American Airlines, like basically all airlines right now, has issues. As a result, they think that, only a few weeks or months since a wave of airlines started charging people for their *second* checked bag (GRAH ANGER GRAH), charging people to check any bags at all is acceptable. So far, this news along with other AA cuts has sent the airline’s stock down 24%. I hope it plummets further, before other airlines think this is actually a good idea and copycat it. Is it at all possible for every passenger on a flight to fit a carryon suitcase into the overhead compartment? No! Except for short-term business travelers and the like, you may as well just add the $15 onto every AA ticket price.
It seems like airlines have been doing their gosh-darned best over the last year or so to make flying as unpleasant an experience as possible. A customer satisfaction survey just released found that we are the most dissatisfied with air travel since 2001. Randomly canceling tons of flights, providing crappy service, and raising fares probably all have something to do with this.
Don’t get me wrong–I am more than willing to put the blame for this predicament on the shoulders of decisionmakers at the top airlines. They’ve made plenty of lousy decisions and customer-hating policies. But there are definitely factors more or less out of the airlines’ control. The TSA being the #1 most hated government agency, for one (though the airlines are capable of lobbying for less idiotic security policies–they apparently just don’t). Oil prices are another. (Do hybrid planes exist? Can we buy some?)
Which got me thinking: what if air travel just isn’t worth being in business anymore? As American Airlines chairman and CEO Gerard Arpey mentioned in the article:
The airline industry as it is constituted today was not built to withstand oil prices at $125 a barrel, and certainly not when record fuel expenses are coupled with a weak U.S. economy.
Most firms that are incapable of turning a profit in the mass market either go away, or become high-end niche businesses. What if that happened to air travel? Flying, after all, is one of the most wasteful-per-capita means of transportation out there–you burn more gas per person than you would roadtripping all that distance. With oil prices as they are, eco-friendliness correlates with profits–or vice-versa. The rich and business travelers who need to get places fast would still have airlines to serve them. But how would the rest of us get around this big-ass country of ours?
There’s the problem. What alternatives does the middle class have to air travel for long-distance mass transit? Amtrak goes almost nowhere, except maybe on the East Coast. While the overall Amtrak experience has been quite enjoyable in my experience, it’s expensive as heck and you run the risk of MAJOR delays if the schedule gets messed up and you have to compete with commodity trains for rail space. Greyhound buses exist, but they’re not only uncomfortable, they’re also gas-dependent and in many cases fares cost the same or more than comparable flights. Chinatown buses are useful and cheap as heck, but they also are pretty much limited to East Coast departures and destinations.
In short: we don’t really have an alternative. As much as we loathe them, we need the airlines to stay afloat. For now. Where’s my goddamn high-speed transcontinental maglev train?
Honestly, I’m not sure I can, in good faith, blame the airlines, even the “decision-makers at the top airlines”. Fuel costs have got to be astronomical right now compared to what they were before, and business is probably worse than usual because of the economy. What alternative do they have besides raising prices?
According to random internet sources, every penny increase in cost-of-fuel-per-gallon raises yearly expenses over the industry by 195 million. Fuel prices have DOUBLED since early 2007; fuel is about 15% of total airline yearly operating expenses (don’t know how current that number is, whether that’s before 07 or after the price increase), so you’d expect ticket prices to go up by 15-20% or so over the past year and a half. Have they? I haven’t been tracking them at all. (http://www.usatoday.com/travel/flights/2008-03-29-airlines-lighter-planes_N.htm , http://www.investopedia.com/features/industryhandbook/airline.asp , and in general googling for ‘airline fuel prices’)
And that’s just pure fuel, I have no idea how much other parts of their costs have increased (because I’m sure there are plenty of other things that require oil…) and how much their business has gone down simply because of the economic situation, independent of all of the cuts they’ve been having to make.
They’re at least trying to spread the cost out to those that are using it – the people who carry more weight on board in luggage pay more, it makes perfect sense to me. Lighter airplanes use less fuel – this is both a way of raising money and of encouraging people to travel lighter. Remember, every extra pound the airplane is carrying means it’s using that much more fuel. It’s not like the people up top are thinking “hah, how can we squeeze the last bit of money out of those poor hapless consumers!!” – it’s probably more along the lines of “well, we’re going bankrupt within the year if we don’t raise prices or fire people…” Airlines are doing things like replacing glass and metal with plastic for glassware and silverware because it’s lighter, and you honestly want every passenger to be able to carry an extra 50 pounds on the plane for free? (Or, rather, for the people not carrying extra weight on-board to pay for those that do.)
