Why Is Airline Service So Bad?

Chris Hayes wants to know why air travel is so lousy. A source inside the industry responds:

Why Airline Travel Sux: Big Air Responds!, by Christopher Hayes: So I’ve been on a bit of a jag about how awful flying is. I’ve flown four of the last eight weeks and every single return trip has had some very significant problems: three cancellations and one flight delayed long enough we would have missed our connection. What gives?

Megan McArdle made some good points on the general topic of complaints about air travel, which Matt added to here.

I decided to email my super secret source inside a major air carrier, and I’m pasting in his response below, which I found pretty fascinating. The subject of my email to him was “Why does flying suck so hard?” His response:

Actually, people have been asking me this question for the entirety of the ten years I have worked in this business. I think the best thing I can do is to basically give you the answer I gave ten years ago, and then take you through the ways in which that answer has changed (or, really, gained additional layers and nuance) as 1) the tech bubble burst, 2) 911 and aftermath 3) the current fuel crisis happened. First off, flying today *doesn't* suck so hard. There, I said it. Flying today, however, is often racked with numerous small frustrations and irritations, and on occasion is a complete pain in the ass. What is the difference?

Well, you are still getting pretty good value for your money -- in inflation adjusted dollars, fares are still unbelievably low... even with recent increases (more are coming). But over the past three decades, lower airfares have dramatically reshaped the quality and tenor of life in the United States -- from frequent trips to see family even though they may be far away, to commuter relationships, to college students being able to go to school further away from home but still come back for holidays. These are just a few examples -- I'm leaving aside growth in business travel, and the too-numerous-to-list ways in which exploding intercontinental air travel has transformed our world. Sure -- there's no more chateaubriand on flights from JFK to LAX. But getting from NY to LA is no longer only the province of the super rich. The Southwest Airlines slogan "You are now free to move about the country" has more than it's share of accuracy *and* meaning -- it's right-on, and it speaks to the dramatic democratization of air travel since deregulation. That's why President Carter signed it into law, and it has been a huge success. This success has come about, however, with a cost: complete and constant change in our industry. Mao called it "permanent revolution." Second -- four trips, four cancellations -- a bad run, no doubt. The last one -- DCA-AUS via CLT -- four legs total, leaving from and returning to the notoriously delay and weather-prone NE Corridor. Also, this trip was in the middle of the delay-prone summer season, when thunderstorms wreak havoc, and planes are full. When were your other three trips, where were you going, and what was your routing? You touched on one point -- full planes makes reaccom a headache. You're right, but the culprit isn't that schedules are smaller (not yet, really), it's that it's summer and everything is packed to the gills. This point is really, really hard to overstate: O'Hare Airport in Chicago has *worse* delays in the summer from thunderstorms than it does in winter from snow. Plus everything is full, so there's not a lot of recovery opportunity when you run late or cancel.

Let’s rewind to, oh 1999/2000—I’m new to the industry, and I’m joining at a good time. Things have been going pretty darn well in the industry for a while, so the airlines are relatively flush with cash, holding a pretty big portfolio of aircraft, and generally well-staffed. (Labor will always contend that last point, and there’s a lot to contend there—for the sake of this general argument, let’s assume that I’m right). Everything you fly makes money, so as you take new aircraft, you don’t exactly rush to retire your older planes—you have them already, even if they are old and gas-guzzling, demand is strong and gas is cheap. Everyone is growing.

Here’s the problem—if your airline is planned properly, you are already flying your best routes, and the stuff you are adding is, by definition, your most marginal capacity. Even more telling: those extra flights you add on at the beginning and end of the day, increasing your capacity but not requiring you to have any more aircraft on the property? The big costs are sunk already—all you need to do is cover your variable costs: some crew cost (although not much since you are already well staffed), gas, landing fees. That flying covers its incremental costs to the airline, but isn’t exactly gangbusters, and wouldn’t make sense if it had to justify buying an airplane to fly it. But everything is OK—it’s 1999 and demand is good, so you ratchet up the airline as much as you can.

Skip forward to fall 2000—the bubble bursts, demand starts to dry up. Not a whole hell of a lot, but just enough for all that marginal capacity to start to be awful for the industry. Capacity needs to decrease… but with gas being cheap, it’s not really in any one airline’s interest to cut back. It’s the classic “Tragedy of the Commons” problem. It’s in everyone’s interest for the industry to shrink, it’s in no one’s real interest to make the cuts.

At this point in the story, the DC Editor of The Nation sits up, bright eyed, and says “But if this is a “Tragedy of the Commons” problem, why doesn’t it make sense for the government to intervene?

1. Yep, gov’t regulation works for things like car emissions—but that’s not reversible at all, and the private sector needs to have its hand forced on that stuff. Throughout all the tumult of the early 00s in the industry, the vaporization of any one major network carrier would have solved all of the industry’s ills.

