I've contended since way way back when, when "People's Distress (People Express) first came on the scene, that deregulation was no friend. I've maintained it lo these many years and everyone I respect in the travel biz has shared that opinion (for various and sundry reasons - safety among them.) They'll probably never re-regulate - at least not in our lifetime but no good has come from deregulation in my opinion.
Alisa

by Alisa B on Sunday, June 28, 2009

Interesting read, although it hardly tells the whole story, and this is obviously a left-leaning think tank. Be that as it may, you realize that if airlines go back to life before Alfred, when fares were set by the government and rarely changed, and were *actually printed in timetables* (can you imagine? they were!) then there'd be no need for Airfarewatchdog and your ilk. So careful what you wish for.

by Henry H on Sunday, June 28, 2009

@Henry H: I'm not necessarily wishing for a return to regulation, nor for the demise of our wonderful Web site. But it would be nice if airlines could treat their employees and investors and passengers better. Maybe we need a few more rules, and less capacity, and higher fares in order to allow airlines to be profitable once more.

Airlines have lost billions and billions, and where do you think that money has come from? From anyone whose pension fund invested in airline stock; anyone who uses a bank that lost money loaning to an airline; and of course, millions of individual investors in airline stocks; the employees themselves who lost jobs, pensions, and investments; and I've probably forgotten a few classes of people who have lost money. Those billions in losses had hidden consequences for many ordinary people, not just Wall St. fat cats and airline CEOs.

by George Hobica on Sunday, June 28, 2009

George -- I didn't realize you were such a lefty. :)

The arguments contained here are boilerplate lefty logic. We need more airline competition. We need to pay workers more. We need more rail transportation. None of these ideas would help consumers one iota.

There is obviously plenty of airline competition. Indeed, it's obvious that there's TOO MUCH competition. Prices are too cheap. All of us remember buying airline tickets for the same price -- or more -- 25 years ago. It sure would be nice if we could roll back prices on everything else!

Worker pay is what it is. Obviously, during regulation, airline employees made more (in inflation adjusted dollars) than they do today. But that only proves that, in the regulated environment, they were OVERPAID. Nobody forces anybody to work for an airline. If the pay is inadequate, employees will work elsewhere. I myself wonder why anyone would sign up to be a First Officer for 20K a year, but getting a foot in the door is obviously worth it TO THEM. The safety card, of course, is an outrageous slander. Everyone knows that the US aviation industry is unbelievably safe. It's truly an antonishing achievement. The odds of being on an airplane flight that sustains one fatality is more than 1 in 8 million! Give me a break.

More rail transportation is, of course, a popular mantra for Greenies everywhere. In certain parts of our country, it would seem workable. But does anyone truly believe that taxpapers will get better bang for their buck than they do with commercial aviation. Call my skeptical, but I don't think ANY rail line ever launched in the US will be able to compete with Southwest Airlines over any reasonable distance. Sure, we could spend lots of money on trains, but would we truly be better off if we did?

by Dave D on Sunday, June 28, 2009

Why must left-wing groups always obscure their true identity with phrases like "non-partisan"? Their own website itdentifies them as "progressive" which is code for "we think the Democratic Party is too right-wing". Here's a clue - "non-partisan" does not equate to "balanced".

Without going into too much detail in the report, which is chock full of cherry-picked facts, let's take a look at just one quote:

“While the price of flying has come down over the past thirty years,” the report notes, “it decreased at a comparable rate from the 1940 through the 1960s."

Okay, but deregulation happened in 1978, how much did airfares drop during that hole in your data - the 1960's to 1978? Not to mention a whole lot of technological innovation in the airline industry from 1940-1965 that massively lowered costs per passenger mile as aircraft got larger and jets were introduced. To imply that the price of flying would have continued to come down without deregulation because it previously had is the worst kind of historical financial analysis with no basis in fact.

To quote from the U.S. Centennial of Flight Commission:

"In the 1970s and 1980's, a few visionary people began to open the skies to the average American with low fares. Since 1938, the Federal government had strictly regulated airline fares and routes. The government kept fares high to please airline investors and airline-employee unions. This policy kept airline costs high and priced air travel out of the reach of most Americans."

These guys want to return to those days. Oh yeah, good times.

by MrMom62 on Monday, June 29, 2009

May I say that as a former airline employee who saw his pension and airline stock nest egg disappear thanks to my employer's bankruptcy that these low fares MrMom etc are speaking of have been achieved on the backs of many innocent victims. The airlines are not making money and as an industry the airlines have lost billions. These low fares are smoke and mirrors and they must be rationalized eventually. It's almost the same thing as sub prime mortgages. The airlines will eventually get real, we'll see more consolidation and capacity cuts. Even once profitable British Airways and Southwest are losing money now, and just wait until oil prices begin their inevitable climb.

