When stock holders & Board reward the management when they are doing good, they should also pull their leash when things go wrong rather than reward them again. Continental CEO’s are taking pay cuts now,its not that they are starving to death or working for low wages. But Continental is serving free sandwiches on its flight!Maybe there is still room to run your business efficiently and make some profits.

]]> By: Ian Woolley http://briansullivan.blogs.foxbusiness.com/2008/08/06/the-baffling-airline-business-a-play-in-two-acts/comment-page-1/#comment-659 Ian Woolley Thu, 07 Aug 2008 15:50:49 +0000 http://briansullivan.blogs.foxbusiness.com/?p=59#comment-659 About the issue of Customer Service, or lack of it in todays airline industry, the answer goes directly back to price. Customer Service costs. In order to provide a sustainable high level of customer service a company requires well trained and highly motivated personnel. The problem today is, that with all the cost cutting going on, training budjets are slashed, at least in non mandated training areas and saleries are reduced in order to provide passengers seats on aircraft at prices that are just not sustainable. Motivation goes out the window and takes Customer Service with it. You can't keep asking people to do more with less indefinately and expect that they will. The good years (for the passenger) are gone, oil prices are through the roof, and I can remember how the airlines screamed when crude topped the $50.00 a barrel mark. Wake up out there, RASM (Revenue per available seat mile) has to exceed CASM (Cost per available seat mile. If it does'nt you're dead, or at least dying. About the issue of Customer Service, or lack of it in todays airline industry, the answer goes directly back to price. Customer Service costs.
In order to provide a sustainable high level of customer service a company requires well trained and highly motivated personnel.
The problem today is, that with all the cost cutting going on, training budjets are slashed, at least in non mandated training areas and saleries are reduced in order to provide passengers seats on aircraft at prices that are just not sustainable. Motivation goes out the window and takes Customer Service with it.
You can’t keep asking people to do more with less indefinately and expect that they will.
The good years (for the passenger) are gone, oil prices are through the roof, and I can remember how the airlines screamed when crude topped the $50.00 a barrel mark.
Wake up out there, RASM (Revenue per available seat mile) has to exceed CASM (Cost per available seat mile. If it does’nt you’re dead, or at least dying.

]]> By: Blue Forest http://briansullivan.blogs.foxbusiness.com/2008/08/06/the-baffling-airline-business-a-play-in-two-acts/comment-page-1/#comment-658 Blue Forest Thu, 07 Aug 2008 15:38:23 +0000 http://briansullivan.blogs.foxbusiness.com/?p=59#comment-658 To airline worker: Nowhere in my post did I state that the flight attendants either were subjected to passenger abuse, or were obligated to do so. FWIW, I have a relative who works as a crew member for a major domestic US airline, so <strong>no-one</strong> is more sympathetic to what flight crews do than I am. Such defensiveness on your part was entirely uncalled for. To airline worker:

Nowhere in my post did I state that the flight attendants either were subjected to passenger abuse, or were obligated to do so. FWIW, I have a relative who works as a crew member for a major domestic US airline, so no-one is more sympathetic to what flight crews do than I am. Such defensiveness on your part was entirely uncalled for.

]]> By: airline worker http://briansullivan.blogs.foxbusiness.com/2008/08/06/the-baffling-airline-business-a-play-in-two-acts/comment-page-1/#comment-657 airline worker Thu, 07 Aug 2008 15:11:53 +0000 http://briansullivan.blogs.foxbusiness.com/?p=59#comment-657 Comment by Blue Forest.... I’ve been on one flight during which the flight attendants visibly became upset with the passengers, and I’ve been on flights were the service was excellent. >> So, Flight attendants are supposed to just take passenger abuse, and keep smiling? and this for 30% less pay than 5 years ago? C'mon. if someone gave you a hard time over something you had no control over ( like the food,or lack thereof,on board)you would just say "thank you,can you yell at me some more?" ..yeah .... Comment by Jonathan With air travel, we pay a lot of money for a terrible experience. >>Uh, did you read the article? You may THINK you are paying a lot of money, but honestly, you're not paying enough. Caveat emptor, you get what you pay for. Sadly, if you watch the airline industry, you would notice you are paying for a bunch of Executives and NOT for whatever the airline could offer. Ex.: AAL has lavished over $400 Million in profits and bonuses (over the past 3 years) on their executives( CEO in particular), instead of re-investing in the airline. Does that tell you anything about the priorities of the leadership in the industry? Comment by Blue Forest….
I’ve been on one flight during which the flight attendants visibly became upset with the passengers, and I’ve been on flights were the service was excellent.

>> So, Flight attendants are supposed to just take passenger abuse, and keep smiling?
and this for 30% less pay than 5 years ago? C’mon. if someone gave you a hard time over something you had no control over ( like the food,or lack thereof,on board)you would just say “thank you,can you yell at me some more?” ..yeah ….

Comment by Jonathan
With air travel, we pay a lot of money for a terrible experience.
>>Uh, did you read the article? You may THINK you are paying a lot of money,
but honestly, you’re not paying enough. Caveat emptor, you get what you pay for.
Sadly, if you watch the airline industry, you would notice you are paying for a bunch of Executives and NOT for whatever the airline could offer. Ex.: AAL has lavished over $400 Million in profits and bonuses (over the past 3 years) on their executives( CEO in particular), instead of re-investing in the airline. Does that tell you anything about the priorities of the leadership in the industry?

]]> By: Dave Swiderski - Penn State University http://briansullivan.blogs.foxbusiness.com/2008/08/06/the-baffling-airline-business-a-play-in-two-acts/comment-page-1/#comment-655 Dave Swiderski - Penn State University Thu, 07 Aug 2008 09:19:27 +0000 http://briansullivan.blogs.foxbusiness.com/?p=59#comment-655 Hi Brian! This is a well-written and really informative article. Personally, in order fo the airlines to turn it around financially, I think they should just raise their fares and stop the practice of "nickle and diming" their customers to death and then focus on better customer service. It's no wonder passengers are fed up. Every time you turn around, it's costing you $5 for this and $5 for that!!! The airlines have done a lousy job in the past in hedging their fuel cost (except Southwest) and it's time for them to accept responsibilty and stop giving the passenger the "green weenie." Hi Brian!

This is a well-written and really informative article. Personally, in order fo the airlines to turn it around financially, I think they should just raise their fares and stop the practice of “nickle and diming” their customers to death and then focus on better customer service. It’s no wonder passengers are fed up. Every time you turn around, it’s costing you $5 for this and $5 for that!!! The airlines have done a lousy job in the past in hedging their fuel cost (except Southwest) and it’s time for them to accept responsibilty and stop giving the passenger the “green weenie.”

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