2. The health of any one airline is not in the national interest of the government, even though individual regions/states/cities may well be primarily dependent on the access provided by one carrier. If someone vaporized, there would be backfill—I promise you.

Now 9/11 hits, demand tanks, and the network airlines respond by aggressively parking their oldest fleets (less fuel effecient, and in many instances having three-man cockpits instead of two). Massive layoffs, and a truly psychotic couple of months until the “new normal” of demand is determined (I have anecdotes from this era that are outstanding and I’ll share them over a martini; inclusion here would destroy my anonymity in an already incestuous industry). In the meantime, the airlines (including my employer at the time) lobbied hard for federal bailouts to ensure that they survived, all the while hoping that a competitor would fall by the wayside and solve everyone’s problems. The industry whines, and DC responds with silly federal largesse that rivals that which Sen. Stevens brings back to AK, the criminal Archer Daniels Midland subsidies, and the sinfully wasteful Essential Air Service program.

The pain continues. UA, US, NW and DL all take a trip through the dry cleaners of Chap 11 bankruptcy. Major progress in streamlining cost structures is achieved at all four; but all four bankruptcies are not created equal by any means. Labor takes a pretty dramatic and painful haircut, but from pay rates and work rules that are completely unsustainable.

The overcapacity problem continues, with better and worse points. The bankrupt carriers are insulated from some of the financial pain of the capacity decisions; at one memorable point Continental issues a press release calling for the industry to shrink by another 6% or so, and follows it up the next day with a press release announcing capacity adds. Thanks, Gordo, for doing your part.

And. Then. Fuel. Prices. Start. To. Rise. Slowly at first… and then faster and faster. At one point, fuel expense eclipses labor expense for the industry. That’s huge… and it’s the solution to the problem (although the medicine is going to really burn going down).

Fuel costs are variable, so marginal flying doesn’t have the cover that it once does. You can’t limp along flying stuff that doesn’t work anymore, because the gas bill just makes you pull out the mechanical pencil and start cutting flights that can’t cover their variable costs, let alone overhead.

We are in late spring 2008, oil is sitting around $125 a barrel, and the industry has its come-to-Jesus moment—and starts announcing their capacity pulls for the fall. (Remember my earlier point about seasonality: a whole bunch of stuff makes sense June-August and then becomes useless in September, so if you’ve got the planes and the people on the property, you announce cancellations effective after Labor Day). The industry is poised to shrink about 16% overall: that’s (at least) one percentage point more than the industry contracted after 9/11. UA announces that after its fall layoffs, its overall staffing on the property will be the same as it was in 1980. Or, rephrased, the vaporization of all its deregulation growth. Ouch.

But the big lesson is that the major structural flaw of the industry (high fixed costs, low variable costs leading to every incentive to produce too much capacity) has been righted—alas, by pushing up the fuel price input.

So what’s going to happen? Fewer flights, higher fares, emptier planes (yeah, fares are going to drive down demand, not consolidate fullish flights onto each other), fewer air traffic delays. In short, the fuel price will accomplish just about everything that reregulation could hope to do. It’s exactly the same reasoning as why anyone concerned about climate change needs to see $5/gallon gas in the US and cheer, because it’s the only way to change consumer behavior. (Yes, it sucks that the working poor and working class folks who are car-dependent for employment are disproportionately hit by this. My dad is one of them—and now for the first time he’s cursing his big stupid 1997 Jeep Cherokee, which he does not need to negotiate the wilds of Nassau County. I digress.)

Less flying is going to make some huge differences in air traffic control, and that slack is going to make delays drop pretty dramatically across the US system. The FAA is working on some pretty important advances in air traffic management that it will be implementing over the next several years—also good news. The whole experience is about to change. For the better? Well… that depends. It’s almost guaranteed to be more pleasant, and it is guaranteed to be more expensive. The best thing the Federal government can do to help the situation? Ease off on the crazy deficit spending and get the budget in order so that the dollar starts to climb some against foreign currencies.

Domestic manufacturers would disagree pretty strenuously with this last point.

Comments

[William Smith]

"Domestic manufacturers would disagree pretty strenuously with this last point."
Vast understatement. Boeing is nearing strikes and riots as is. If the US Airline industry contracts 16% and it loses the tanker contract, I'd expect Seattle to be in trouble.

[2slugbaits]

This is a sore subject with me. I visit airports about every other week and since last fall things have really gone downhill fast...and that was starting from a low level already. And if you get a seat, it will likely be on one of those overpacked commuter jets that seat one on the left side and two on the right. A few months ago I was on a flight where they had to pull 10 people off the plane because bad weather required a rerouting, and that rerouting required more fuel. So they took off 10 people to match the added fuel. Just in the last month or so I've spent two nights (including my birthday) sleeping on the benches at O'Hare having missed my connecting flights. And the 6:00am flight was packed with other folks who missed their connections. I've also noticed that airports pretty much shut down after about 9:00pm...and I'm talking big airports like O'Hare and Atlanta and Dallas. That wasn't true a few years ago. You used to be able to catch a connecting flight at midnight and the airports were still bustling with people. My guess is that over the last 50 flights I've taken, at least 45 were overbooked. The airlines then ask for volunteers and offer things like "Delta Dollars" and $300 ticket vouchers. Now why would anyone accept those things? Afterall, it just means that when you take that free trip you'll only get bumped on that one as well. I always throw the free tickets away.

