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| Wednesday, April 16, 2008 |
 American airline carriers have certainly been in the news lately. Over the last few weeks, numerous airlines, most notably American Airlines, have cancelled thousands of flights due to safety issues. Aloha, ATA, and Frontier airlines have all gone bankrupt while Delta and Northwest just recently announced that they were going to merge.
All this turmoil makes you wonder: What's going on with flying in America? It seems pretty grim lately and I'm not at all surprised. After having flown in many different parts of the world, flying in America is by far the worst experience I can think of. It makes those long dusty bus rides in Cambodia seem like a luxury tour. Flights here are expensive and inconvenient. Service is practically non existent (Can't a brother get some peanuts!!!) And trying to navigate the airport is even worst- long lines, delays, inane security checks, and rude guards. When I came back to America from Australia, I had to go through THREE security screenings just because the flight went to America. What was wrong with the first two!?
American passengers here put up with a lot of crap. I may not get many perks on flights around the world but when I'm paying $60 dollars, I don't expect any. When I'm $200 dollars, I expect something (When can a brother get some peanuts!?!). All the turmoil in the industry highlights just how bad things are, and sadly, I think things are only going to get worse before they get better for a number of reasons.
For starters, America lacks real competition. There aren't that many choices when flying the friendly skies. Foreign carriers aren't allow to fly "within" the states and, as the recent bankruptcies show, very few low cost carriers actually make it. With all the mergers, consumers in the US face little choice. When you are the only game in town, why charge less?
Secondly, the US uses a spoke and hub system that routes flights through a major hub from the smaller spokes (minor airports) and back out again. So unless you are flying between major cities, it's hard to go direct. Hubs are also in silly places too like Cincinnati or Memphis or Dallas. To get from point A to point B, you need to fly through point C. In a different age, this made sense but, with higher costs today, I think direct flights would reduce costs and make flying more convenient.
Additionally, American workers are pretty expensive by comparison for two reasons: health care and pensions. Pretty much every other country in the world has universal health care so companies don't have to pay for them. Government's also pay retirement benefits and American carriers are still paying out pensions for employees 20 years ago. This adds a lot of cost onto the airlines and doesn't allow them to be as price competitive as they could. This also why new airlines such as Jetblue could undercut older carriers. No pension obligations! I'm not advocating any one system here, I'm just saying these are costs foreign carriers don't deal with.
So as airlines have faced higher costs and little competition, as well as an inefficient airline model, they have raised ticket prices while lashing services. I think eventually this Delta/Northwest merger will result in cheaper flights and better options but, I think that dream is years away. For the immediate future, I see more headaches and higher prices.
With all the problems in the industry, I suspect that more consolidation is ahead. Additionally, not until airlines shed their high labor costs as well as get rid of the hub and spoke system in favor of more direct flight will consumers see a sort of reduction in airfare. Hopefully, then we will also see a return in service. However, for the distant future, flying in America will remain unpleasant, a hassle, and expensive.
(If you have any flight horror stories, please share with us!!)
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posted by Nomadic Matt @ 6:52 AM  |
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| 1 Comments: |
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Interesting analysis. Your observations about the low levels of service are right on.
Although I'm not so sure it's a fair comparison between the US carriers and foreign airlines. There are just so many differences in their fleets, operations, pension and labor obligations, and customer demographics etc.
The fares that we see are not so much because of low levels of competition but a combination of of many factors including the huge labor costs in America and high oil prices.
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Interesting analysis. Your observations about the low levels of service are right on.
Although I'm not so sure it's a fair comparison between the US carriers and foreign airlines. There are just so many differences in their fleets, operations, pension and labor obligations, and customer demographics etc.
The fares that we see are not so much because of low levels of competition but a combination of of many factors including the huge labor costs in America and high oil prices.