Between the DOJ, some law firm in Texas, and most of the rest of America, the airline industry is starting to take it on all sides. I mean, for an industry that’s never made money in its history, something must be up now that it is making money, right? Actually, no. I’m sorry, but a for-profit business doesn’t need to give away product so you get a $99 fare, 5,000 bonus miles, and a free puppy.
Where we are today has been a long time coming. Supply and demand for air transportation are near equilibrium, but a lot of analyst types would say we’re getting a little heavy on the supply side. Maybe, maybe not. Doesn’t matter because my point is that airlines were not going to lose money forever. If they did, they’d all be out of business, and in the most hyper-technical sense of the word, they all have been out of business except Southwest, JetBlue, and Alaska (and probably a few others I’m forgetting) because in my book, the day you file Chapter 11 is the day your business failed.
Image courtesy of Shutterstock.com.
New companies were created with new business models that allowed them to be profitable, reward their owners, pay their employees, buy airplanes, and provide safe and mostly reliable transportation between points on a map. Do I think airlines are blameless in all this? Hell no. Traditional airlines still operate in ways that boggle my mind, and I worked for the most traditional of all for over 10 of the best years of my life. Airline – customer relationships are too complicated and confusing, and I strongly suspect a few CEO’s and senior managers need to spend a bit more time in coach…..real coach…..38E coach. (I’ll be sharing some ideas on fixing the airline – customer relationship mess next week.)
Airline pricing is market specific, and varies day by day based on demand and probably 300 other factors. We aren’t owed an empty seat beside us, and managing capacity to closely match demand sounds like prudent business to me. Americans have developed a tendency to want it both ways in a lot of different areas – health insurance for all, but don’t raise my taxes; great roads, but don’t raise my taxes; airport palaces, but don’t raise my taxes; and new planes with wide seats, free meals, bonus miles, and a puppy, but don’t charge more than $99 for it. Here’s the answer – just re-regulate the airlines already. Come on, let’s do this thing! Get it over with. Let’s stand up the old Civil Aeronautics Board and let them decide how much airlines should charge. That will make everything right again, won’t it? Yeah, I thought so. It’s time for America to decide what it wants from airlines. I don’t think fishing expeditions and witch hunts are the answer.
-MJ, July 10, 2015
[…] On Airlines – It’s Time For America to Decide What We Want […]
I agree with you 100%, MJ. The depth and amount of vitriol directed at the airlines amazes, but does not surprise, me. You can see the same kind of thing directed at any large and powerful group or individual. Frankly, I think a lot of people are just looking for a reason to be angry about something.
Spoken from a true Delta apologist, obviously one beaten to submission!
But I’d still buy you a beer.
Bravo, Marshall! Well said. I’ve always wondered why airlines alone are pilloried for wanting what every business wants: a decent profit for a decent product/service. Is it perhaps that the public somehow thinks airlines are a public commodities and owe the public a cheap seat with all the trimmings? Puzzling.
Didn’t the regulated system used to be that the airlines bid blindly on a route? American, say, would bid a certain amount from NYC to LAX, figuring costs and a reasonable profit. Then they would have to honor that price for the next quarter, regardless of how much a competitor had bid. That kept things reasonably honest. At least that’s how the system was explained to me.