What's maddening is that 80 percent of airline business travel is completely unnecessary. Video conferencing has gotten good enough that there aren't many good reasons for actually having to physically travel. It wouldn't hurt my feelings if a few of the airlines went the way of Pan Am and Eastern. (Note: I was stuck at an airport the day that Pam Am went bankrupt).

[gordon]

A few weeks ago during a bout of insomnia I found myself at about midnight watching (maybe North by Northwest?) Cary Grant on a train . What a train! It had a comfortable sleeping compartment (with plenty of legroom), a nice bathroom and a wonderful dining car.

You may say that such a train was only possibly because of (a) absence of airline competition and (b) cheap labour, but think about that response. If airlines in the US are as bad as people say, the airline competition argument looks shaky. And as for cheap labour, well the only difference between now and the mid-50s seems to be the exchange of Mexican people for black people. So why not trains?

[Alex Tolley]

2slugbaits - you raise some good points. Double booking by airlines to ensure fully loaded planes should be illegal. The airlines are to blame for that, no excuses. Airlines have increasingly over time tried to avoid costs associated with delays - and when was the last time an airline paid for a room when they were at fault for canceled flights? Add that gaming of the system - cancellations "due to weather".

I suppose we can also blame ourselves, demanding the cheapest price but still demanding quality.

I would also really like to know how seat sizes and leg room have changed since the 1960's start of jet air travel with 707s and DC8s. While age has widened me, it certainly can't have made me taller.

[Bill Jefferys]

The day before 9/11 I happened to be in Washington for a meeting; I was invited to stay over for a retirement party for a colleague, but I was scheduled to teach the next day and fortunately flew back that evening.

I had told my class that I was going to be in Washington that Monday, and they obviously were concerned about me, judging by the applause they gave me when I walked into class.

Since then I have made exactly two trips by plane. The hassle of flying is just not worth it to me any more. It's not like the old days, when I was working on the Hubble Telescope project and would fly pretty much every month without encountering problems.

[nocountry]

Domestic manufacturers would disagree pretty strenuously with this last point.

Wouldn't economists also disagree with his last point? I mean, don't smaller budget deficits lead to lower interest rates and a weaker dollar?

[dissent]

Fly Virgin America. Really. A new airline.
The planes are so new everything in and out gleams.
They have a groovy Linux based terminal at every seat to customize movies, teevee, audio, even foreign media.
They're based in san francisco and use the slick new international terminal for domestic flights. You get an art experience in the terminal.

Sorry to take up space with an ad, but I've had NO enjoyable flight experiences in the past few years, except for my flights in the last 2 weeks, with VA. They don't charge (yet?) for ear buds, unlike Jet Blue.

[btg]

regulation, not of prices but of specific practices, could be of great help in making travel a little more pleasant and predictable... things like:

1. laws governing air traffic control that increase the time between scheduled flights, so there is more "slack" t deal with weather or other problems that cause planes to get backed up on the ground.

2. laws governing overbooking of flights - get more people to agree to fly standby

3. require larger seats and more space between rows, particularly for planes on long haul flights

4. by law ecrease the number of passengers per cabin crew - so service in flight is better.

[Cynthia]

It will really sux when the powers that be tell us that the airlines are too big to fail. And the moment they do will be the same moment I'll tell them to take a flying greyhound -- minus the wings, of course.

[Alex F]

"It’s the classic “Tragedy of the Commons” problem. It’s in everyone’s interest for the industry to shrink, it’s in no one’s real interest to make the cuts."

Everyone's interest, if you're only counting airlines. This isn't a Tragedy of the Commons, it's *competition*. Bad for airlines, good for consumers. When marginal costs are low, prices should be low too.

[Alex F]

"It’s the classic “Tragedy of the Commons” problem. It’s in everyone’s interest for the industry to shrink, it’s in no one’s real interest to make the cuts."

Everyone's interest, if you're only counting airlines. This isn't a Tragedy of the Commons, it's *competition*. Bad for airlines, good for consumers. When marginal costs are low, prices should be low too.

[Richard Green]

I was recently upgraded on a United flight. It was one of the newly reconfigured 747s, which was very nice, and the service was very nice as well. I told the flight attendant that it was all so nice that it reminded me of Singapore Airlines. She responded that Singapore has much younger flight attendants. I responded that I'm not so young myself.

Two points here, I guess. First, one things our airlines do better than those in some other countries is not discriminate based on age.