When underlying costs of running an airline rise, you’re going to either have higher prices, worse services, or both.
Well, the other option is mergers, to reduce competition so that you can raise prices without having competitors steal all your customers. That’s also happening.
I wouldn’t be surprised if, within the next 5 years or so, we see a bunch more airlines go out of business, a bunch of mergers, and uniformly increased prices – yes, including per-bag pricing…
Perhaps some airlines will find other ways to cut costs without ruining the customer experience quite as much. Then those are the ones that will stay in business while the others go bankrupt; buy from those, if there are any… if not, well, then higher prices it is.
On our way home, the Southwest plane we were supposed to fly in BLEW A TIRE when it landed! Fortunately we were put in a different plane, but it was scary nonetheless.
Max–
I agree that, as much as I don’t like it, price hikes are pretty much inevitable as oil prices go up. My beef with this particular change is that it’s misleading. American’s fares, as listed on booking websites, will appear to be $15 or $40 less than for an airline with (what used to be) normal baggage policy. Unless there’s a major backlash against American, other airlines will *have* to follow suit, so that they don’t appear to charge more and lose the e-ticket price war. It’s a race to the bottom.
It’s kind of like when MN had a budget deficit–the governor had made a campaign pledge not to raise taxes, so instead he made up a bunch of “fees” to balance the budget. Call a tax a tax, and a fare a fare. I may be mistaken, for I’m not a business traveler and all I know is my own experience, but the vast majority of travelers are going to check at least one bag. American’s listed ticket price thus will be inaccurate for the vast majority of customers. That seems sleazy to me.
There do exist some airlines that still have my respect–Virgin, JetBlue, British Airways, and Southwest (popping tires aside). Of course, thanks to Northwest’s MSP near-monopoly, none of these fly where I live…sigh.
Well, I’ve never checked bags when traveling home to or from winter or spring break, never checked any bags when going on grad school visits. Perhaps that’s why I’m a good bit less indignant :)
But yeah, I see your point now, if they don’t advertise their different policies at the point that the ticket is bought, that’s misleading.
Current oil prices are a result of speculation and are not supported by market fundamentals. Eventually, speculation will have to end and oil prices will come crashing down allowing for the airlines to do well again. I’m not saying we will ever see $50 barrel oil again, but the current price growth is not sustainable.
I am confused, however. The rapid increase in the price of fuel is really the only thing that is driving the slight decrease in fossil fuel emissions. A green girl like you should be thrilled that oil is expensive. If it gets more expensive, it will create a cost incentive to make all of the wonderful green innovations (like hybrid planes) that you dream about.
So, do you want to save the planet or save money on airfare?
Given that I don’t exactly control the price of oil, obviously I’m on the side of oil-efficient or oil-free innovation. It would’ve been nice for companies and governments to have been a bit more long-sighted so that they would’ve seen this coming, though. Change takes time, and who knows how long an adjustment to the spike will take? Airlines are taking the baby steps (extra fees for everything from baggage space to air use) but I haven’t heard a thing about hybrid planes, maglev trains, or other ‘big idea’ solutions.
Of course, given that typical airline CEOs just make a few bucks, stay for a couple years, then leave, there’s not much of an incentive to do anything intelligent in the long-term. Used to be that airlines owned their planes–it meant they had assets as collateral and as a buffer against bad times. Then some CEO got the bright idea to sell all the planes to someone else, then lease them. He and the copycats made a ton of money, but they’re all long gone. Now, with practically all the airlines on the edge of bankrupt, we see the consequences. If the corporate culture condones or promotes short-sighted decisions, how’re we ever gonna see the broad-base changes needed to make the country’s infrastructure more efficient? Makes more sense to run the business into the ground and hope you’re not the one at the helm when it’s too late.
Some Airlines were more long-term thinking than others. Southwest, for example, has been able to gain significant advantage by investing in oil hedge funds. Other airlines that were shortsighted have certainly suffered consequences. However, these consequences were blunted by government bail-outs (which generate moral hazard and encourage more airlines to be short-sighted).
I think the only thing capable of producing cost-effective fuel-efficient innovations is sustainable high fuel costs. I suppose the government could implement a high fuel tax, but I don’t see that passing in any sort of Democratic form of government.