A Bump in the Road for Air Travelers

The disappearing joys of flying

Steve Chapman | August 16, 2007

In a season of crowded planes, long security lines and numerous delays, there are only two kinds of travelers: those who dislike the airlines, and those who loathe and abominate the entire industry with every fiber of their being. So the Department of Transportation is not risking a mass revolt when it entertains the idea of making carriers pay large sums to passengers who, after buying a ticket, find it doesn't come with a seat.

Airlines overbook to assure full flights, but when everyone shows up, not everyone gets to go. Involuntary "bumping" of passengers is an old custom that has gotten more onerous, since it's not as easy to get on the next flight as it used to be. So groups claiming to represent consumers have been demanding that the government force airlines to boost their compensation.

Currently, offenders have to pay a maximum of $200 if a customer is rebooked on a flight scheduled to arrive within two hours of the original one, or $400 for flights that arrive later. Organizations like the Consumer Federation of America propose that these figures be raised to restore the value they had before inflation eroded it—which would amount to $624 and $1,248.

You will not hear many travelers oppose getting more satisfaction when a ticket agent spoils their day. But it's hard to see a problem serious enough to justify Washington's intervention. And in this case, an attempt to help consumers at the expense of carriers promises to leave both worse off.

The industry has good reasons for this practice. A no-show passenger can mean an empty seat, and every empty seat costs the airlines cash they badly need. As a group, they have managed to operate in the red for six straight years. Overbooking can be the difference between a flight that makes money and a flight that loses money.

Contrary to what you might assume, this supposedly rampant abuse is about as common as a vacant exit row. Out of every 10,000 passengers, on average, only 1.45 are involuntarily bumped. You could expect to fly thousands of times before you would ever be left at the gate.

One reason for this is that the airlines don't like turning away paying customers. So they strive to sell no more tickets than is absolutely necessary. Wallace Beall, senior director for revenue analysis at US Airways, told The New York Times, "Employees call in sick because they don't want to deal with overbookings." A passenger who is barred from boarding by Airline A is a passenger who in the future will go to great lengths to accumulate frequent-flier miles on Airline B.

Another reason few travelers get bumped is that the carriers solicit volunteers with ample enticements, which offer travelers a better deal than the government does. If you agree to be put on a later flight, you can generally expect to get a free roundtrip ticket to anywhere in the continental United States.

Of course, some travelers really have to get where they're going in a hurry. But those who put a high priority on not being turned away can easily protect themselves. If you buy your ticket early enough to get a seat assignment, you're virtually immune from bumping. Likewise for passengers who check in online and get their boarding passes.

The typical bumpee is someone who decides to fly at the last minute or doesn't check in until arriving at the airport. But that's also the person who, if airlines are deterred from overbooking, won't be able to buy a ticket at all. Instead of having a tiny chance of not getting aboard, this poor soul would have a 100 percent chance of not getting aboard. How would that make him better off?

It wouldn't. Fliers also benefit from the lower fares that overbooking helps to pay for. Without it, you would pay for the cost of your seat—and part of the cost of the empty one next to you. By selling more seats than they actually have, carriers can maximize revenues and minimize costs. Those two achievements help to preserve the low fares we enjoy today, which in inflation-adjusted terms are roughly half what they were 30 years ago.

Involuntary bumping, with the current modest compensation, is a less-than-perfect method of reconciling the interests of travelers and airlines. But there's no system so imperfect that a helping hand from Washington can't make it worse.

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|8.16.07 @ 7:49AM|#

damn, on Arrested Development, Carl Weathers made it seem like such a doable scam.

|8.16.07 @ 7:59AM|#

The solution is simple, but airlines seem unwilling to implement it.

Make all tickets non-refundable. The airline sells you a seat at a price. Then they don't care whether you show up or not. There's no reason to overbook. In fact, if you DON'T show up, their operating costs are lower.

To make it work, the same ticket SHOULD be transferable. That way, after you buy a seat, and realize you can't make the flight, you should be able to sell the seat to anyone you want to. Of course, the airlines will no longer be able to run the passenger's name against a "No Fly List" prior to passenger check in, but that shouldn't be a problem, technology being what it is.

CB
(Disclaimer: Retired 26 1/2 year airline employee).

|8.16.07 @ 8:12AM|#

"If you agree to be put on a later flight, you can generally expect to get a free roundtrip ticket to anywhere in the continental United States."