Second, flight attendants are often treated atrociously by passengers; it is no wonder they are weary by day's end. But a couple of thank-yous and smiles from passengers inspires many of them to provide great service. The wife of one of my wife's colleagues is a flight attendant. She is a cheerful and charming person, and yet the thank-yous she gets are so rare that they are noticible.

Do the airlines screw up? Sure. I do think American pretty much treats its passengers like cattle nowadays. But to some extent, we passengers have met the enemy and it is us. If we were kinder to those who worked at airlines, they might be kinder to us.

[no one]

btg - concerning your point 2, if airlines are only required to sell the available number of seats then all fares should be non refundable - forcing the ticketholder to use the flight.

Some airlines also allow family members to fly standby and pay only the taxes. This practice should be reduced or eliminated as it contributes to crowded cabins.

[save_the_rustbelt]

Americans want low prices.

Americans want great service.

Hmmmmm?

My recent flights have not been comfortable, but have been on time and the service was not bad.

We get what we pay for.

[Barkley Rosser]

Richard Green,

I did not notice any complaints by anybody about flight attendants. Whatever the sources of the increasing problems, and they are increasing, if not quite as dramatically as people think (there have always been delays and so forth), they are not due to flight attendants, who are generally as much victims of all this nonsense as the passengers.

[Bruce Wilder]

"the major structural flaw of the industry (high fixed costs, low variable costs leading to every incentive to produce too much capacity)"

(Soapbox time! I haven't had this one out for a while, but it is a good one. I promise to keep it short.)

Scheduled passenger air travel tends to be a market without a market price equilibrium.

Chris Hayes' Anonymous informant intuits the problem, without revealing the analytic nugget. It is this: the airline is selling passenger (one-way) trips, but producing aircraft (round-)trips, and the aircraft are subject to economies of scale pretty much through the entire range of most relevant city pairs (distance, volume of passenger demand).

Here's the thing about unexhausted economies of scale: marginal cost is below average cost and declining. To get a market equilibrium, marginal cost has to be rising. For firms to make money at equilibrium, price has to be above average cost. But, it's not, and it's not, and there's no equilibrium, and the airlines struggle to charge a range of prices, which will add up to enough revenue to cover the total cost of the scheduled flights.

In slightly less abstract terms, if an airline fills the plane scheduled to fly between City A and City B, the airline could lower its average cost per passenger by using a bigger plane with more seats. (That's what unexhausted economies of scale mean.) But, that bigger plane would have some empty seats, and the airline could make more money by filling those low marginal cost seats, even at a price less than the average cost of a passenger seat trip. It becomes a slippery slope as the airline struggles to sell a few more very low marginal cost seats at a price, which would be too low to justify flying the plane at all, if that price became the average price.

Marginal cost can never equal average price, so there's no equilibrium price.

Price discrimination is one solution for the problem of how to cobble together enough revenue to pay to get the plane off the ground, while still using an economically large plane. But, competition tends to undermine price discrimination. A Virgin provides a low-cost, first class only service, skimming off the top, for example. Or a Southwest eliminates the costs associated with price discrimination, and uses its low-cost operating scheme to undercut the full-service airlines. It is an inherently unstable situation.

That's it. I'm putting my soapbox away, now. The preaching part is just to remind folks that not all markets clear, not all markets or production processes are the same, and generalizing from the abstract model of perfect competition in widgets is a bad business.

[garu]

Please... It's no wonder that the airlines suck if this is the kind of analysis they believe. There are so many points here to comment upon and with which to disagree, but I'l hit on only a couple. In brief: First, as others have commented, re-regulation is needed, pronto. Letting the inmates run the asylum never made much sense, and it makes even less sense now. Second, re. wages and benefits, why is it always that the pay rates and work rules for labour are "completely unsustainable," but that obscene executive, board, and management wages and benefits never are? Third, re. train networks, both long-distance and shorter distances, the US could have extensive networks in place now if there had been less lobbying efforts in the past to stop them, lobbying efforts that included major US airlines. Fourth, assuming that the price of fuel was going to stay stable...well, we know what happens when one assumes, don't we? Finally, the Fear and Loathing that one suffers when one travels by air is pretty much limited to the US and Africa. Yes, Heathrow is a mess; neither Europe or Asia are perfect. Traveling by air in the US, however, is a universally miserable experience.

An example (and not an isolated one): two months ago I was traveling to the US on business, through Los Angeles. The flight from Narita (ANA) was delightful, as always. At LAX I was told that bus service to my connecting terminal was every five minutes "or so." Fifty minutes later the bus arrived. As I helped an elderly lady with her bag, the bus driver bellowed, "Are you getting on the damn bus, or what?" At the connecting terminal (United) was chaos. There were three people working the counters, two for Business/First and one for everyone else. The line stretched out the door. There was one United employee yelling at people to use the Automated Ticket Machines. Unfortunately, of the six machines available only one worked. I was told to go directly to the gate. "But I can't get through the security check without a boarding pass," I said. The United employee just shrugged and walked away. When I finally did get to the security check, I was greeted by the usual rudeness of the TSA ("NO TALKING IN THE LINE!") and a new twist: three German Shepherd dogs, all growling and yelping (and one lunging). The young Japanese couple in front of me were terrified. In Japanese, the man said to the woman that he would "never come back to this country again."