No one is served by airline pilots working dangerously long hours on commuter carriers, earning $20,000 a year and living on food stamps.

This madness has got to end.

by HiFlier on Monday, June 29, 2009

@ DaveD
I am a lefty on some things, but quite a righty on others (you'd be surprised)! As HenryH points out, Airfarewatchdog (and for 8 or 9 years before that, my Travel Guy feature on AOL) has had great fun and much success telling people about the wacky low fare wars from the likes of Independence Air (remember them?), SkyBus, America West, and the rest, and we'd hate to see the fun stop. On the other hand, we get bombarded every day with emails from consumers who have suffered indignities at the hands of the airlines--atrocious treatment that no other industry could get a way with. I sort of agree with HiFlier that there are elements in the US airline industry that remind one of the failure of the mortgage and banking industries. Again, I would truly hate to see fare competition end, but I can see how an ailing US airline industry serves no one in the end.

by George Hobica on Monday, June 29, 2009

"On the other hand, we get bombarded every day with emails from consumers who have suffered indignities at the hands of the airlines--atrocious treatment that no other industry could get a way with."

You're kidding, right? "Atrocious treatment"? Like exactly what? I deal with airlines almost everyday, and airline customer service is above average among US industries (albeit far from perfect). The fundamental problem, though, is that airfares are so cheap that the airlines can't afford to "take care of everything" when things go wrong -- as they often do given the unpredictability of travel. Like when you miss the last connecting flight of the day because of ATC delays. If there were higher profit margins in the industry -- indeed, any real profit margin -- airlines could be more generous in "making things right."

I could give a long psychology lesson on this, but the reality is that even though the average customer gets a FANTASTIC deal when he/she buys airfare, he doesn't feel that good about it. It's largely because he doesn't feel special. Compare this to the experience of buying a luxury good, where the consumer (by any objective measure) is getting ripped off (tiny incremental increase in quality, huge increase in price), yet feels "special" and is satisfied.

To increase customer satisfaction, airlines would have to be able to charge higher prices. This would also enable them to pay their workers better, which might also result in better customer service. The only way we'll get higher prices is if airlines merge and there are fewer competitors. Try to think of another major industry (and the airline industry is huge -- even medium sized airlines have over $10 billion in annual revenue) that has so many competitors. It's nuts.

Of course, we all like our low fares, and the current Administration in Washington thinks corporate mergers are evil. Heck, just today they decided to give United and Continental a hard time on their efforts to jointly sell certain tickets. God knows, United and Continental are just SO profitable these days -- it would be so unjust to let them try to make a buck.

So the folly continues. Financially strapped airlines which don't make enough money to satisfy their passengers or pay their employees what they feel they deserve. Somehow, I don't think the situation is going to change that quickly -- especially if the Obama administration vetos any mergers.

by Dave D on Tuesday, June 30, 2009

@DaveD I think we're in agreement about the situation. Airlines would treat passengers better if they made money. Airfares are incredible bargains unless you travel at the last minute or over a peak holiday period.

Atrocious treatment? Taking a year to issue a refund on a fully refundable first class fare. Changing their schedules at the last minute and forcing an expensive hotel layover which they refuse to pay for but charging $250 if the passenger wants to change. Making passengers sit on runways for 8 hours with no food or working toilets. Putting unaccompanied minors on the wrong flight. Refusing to refund a nonrefundable fare when a passenger dies before departure (c'mon!). I could go on.

by George Hobica on Tuesday, June 30, 2009

My recollection is that there are something like 700 million enplanements in the United States every year. Given these numbers --- and the complexity of air travel -- it's hardly surprising that some really bad things happen to some travellers. It's the law of large numbers. Like putting unaccompanied minors on the wrong flight. Its the airline equivalent of a school teacher having sex with one of his pupils -- but only about 1/100th as bad! Yet we don't condemn all teachers as evil because a handful of them behave atrociously.

There just needs to be perspective. There are enough people holding the airlines to an unrealistic level of service. People who know the industry must put these incidents into proper perspective. Every day, almost 2 million Americans fly in the United States. The overwhelming majority of these trips go off without significant inconvenience, at a price point that is incredible.

by Dave D on Tuesday, June 30, 2009

Where is the evidence that airlines making more money would treat people any better? Why would they? Wouldn't the jaded view that wants reregualtion also say that if they made more money, they'd just keep it and keep treating people badly because it made them more money. Should we have regulations that require them to be nice?