Um, where did you get that, dude? Do you have any evidence to back it up? I don't fly much, but in my limited experience, airlines offer $200 to $400 in free travel, which would probably not cover a roundtrip from, say, Portland, Maine to Portland, Oregon.

Also, the "teaser" for this story, "Steve Chapman braves the friendly skies to find out what's wrong with the airline industry," is total bullshit, because the point of Steve's story is that everything is hunk-dory with the airlines. It's the damn whiny customers who are at fault! Those damn customers! They're always wrong!

thoreau|8.16.07 @ 8:26AM|#

It's the damn whiny customers who are at fault! Those damn customers! They're always wrong!

Yeah, I've gotta say, not the greatest column a libertarian writer could produce about airlines. There's a lot that libertarians could say about the airlines, a lot that would be critical of any number of government and industry decisions. But Steve Chapman wants to talk about refunds for getting bumped, and assure us it's OK?

Come on, this isn't even wrong. It's just fluff.

Xmas|8.16.07 @ 8:29AM|#

Alan,

You know you can haggle with the gate person when they ask for people to be bumped.

They'll offer $200, you can ask for a free domestic round-trip ticket and a stay at the nicest hotel next to the airport and maybe a rental car.

If you're a frequent flier with status, you can usually get away with asking for more. The airline gate person is trying to handle everyone with the least amount of hassle. They have a lot of leeway and the ticket-holder has a lot of leverage. And if you're nice and friendly and make an offer to give up your seat, they'll probably jump at it.

Rhywun|8.16.07 @ 8:35AM|#

Make all tickets non-refundable. The airline sells you a seat at a price. Then they don't care whether you show up or not. There's no reason to overbook.

That's more or less how hotels operate. If you don't cancel by 6PM you pay anyway. And yet they continue to overbook. I used to work the 3-11 shift at one hotel and boy did I get sick of turning guests away who had reservations. The practice stinks.

|8.16.07 @ 8:36AM|#

Given that the airlines are as powerful as they are entirely because they had governments build their airports, I'm not sympathetic. (I like trains much better.)

It's not even that this is the worst thing airlines do. I once spent a flight from Austin to Phoenix with my two sons -- ages 4 and 8 at the time -- six rows away from me. They were assigned said seats by United, which company flatly refused to let me or them change seats to be closer. Lotsa fun for the guy in my kids' row, I'm sure, too.

For those without recent experience in this, United gets all passengers' birthdates. They KNEW how old these kids were, knew I was their mother, and still booked us like that. Thanks, dudes. Really.

|8.16.07 @ 8:44AM|#

What a terrible article...really.

There's a plethora of things wrong with the airlines. Take this salient point Mr. Chapman himself made:

"As a group, they have managed to operate in the red for six straight years"

Um, yes, at massive cost to the taxpayers in forms of subsidies and bailouts. Why are we supporting a failed business model, and why is a libertarian writer not even mentioning it?

Not to mention Karen's input, wherein governments build these giant terminals for these bloated businesses to operate.

So, let's review: massive government subsidies, a failure to completely deregulate, extreme municipal codes (i.e. where can you smoke in an airport anymore? Spaces are fading fast); onerous government search requirements and ridiculously early check-in times for 'security'; rolling over and banning things like bottled water; ad infinitum...

But, yeah, overbooking and customer whining is totally the problem. Right.

|8.16.07 @ 9:02AM|#

If the number of bumps is such a small percentage where are the savings coming from exactly by the over booking?

If I buy and pay for a ticket I damn well better have one. What the hell does it matter if I pre check online? If they have my money I should have my ticket. The airlines know what flights are busiest and which are empty it should not be the publics responsibility to keep these businesses open by allowing these types of practices.

Only part I agree with is no government intervention. But then what do you expect after the government (aka tax payers) has bailed out the airlines for their own mis management. Is it to much to ask that I actually get the seat I PAID for 2 months ago when expected.

The bottom line is no matter when a ticket is sold the plane only holds X amount of people. Those people have to be present to board, now what is it 3 hours they expect you to come early. If an hour before the flight someone with a ticket doesn't show then open the seat for the taking. But up until that door closes anyone with a prepaid ticket should get their seat, even if they have to refund the last second flyer.

Obviously after the bailout the airlines feel no need to have customer service. Seems they have taken the same approach as government in that regard.

|8.16.07 @ 9:20AM|#

Does anyone think that an industry that has been in the red for six years has a flaw in their model?

|8.16.07 @ 9:32AM|#

Normally, when these types of industry apologies don't pass the smell test, I just let it go. But this one is too much. Admission: I flew out of LaGuardia (LaGarbage), JFK and Newark for years. Those places are like third world countries when flights start getting bumped.