I expected the worst, so I made sure that I had four hours between flights. Even then I just barely made my connecting flight. The flight attendants on Singapore Airlines are not only younger, Richard, they are more professional and polite - as are everybody at the airport. Flying on Singapore Airlines -- or ANA, or JAL, or SAS, or Virgin Atlantic, or nearly any other non-US airline -- is a pleasure. Not so United, American, et al. Last month I was forced to fly Continental from Narita to Houston. I checked and was told that all seats had power points, which meant that I could work during part of the flight. When I got on the airplane, however, there were no power points. I politely asked the flight attendant about the difference and asked if I could be moved (it was not a full flight). "Honey!," she said, "I'm not your office manager!," and she walked away. In the printed information available in the seat-back pocket, I was reminded that talking back or being rude to airline staff could be constituted as harassment, and that fines, or worse, could be levied upon passengers acting in such a way.

I'm not hoping that one major US airline fails - I'm praying that they all do.

[bdbd]

William Smith -- Boeing sees strong orders over the next 20 or 25 years because with higher fuel prices there will be a more rapid turnover of older fuel inefficient aircraft and more rapid takeup of new fuel efficient ones. Maybe they're whistling past the graveyard, but that's what they're saying...

[Lafayette]

Mad rush

gordon: What a train! It had a comfortable sleeping compartment (with plenty of legroom), a nice bathroom and a wonderful dining car.

Imagine yourself in this metal tube slithering through the countryside, its view changing constantly. There's time to read, browse, chat with people -- and, yes, the dining car to relax meeting others. All this at 330mph, on the ground. And, you go from city center to city center -- in comfortable seats or even a compartment for long overnight trips.

That's a high-speed train. When next in Europe, try one -- most every country employs them as the continent expands lines to inter-country destinations.

And, it's electric, not diesel, spewing far less CO2 into the atmosphere. No one has ever hijacked a train, no one ever flew it into a skyscraper. The high-speed train here (in Europe) has never known an accident that killed hundreds of people at a time. Accidents do happen; in any means of transportation zero-risk does not exist.

Now, compare that to the same cylinder at 30,000 feet. No comparison whatsoever. Our mad rush from the train to the plane was unwise.

[Bruce Wilder]

Trains are a good complement to air travel. A lot of congestion at major airports could be eliminated, if airlines were not trying futilely to feed in passengers on small, inefficient commuter aircraft.

Proposition Number 1 on California's ballot is a hi-speed (220 mph) rail system connecting San Fransico and Sacramento in the north, through the Central Valley, with Los Angeles and San Diego. The proposed layout connects rail with SFO and with Palmdale and Ontario airports. Hi-speed rail would put Fresno only an hour from San Francisco International; and makes downtown LA almost equidistant to LAX and to Palmdale and Ontario, improving the prospects for those airports to compete and relieve congestion at LAX.

[tuj]

I traveled around Europe via train, and even in 2nd class, it was still quite nice, with very flexible schedules and when a train was full, there was still standing room in spaces. Then, once some people got off at a stop, problem solved.

Of course, Europe has much better density and infrastructure for this, but I don't see any major reason why the US couldn't start to follow this model, especially in the Northeast and maybe the West coast. If we could do more high-speed, the Midwest could even be viable.

[Lafayette]

BW: Proposition Number 1 on California's ballot is a hi-speed (220 mph) rail system connecting San Fransico and Sacramento in the north, through the Central Valley, with Los Angeles and San Diego.

Was this the sort of proposition that Schwarzy could put on a referendum ballot?

I was wondering what would become of his visit to and reception by the French President last year. It was then that he went on to ride the record-breaking run of the French TGV (hi-speed train).

Or, was it some local proposition?

[robd]

"No one has ever hijacked a train,"
Wrong.
They did in the Netherlands...
Treinkaping bij De Punt - Wikipedia
Treinkaping bij Wijster - Wikipedia

[Valuethinker]

Garu

Excellent commentary.

Yes US flying is a uniquely horrific experience. And it wears the staff down, so they lose the ability or will to provide customer service.

Heathrow is bad, but BA at its worst is not a US Airline. And there is Virgin.

Asians of course find this all incredible. US airports can be like visiting the Third World in terms of the hassle and difficulty and the general disinterest of people in helping you. Contrast that to Singapore or Narita.

I think the problem is that, as is pointed out up above, US airlines are in an unstable equilibrium, and thus a 'race to the bottom' in terms of service.

Add to that idiocies like allowing private executive jets to use major airports, and you have the recipe for disaster.

