March 26, 2015 by Chris Kite
I’m going to shift briefly from politics. Kind of.
As someone that flies a lot, I mean I really fly a lot, the consistently decreasing quality of air travel has not gone unnoticed. Sure, I have special privileges because I fly so much. I get to select my seat and select from better seats (exit rows, front of the cabin seats, “main cabin extra” seats, aisle or window). I sometimes get upgrades to first or business class. I get to board early. And yet it is still a miserable experience.
The airline industry is not a terribly profitable industry. With lower fuel costs, airlines are seeing strong profits now. But over the long term, the industry is not terribly attractive to investors. But I can’t help but think a big part of the problem is that airlines are managing their business for the investors, not for the passengers.
Then again, American Airlines tried for years to offer a better flying experience with “more leg room throughout coach.” What they found was that while people loved the extra legroom, they weren’t willing to pay more for it. If the airline has less seats per plane, it really needs to be able to charge a higher fee per seat in order to make the same profit as other carriers. Personally, I was willing to pay a little extra. And the companies I worked for were also willing to allow me to book flights that were a little more expensive.
But airline shoppers (not unlike Walmart Shoppers) decided that price was the only thing that was important and were willing to book seats on carriers that offered less comfort and benefits if the tickets were cheaper. So now we have planes without enough leg room for someone over six feet tall to sit comfortably. We have checked bag fees. We have reservation change fees. We have fees to book a reservation with an actual person. And fees if you want to eat. And we have widebody airplanes that were really designed for nine across seating having ten across seating. That means less legroom AND less elbow/shoulder/hip room.
I understand that the airline industry is capital intensive and is also very much subject to fluctuations in the economy. But I can’t help but think that if one airline offered a truly outstanding product, and a very similar price, that people would flock to it.
The problem is, those airlines that HAVE taken that approach have failed, largely because they don’t offer the route structure and flight frequency as the big carriers. And because the big carriers are able to spot price based on market strategies. In other words, they’re willing to lose money on routes with competition. Especially if they have hopes of eliminating that competition.
The airline industry appears to be a solid example of capitalism run amok. The airline industry appears to be a perfect model on how NOT to manage a business. And yet things stay on their trajectory to the bottom.