Earth to Airlines: Raise the #@!$% Fares


Former American Airlines CEO Robert Crandall once famously said the airline industry is always in the grip of its dumbest competitors. What he didn’t add, however, is what if they’re all dumb? Fortunately, they aren’t, but the legacy carriers-chiefly American and United-seem incapable of facing the music on rising oil prices and are choosing instead to adopt customer unfriendly policies that beat up the very people they need to survive.Specifically, American came up with the boneheaded idea to charge passengers for checking baggage and United followed suit. So did US Airways. Now United has returned to the much-hated fare structure that requires a minimum stay, as long as three days over a weekend in some cases. Passengers see these developments for what they are: punishing the customers for market forces beyond the control of anyone.A friend of mine observed that it’s almost as if they want to run themselves out of business. In any case, Southwest Airlines-I happen to be writing this from seat 6A on a Tampa-bound Southwest flight-has been circulating a funny ad that says “bags fly for free.”The legacy carriers whimper that Southwest and others of its ilk compete unfairly because they have lower seat mile costs and serve fewer cities. Well, duh. Southwest presciently negotiated long-term fuel price deals that give it a huge advantage over American and United who were, presumably, spending their management assets trying to figure out ways to whack passengers for more money for changing flight arrangements or checking that second bag.Everyone knows that the price of oil is at record levels and likely to stay elevated for the foreseeable future. People who fly the airlines also realize that this inevitably must affect fares. Those of us who remember what airline travel was like before deregulation, discounting and service expansion also realize that the industry is going to have to retract to a route service model more like the 1970s than the 1990s. Bluntly, this is going to mean higher fares and less service to outlying markets, which translates to the airlines operating fewer but larger aircraft with-one hopes-higher load factors. The regional jets that now clog the major terminals are almost sure to be reduced in number. It will also mean that some people won’t be able to afford to fly and those who can may fly less.Is this a good thing? My view is that it’s not entirely bad because it forces us as a civilization to use our resources more wisely and to price goods and services in sustainable ways that reflect their replacement costs. The MBAs at United who think they’ll survive by forcing passengers to spend a weekend away from home may find themselves out of a job unless they adapt to this new reality.On the other hand, if you, as a passenger, think you’ll continue to have the choice of six non-stop flights to anywhere for $250 coast-to-coast, you’re living a dream. But then you already knew that.Customers have made this transitional understanding-airline management hasn’t, with the exception perhaps of Southwest, who figured it out 20 years ago.As for the service itself, the airlines aren’t as bad as everyone seems to think, in my view. Bad service was Aeroflot circa 1975 (“Flight cancelled…you go Novosibirsk next week.”) When flying the airlines these days, expect full airplanes with stuffed overheads. Yes, flights get delayed and cancelled, but not so often that you don’t get where you’re going. The security screening sucks, but it’s not the living hell it’s often made out to be. The TSA needs to overhaul the way they conduct screening and, for God’s sake, stop having people remove their shoes. This is sheer idiocy and everyone knows it.As for the airlines, one hopes if they charge realistic fares, they can provide service improvements such as non-abusive schedule-change options, counter agents who actually do their jobs as though they care and maybe a seat pitch expansion so you can walk rather than crawl to your seat. And my bag goes for free, please. What I’m saying is that I’m willing to pay the money for an incrementally improved service. I’m convinced that others are, too.As the airlines raise fares-as they must-there’s an opportunity for general aviation, too, especially for efficient, piston-engine airplanes flying trips under 1000 miles. Even in an age of $7 avgas, you can fly three people 500 miles in a single for under $400 in fuel costs. You can’t match that in airline fares, not to mention the time savings. For the right trips, then, GA is still an efficient option. I think it always will be.But general aviation owners and pilots have to confront an unpleasant reality whether they like it or not. In an oil-short world, the tilt is strongly toward mass transit and that’s what airliners are. Even though you may pay more for a trip on the airliner than you would in your personal airplane, the airliner will frequently-although not always-represent more efficient use of fuel to deliver seat miles. And the economics of large airplanes are the same as they are for small airplanes-filling the seats makes for more efficient use of both fuel and dollars. As an aircraft owner, you now get to decide for yourself if you want to burn more fuel to avoid security lines or suck it up and burn a fraction of the fuel to get where you’re going on an airliner. It’s your call to make.That’s something we all need to think about.