US and Passenger Rail

As to our railroad fans, for America to again be a great passenger railroad country, it would have to be... France.

It's a bit like the fantasy that America will ever again have a huge nuclear industry or a state run healthcare system. You need a state centralised bureaucracy which is prepared to subsidise the creation of infrastructure, and its operation, until it passes critical mass (no pun intended ;-). This is how France built 60 operating power reactors at low cost, and dealt with the nuclear waste issue (french localities cannot refuse to permit a nuclear power station or waste dump).

It's also how France built the high-speed train network. Contrast that to the haphazard British experience with railway privatisation (Britain now has highly subsidised private trains which are amongst the worst in Europe: sample Virgin Trains tactic is to run the morning run to Manchester with equal numbers of First Class and Standard Class carriages, First Class costing £200 a journey and standard £90. Standard Class is standing room only, and First is half empty.).

British rail privatisation is much like US airline deregulation.

Yon supertrain to California would work well if it was ever built, but you would need a hard-driving statist bureaucracy that runs roughshod over landowner rights, and political considerations about electorally useful little towns that need stations (a factor which kills Amtrak). Ohh and it would be 50% over budget (but still worth doing).

And railways have to pay for their own infrastructure costs, and receive no credit for avoiding CO2 emissions. Whereas airlines pay no taxes on their fuel or the CO2 they emit.

Good luck.

[Lafayette]

Vt: Yon supertrain to California would work well if it was ever built, but you would need a hard-driving statist bureaucracy that runs roughshod over landowner rights, and political considerations

The rights of way exist on existing track. These tracks would have to be converted, meaning there is a period in which they are not in use. Forgoing revenue would have to be compensated to the operator.

Load the Amtrak Route Map. It is fairly comprehensive and would be suitable for hi-speed lines between large towns, now covered by airlines.

The high-speed trains are probably not best for super-long routes (more than 1000 kilometers (600 miles). But, on routes under 700 kilometers (that they can cover in just 2.5 hours, center of town to center of town) they have proven to be highly-competitive to airlines.

[Bruce Wilder]

L: Or, was [California High-Speed Rail] some local proposition?

It has at least a ten-year history that I know of. California High-Speed Rail has struggled along for several years, on a shoe-string budget, planning a route and promoting the concept. This initial funding proposition was postponed twice from 2004 to 2008.

The political enthusiasm for it, as I understand it, has its center of gravity in the southern Central Valley. The Fresno paper regards the project as something akin to a promise of eternal salvation.

The Ahnold hasn't been very helpful on budget, but has dragged key legislators to Europe and Asia to ride trains.

[Lafayette]

BW: The Ahnold hasn't been very helpful on budget, but has dragged key legislators to Europe and Asia to ride trains.

I never did understand his keenness for the French hi-speed train. But, I do think California is the size of state that could benefit most. Especially the San Franciso to LA corridor.

Though I somehow don't see "Ahnold" (LOL) riding in it all to often. He's probably too acclimated to his private jet.

Or, he has stock ownership in the Canadian company Bomardier. They are building a high speed link from Toronto to Quebec.

[Cynthia]

There's no doubt that the carbon footprint due to air travel is enormous! So there's no doubt that we oughta switch from air to rail travel, limiting air travel to transoceanic flights only.

[btg]

"Or, he has stock ownership in the Canadian company Bomardier. They are building a high speed link from Toronto to Quebec."

That one is news to me - there is no such link underway, though it has been debated for years. ViaRail - our equivelent of Amtrak - runs on CN or CP owned lines. A high speed line would probably require its own separate track, at a cost of a few billion.

In a case of pork barrle politcs, though, the federal finance minister has set aside money for rail service from Toronto to Peterborough for $150 million - a project that runs though his constituency and that was no on anyone else's list of priorities. That line alone will cost $150 Million.

[btg]

no one wrote: "btg - concerning your point 2, if airlines are only required to sell the available number of seats then all fares should be non refundable - forcing the ticketholder to use the flight."

I know of no other business where a customer pays for a ticket - a contract, where the vendor can sell the product to someone else and no deliver what they have agreed to provide.

It is a problem - airlines want to fill up seats, of course, and not let the plane take off half empty. There must be some way of pricing and allocating tickets that takes this into account so that some seats are 100% guarranteed as long as the passenger checks in by a certain time, and other seats are clearly sold as being on an "as-avaiable" basis, for less money, and other tickets being offered dirt cheap on a standby basis. Or finding some better way of auctioning off the seats that are available as opposed to it being purely at random.

[piglet]

"Finally, the Fear and Loathing that one suffers when one travels by air is pretty much limited to the US and Africa. Yes, Heathrow is a mess; neither Europe or Asia are perfect. Traveling by air in the US, however, is a universally miserable experience."

True unfortunately. It is worth noting that the EU now has what they call an "Passenger Bill of Rights". As to the comments on the lack of passenger train service in the US, it should be noted that train travel has inherent advantages over flight that would make it preferable for not-too-long distances even if flying weren't such a hassle: far greater flexibility and connectivity.

