The Industry You Love to Hate
Learning why airline service is so bad will only make you angrier
Mar 19, 2001, Vol. 6, No. 26 • By JAMES HIGGINS
You arrive at your destination late at night.
"Welcome to our hotel. Will you be checking in?"
"Yes, I have a reservation."
"And you'll be staying over until Sunday?"
"No, I'll be leaving a day early."
"Since you no longer have a Saturday night stay, we'll have to re-book your reservation. Instead of $ 129, your rate will be . . . let me see . . . $ 2,000 a night."
"What!?! Ill go to another hotel."
"All the hotels in this area are booked. Now please be seated over there. Guest traffic control has just told us that you're number 48 in line to be given a room."
"Hey, that chair looks like it was built for a child. My knees will be hitting the seat in front of me!"
"Regulations require that you be seated, sir. The wait shouldn't be more than two or three hours."
"I'm going to the men's room."
"Sir, if you do that well have to call security, sir."
And so you wait, and wait, and wait. Five painful hours later, a bellman arrives and leads you to a tiny door.
"Your room, sir."
"I'm starved. How do I order room service?"
"No room service on a stay of less than three days, sir. But you can have a bag of pretzels and a four-ounce container of mineral water with our compliments!"
"Where's my luggage?"
"We haven't found your luggage yet, sir. But if it's not delivered to you within 24 hours, under our 'Customers First policy we pledge that the hotel manager will send you a form letter of apology."
"Hey, my reservation says I'm staying at the Hotel Grando DeLuxe. The sign out front says this is a CheapoLodge."
"We code-share with the Hotel Grando DeLuxe, sir . . . "
Impossible? At a hotel, yes. But this treatment is what Americans have learned to expect from airlines. Americans may not agree about taxes, about Medicare, or about who won the last election. But bring up the subject of airline service, and liberals and conservatives alike shake with anger -- sometimes even in front of television cameras.
Commercial air travel was once thought to be the great American success story: Industry deregulated, fares went way down, number of passengers went way up. Everyone lived happily ever after.
But then everything went wrong. U.S. airlines lost more money in a two-year period in the early 1990s than they had made in their sixty-year history. Fares shot up. One major airline held passengers captive on a grounded airplane during a Christmas blizzard in 1999. What should have been minor work slowdowns in the summer of 2000 paralyzed much of the air transport system. This year's labor problems promise more of the same. Passengers at some of the nation's largest airports have learned to expect two to three hour delays as the norm. And the airlines have hypnotized Congress into doing nothing but ask the carriers for vague promises to do better.
Moreover, no one seems to be able to explain how it all got this bad or what to do about it. Liberals meekly call for a "Passengers' Bill of Rights" but hesitate to call for regulation, since deregulation itself was an all-Democrat affair, the outcome of 1978 legislation sponsored by Teddy Kennedy and signed by Jimmy Carter. Conservatives, recognizing that the status quo is indefensible but not quite understanding why, grope for technical fixes like privatizing the air traffic control system -- an idea that sounds frightening to many passengers -- or take refuge in sentimentality about "the market" and how it should eventually cause airlines to stop antagonizing their customers.
We can see why the commercial air travel system is so confusing to analyze. It's an amalgam of airlines, airport authorities, federal regulators, and government air traffic controllers. So where does the problem lie?
Sports legend has it that Vince Lombardi once began a practice by going back to basics with the words, "Gentlemen, this is a football." To understand the economic reason why you've just waited three hours on the tarmac on a perfectly sunny day, we need to start by asking, "What is economics?" The answer is that it is the study of optimization: how to do things best within constraints.
What is the binding constraint, the limiting factor, in the air travel system? The answer is right before your eyes as you watch a long line of airplanes waiting to take off at a major airport. The constraint is the limited number of available takeoff and landing slots at our busiest airports.