I travel only a few times a year, often wth kids in tow, and the airlines do a decent job. They get me there in one piece, usually within a few minutes of when they say, and my bags make it too. Only once in 10 years have I had any incidents at all, when United mysteriously cancelled a flight at the last minute with the lame excuse that the flight crew didn't show up - something that couldn't possibly be true because we later noticed the inbound flight was cancelled hours before. They obviously knew the flight was going to be cancelled when we checked in, so rebooking us at check-in would have been the right thing to do, rather than having us run through DIA.

On the flip side, I'd like to know this - how do passengers treat the airlines? We all know thar airlines occasionally screw up, but perhaps that's in reaction to the scams and rude behavior on the part of some passengers, a general coarsening of society. If people paid more, would they behave better? (I doubt it.) I am not an airline employee, but as a passenger, I see all sorts of bad behavior on the part of my fellow passengers every time I hit the airport, and I'm not seeing the worst of it. How is it from the other side of the ticket counter? Do rude customers cause policy shifts that hurt all of us? Are some policies in place just so the airline doesn't get ripped off by unscrupulous customers? I'm really curious, but I do know that a smile and a kind word with most airline employees will get you most of what you ask for, which must mean that a smile and a kind word are rare currency in the airline business.

by MrMom62 on Tuesday, June 30, 2009

"Where is the evidence that airlines making more money would treat people any better?"

Well, we don't know that for sure, but I think it's a safe bet. It's just that when you're running a business that is only a couple bad quarters away from bankruptcy, you simply can't devote the resources to spend on your customers. It's the reason why you're now "left on your own" when bad weather strikes. Trust me, if the airlines were more profitable, they would provide you with free meal vouchers and hotel rooms just like they did in "the good old days."

But there are trade-offs. Consider the Nintendo company. They provide fantastic customer service. My kids tend to break their "gameboys" every year, and all I have to do is call up their 800-number, they send me a postage paid envelope, and then fix the gameboy for free (and renew my warranty for another year)! The bad thing is that Nintendo has a monopoly on software, so if you want a new game, it costs you about 25 bucks (in a competitive world, it would probably be 5 bucks a game). They make billions in profits off their customers. Yet, the typical Nintendo customer is probably happier than the typical airline customer -- even though airline passengers get far greater value. It's that psychology thing.

by Dave D on Tuesday, June 30, 2009

First off, it's not fair to compare a product company with a service company, especially a service company that has a time-expiring product. You don't sell that airline seat, it goes to waste. Plus, one airline seat is pretty much the same as another airline seat, not so with a Nintendo, where a DS or Gameboy is much different from a PSP. And, the game machines themselves are pretty much a loss leader, the goal is to sell you software. Ever notice how if the game sucks, they don't let you return it. Now that would be an apt comparison!

I can't recall the name of the airline, but didn't someone try to start a high service airline, where everything was business or first class? How did that work out? Did people march to it? Or do they run to Southwest, where service is minimal, but good for what they offer, and the prices are usually the lowest in town for any given route. Like anything, when two products are identical, they go for the lowest price. And let's face it, the product really is getting from Point A to Point B. Only a few things are really important there - How much does it cost, how long will it take, does it fit my schedule? Quality of service is far overridden by those three things. (We're assuming things like safety are equal.) When given the opportunity to pay for better service, consumers will not pay for it in most circumstances, or the market is limited, say with people willing to pay for business or first class or refundable tickets.

Now, if you put in an artifical price floor, then yes, service might increase as airlines looked for ways to attract passengers, but what if I don't want those services? I'd rather have my extra $50 or $100 per seat, but in a fare regulated world, someone has already made that decision for me. And as a result, I may not even choose to take the flight, as I can no longer afford it.

This is not to say that maybe there shouldn't be some flyer protection, say for the airlines altering flight times after you buy a ticket. In that case, one side shouldn't be allowed to just arbitrarily alter the terms of the contract, which is what most people think they have when they buy a ticket on a particular set of flights for a certain price. Getting a refund on a set of tickets that are refundable - that's part of the deal, or it's why they invented small claims court. But getting a refund when a passenger gets sick before a trip - that's why they invented trip insurance and given the price of it, you can see why most people don't want it built into the price of their tickets.

Consumers are not stupid, they have voted with their wallets and most are actually pretty happy about the deal they've got.

by MrMom62 on Tuesday, June 30, 2009