The airline sells you something that they know they don't have. Maybe, just maybe, another customer will relinquish theirs and give it to you at the gate, but the airlines know that they're selling something that they don't have. According to Chapman, this is supposed to be acceptable because the airlines are financially screwed.

Why are they screwed? It has nothing to do with flights that have a few empty seats, to imply otherwise is disingenuous. It has much more to do with the failure to hedge fuel prices, poor route planning and competition from budget carriers with planes still under maintenance contracts.

To suggest that a free trip across the country is a viable compensation is misguided. First, those seats across the country are on a stand-by basis. People with paid tickets are getting bumped, so people with stand-by tickets have no chance unless they want to go to unpopular destinations. The carriers that give $400 in travel dollars (so you can buy a ticket) are doing better, but that will only get you across the country in the off season or at an unpopular time, hence it is a less valuable compensation. Keep in mind, the airlines might pay for a meal or something, but they aren't pay for your cabfare back home, your parking or any of the costs of not being at the location (if there are any).

The airlines should make all tickets refundable. If the ticket bought is non-refundable, then that person pays for the seat whether they show up or not. Or the airlines could offer two classes of tickets: confirmed tickets and lottery tickets. At least with a lottery ticket, there's some truth in advertising.

If there were a scam where a company sold something it knew it didn't have, then offered to send a replacement that defeats the purpose of the original item along with a $100 voucher worth $10, it's hard to see how the gov't wouldn't step in.

rho|8.16.07 @ 9:35AM|#

My mom-in-law got bumped and she was given a free-flight voucher plus a generous in-terminal gift certificate. She waited out her next flight shopping and at the airport bar.

Why aren't we allowing foreign airlines to run domestic flights? If United can't get their shizz together, let's let Aeroflot have a go.

Rich Paul|8.16.07 @ 9:42AM|#

Easy answer:

Do not permit airlines to refuse to honor contracts into which they have entered. But allow them to negotiate their way out. If more people show up then there are seats on the plane, hold an auction. 300+x passengers, 300 seats, those x passengers who will give up their right to a seat most cheaply get bought off, the other 300 get on the plane. There is no violation of passenger rights.

Lets face it, if you're earning $30,000/year, and the auction gets to $100,000, you're probably going to volunteer even if you'll lose your job. (of course your employer may be grumpy).

Of course this would be expensive for the airline, if it got that high, but after all ... only 1 in 10,000 passengers is bumped. If they need to make it 1 in 50,000 passengers, they've got the actuaries to make that decision.

|8.16.07 @ 9:48AM|#

Rich Paul: The flight schedules (and time itself) doesn't stop when you're having auctions, making the solution unworkable.

...though it is a novel idea.

Rich Paul|8.16.07 @ 9:55AM|#

I used to fly twice a week, as a computer consultant, and have never seen a flight with bumps that did not include a delay.

|8.16.07 @ 9:58AM|#

I for one think that airlines should be responsible for paying all the costs associated with conducting their business, and adjust ticket prices accordingly.
If any politician took reduction of CO2 seriously, de-subsidizing the airline industry would be a huge step. But then again, nobody's really serious about fixing any problems, just looking as though they're fixing them.

thoreau|8.16.07 @ 9:58AM|#

Glad I'm not the only one who thinks there's something smelly about this article. I mean, you've got a heavily regulated industry that's bleeding cash, and Steve Chapman wants to talk about compensation for those who get bumped and explain why customers should be happy with what they get?

I'm not saying that those compensation rates should be adjusted by coercive measures, but maybe there are bigger problems afoot, and solving those problems would go a long way toward making customers happier and reducing scheduling nightmares. Just a thought.

I should write an article on gasoline, and argue that there's no reason to complain about dirty bathrooms at the gas station. Because, really, of all the things to talk about on the subject of gasoline, that's the most important one from a libertarian perspective.

|8.16.07 @ 10:08AM|#

"I used to fly twice a week, as a computer consultant, and have never seen a flight with bumps that did not include a delay."

Yes, but overall on-time performance is only at 68% of flights. Overbooking and delays occupy that shady area where incompetence and bad karma make pig love.

|8.16.07 @ 10:11AM|#

If the number of bumps is such a small percentage where are the savings coming from exactly by the over booking?