Contrary to received wisdom, it is nonsense that the US is too big for train travel. Most Americans live in agglomerations (especially the North-East) more densely populated than France, with numerous large cities within a radius of a few hundred miles. That these cities are nowadays connected by unreliable, unnerving flight services instead of smooth, enjoyable train rides is a shame and nobody is to blame for that but the short-sightedness of American planners and politicians. Geography certainly is NOT to blame, and neither can I believe in a lack of bureaucracy as the cuplrit. Get real, folks.

[hhoran]

I've been in the industry for 25 years. Most of the points are valid, but 4 comments on the economics

1. The huge overcapacity from the dot-com era was NOT a tragedy of the commons problem. It was stupid ass managers who didn't understand basic ideas of supply/demand and capital planning but were keen to create the "growth" that would get the dumber-ass folks on Wall Street to pump the stock price that drove their bonuses. Capacity was added in places where it had no competitive advantage, and could only cover costs during a cyclical peak.
2. The industry's biggest problem--the reason it never gets "fixed", is "barriers to exit"--it is very easy to add capital; and capacity, but very hard to get rid of capital that is hopelessly unsustainable. The bankruptcy laws work on paper, but in the last downcycle, insiders hijacked several cases (UA and DL especially), blocked all of the competitive bids (which would have cut more capacity) so that insiders could make big bucks post-emergence. Glenn Tilton of United personally pocked $20 million, using a coalition with big suppliers (who have to suck up to management) and the unions, and spent $700 million on lawyers and consultants to make sure they controlled the process. In the bigger shakeout likely to come, it is unlikely that the political/legal system will be able to cope, thus the system will remain broken
3. Airlines are not, and have never been "high fixed cost", unless you talk about an absurdly short (this week) time frame. In normal airline planning horizons, airline costs are (roughly) 80-90% variable. You can sell planes and layoff staff
4. Passenger trains have an obvious role in the grand scheme of things, but are 99.5% irrelevant to any airline discussion, even in Europe. There are only 2 routes out of Paris (out of 150 total) where trains clearly win versus planes (Lyon, Brussels). On all other routes planes still economically carry longhaul passengers.

[piglet]

"Passenger trains have an obvious role in the grand scheme of things, but are 99.5% irrelevant to any airline discussion, even in Europe. There are only 2 routes out of Paris (out of 150 total) where trains clearly win versus planes (Lyon, Brussels). On all other routes planes still economically carry longhaul passengers."

Trains provide a competing service. How can this be "irrelevant" unless the market is rigged? And planes would have a much harder time competing with trains without the many hidden subsidies (including a gas tax break). We'll see how this plays out with gas starting to actually cost something.

[Highplains Lawyer]

Part of the problem appears to be the level of information available to consumers. We tend to book our flights online. Travel agencies are pretty much left out of the picture when it comes to book a flight.

When we book online, we put in the destination and the time we would like to leave and return. The computer returns with a list of flights, the airlines and a price. We do not know if the service is bad, whether the flight will depart or arrive on time, whether a meal will be served, whether the seats will be clean and comfortable and whether the airilines will lose our baggage. We do not even know if the airline we are paying for will be the one having the flight, or whether it will be left to one of their partners.

Everything being equal, what does the average passenger choose? The flight with the lowest price. The computer sorts it out for us, listing the flights by price. Now we really don't know if the flight offered by airline A, which costs more, is going to be better than the flight offered by airline B. Everything else being equal, our decision as to which flight to take is governed by price.

There is no incentive for airlines to offer good service, in flight movies, meals or comfortable seats. They KNOW, everyone is basing their purchase decision on price. The goal becomes offering the lowest fares possible. That is done by cutting service, meals, movies and cramming seats together.

I suspect if you asked the average consumer whether they would be willng to pay 50% more for better service, most would say "no," figuring that they could endure a few hours of discomfort to save several hundred dollars. However, most passengers are not consciously making that decision. So they expect first class service for steerage prices.

[piglet]

Here are a few examples of train services from Paris to European destinations. Many of these services are available every one or two hours, though you may not always get the fastest route. Short-distance air travel, including check-in and getting to and from the airport, takes at least 3 to 4 hours. In my view, train clearly beats plane within France and much of Central Europe, unless you happen to live next to a big airport (which few Europeans wish to). Keep in mind that there are many more destinations that you can reach by train than by plane, and very few Europeans, contrary to Americans, live closer to an airport than to a train station. Also keep in mind that many destinations further away can be reached by time-saving overnight services.

It is true that short-distance air service has gained ground in Europe despite the fact that it is rarely time efficient. This is at least in part due to the hidden subsidies, like the fuel tax break which was deliberately enacted as an incentive to help the airline industry. It may also play a role that although trains have become much faster in recent decades, the overall network density has actually been reduced. Short-sightedness everywhere.

Paris to
--------------
Brussels 1h22
Lyon 2h
London 2h15
Bordeaux 3h05
Marseille 3h06
Geneva 3h25
Stuttgart 3h39
Cologne 3h50
Amsterdam 4h11
Zurich 4h36
Berne 4h39

Munich 6h07
Milan 7h11
Berlin 8h16

[Lafayette]

Dual challenge

HP: There is no incentive for airlines to offer good service, in flight movies, meals or comfortable seats. They KNOW, everyone is basing their purchase decision on price.

No, not everyone, just most flyers.

There are some who are willing to pay slightly more for comfort (ie, Business Class) and fewer again who are quite willing to pay for First Class comfort.

The airlines gouge these prices in order to compensate for the razor-thin margins of Sardine Class seats. They can do this easily by internal seat configurations that can change overnight, if need be, on any given aircraft.

The dual challenge of commercial airlines is the high cost of fuel (low-cost being confined definitively in the past) and too many companies fighting for too few slots at any given hub.

This could all be greatly relieved by sponging off the low-cost seeking travellers on shorter routes (meaning less than 300/400 miles) by means of competitive hi-speed trains. Which is precisely what has happened in Europe, btw ....

Aside from the ecologically preferable electric trains. And, a good rail system around large cities can even reduce urban sprawl. People will live further away from their jobs if their train commute-time is the same as their car commute-time.

[BJ Feng]

Highplains Lawyer hit the nail on the head. Why is service so horrible? Because people refuse to pay for better service so airlines with better service and higher prices wind up cutting service to bring down prices.

As mentioned, business class offers a much higher standard of service. My friend routinely flies business on United, thanks to upgrades. United is known for poor service, but in business class, the attendants greet you by name! And there is a menu to choose your meal from. The people in economy don't want to pay for that kind of service so they get what they paid for, how dare you ask for a drink you cheapskate! (joking)

Part of the problem is the unions. Thanks to union rules, rude attendants can't be fired or disciplined easily. They know they can give you lip and get away with it. Attendants can pick their routes based on seniority, so the overseas routes are picked by the most senior attendants and they are usually also the worst in terms of rudeness and service. On shorter domestic flights, the service is different from what I hear, since these are the new attendants who haven't been jaded by union protections or suffered burnout.

Interestingly, service on foreign airlines tend to be very good. I flew Cathay Pacific to Hong Kong in economy and I was shocked at the great service, including a menu for my meals. One time a passenger made a request for a special sandwich when the attendant was already busy serving another passenger. I cringed, expecting the attendant to give lip like I've witness on American carriers, but the attendant just smiled and said she would make the sandwich right away! That was the most surprising part of the flight, I've become so used to American carriers that I never ask them to bring me anything, I just go to the prep area and get water or whatever I need, but on Cathay Pacific, the attendants seemed embarrassed when I did that and rushed to help me anyway. Cathay Pacific costs more, about a hundred to two hundred on overseas trips. They were the only option for my schedule, but since I'm used to no service and don't need much pampering anyway, I would pick the cheapest airline in the future. So you see, I'm one of those people who refuse to pay for good service, but I don't complain about it, I'm happy with what I receive, a cheap ticket to where I want to go.

[Lafayette]

BJF: Why is service so horrible? Because people refuse to pay for better service so airlines with better service and higher prices wind up cutting service to bring down prices.

Purely American phenomenon.

There are plenty of airlines that cater to and exploit a significant number of (obviously) non-American clients who want a minimum of comfort and safety that not-flying Sardine Class will offer.

On your next long-distance cheap-ticket flight, I wish you an acute case of DVT (deep vein thrombosis, or phlebitis) resulting from high-density packing.

Perhaps you will then understand?

[piglet]

"Interestingly, service on foreign airlines tend to be very good."

Hear, hear! Maybe we could agree on saying that lousy American airline service is God's punishment for American decadence ;-)

[Lafayette]

Ya get what ya pays for

The problem with fixating on cost, to want always and absolutely the Cheapest Cost, means that one obtains necessarily also the Cheapest Service/Product.

Marketeers know how to pull the wool over our eyes by making things that are effectively of simple quality seem to be of a superior quality. The problem is this: With the great gullibility of the masses, this tactic actually works.

Some examples (on a larger scale):
*We had, for a donkey's age, leaded fuels (obtained to get a higher octane from a cheaper-cost petroleum process) -- without ever considering what lead inhalation did to very young brains.
*We put asbestos into buildings as a cheap insulation, never asking ourselves the question "Is asbestos lethal to health". The answer to that question being a definitive "Yes!"
*We have shifted to a protein based diet, amongst the poor, to a carbohydrate-based diet because the latter are cheaper to produce than the former.

I could go on, but I wont.

If we fixate too often and too shortsightedly on the Absolute Lowest Cost, then we must be prepared to accept the consequences of our choice. Those consequences often far, far outweigh the supposed cost savings.