Right, Chapman wants to have it both ways. Bumping is so rare that it's not a problem, but if airlines didn't oversell it would cost them a ton of money.

Not to mention his asinine line of reasoning that customers should gladly endure what amounts to a type of fraud (selling something you don't have) because if airlines had to play fair the flights would cost more.

I've said before that Reason is often more of a pro-corporation magazine as it is libertarian. Consider this piece Exhibit A.

|8.16.07 @ 10:14AM|#

They were assigned said seats by United, which company flatly refused to let me or them change seats to be closer.

So why didn't you just ask the poor fellow with your kids if he'd like to switch seats?

I think the meat of this article was the 1.45/10,000 rate of involuntary bumping. True, the typical compensation for voluntary bumping is $200 or $400, but this usually generates more volunteers than they need. In the rare cases where it doesn't, they simply increase the size of the voucher.

In short, the airlines hold their own auctions for those seats, offering increasing values of voucher until they get enough volunteers.

So, of all the problems the airlines do have, I don't believe that overbooking is one of them.

thoreau|8.16.07 @ 10:14AM|#

I've said before that Reason is often more of a pro-corporation magazine as it is libertarian. Consider this piece Exhibit A.

I think that applies more to specific articles than to the magazine as a whole.

|8.16.07 @ 10:15AM|#

Scanning through the comments, it seems that people are failing to distinguish between asking for volunteers to get bumped, and involuntary bumping.

Overbooking is common. Requesting volunteers to get off the plane is less common. Bumping people involuntarily is a nonissue.

|8.16.07 @ 10:18AM|#

It's hard to see how this article advances the cause of free markets. It completely ignores a noxious brew of managerial incompetence, gov't subsidies, heavy regulation and unfair local markets.

Bubba, I've been involuntarily bumped by Freedom Airlines. Let me tell you, it was a big freakin' issue. And you fail to understand that if volunteers aren't found, everybody bumped becomes involuntary, regardless of whether they take the $200 voucher.

|8.16.07 @ 10:19AM|#

My gripe about the airlines is their inability to sit me in comfort. Without me paying some ridiculous surcharge for business or first class, that is. I'm 6'2, 200 lbs., so it's not because I eat too much. Grrrrrrrrr. Why do airlines hate tall people?

|8.16.07 @ 10:20AM|#

To make up for supermodels hating short people?

Timothy|8.16.07 @ 10:26AM|#

I'll jump on the bandwagon here. The other big, big problem I have with most of the airlines is the complete lack of flexibility or redundancy built into their system. They try to operate on narrow flight turn around times, but plan so poorly that a thunderstorm in Chicago can totally bugger my trip from San Antonio to Eugene, OR. They'll also just make things up, that same trip American blamed "weather in Dallas" for the delay departing San Antonio...while I watched Southwest's flights to Dallas depart from the same terminal.

Now, okay, different airport...but have you been to Dallas? Those airports are maybe 10 miles apart and from San Antonio the routing is going to be exactly the same. If your system is so shoddy that you can't deal with a little bad weather, you goddamn well ought to consider a different line of business. Was I compensated for the stress of a two hour delay and having to run through not just DFW but LAX as well*? No. Was I compensated for the airline utterly failing to deliver my bag and having to attend a memorial service for my girlfriend's dead father in clothes that reeked of sweat and frustration? No. Well, I guess they delivered the bag to where I was staying. In lieu of a $25 travel voucher.

So they delay my first flight, make me sprint through two airports, run out of food on the flight from Dallas to LAX (all they had left was one bag of trail mix, which we bought for five fucking dollars) because it's "not the right plane" and they "weren't prepared for this many passengers", lose my bag, make me attend a memorial smelling like a greyhound terminal, and expect me to be satisfied because I arrived approximately when I was supposed to and you brought my bag to me? Seriously, fuck those guys.

But, no, nevermind, I'm sure that Mr. Chapman is right and it's all the fault of overbooking and whiny passengers like me who expect to receive a reasonable level of service when we spend $600.

*My Dallas layover was two hours, my LAX layover was supposed to be about an hour. I have traveled enough to build that into my schedule, so it's not like I was on flights that were too close together.

|8.16.07 @ 10:29AM|#

I only fly once or twice a year, but last week was one of those times.

Flying American from Tucson to BWI and the flight leaves Tucson around 10:40 local. Gets into Dallas (DFW) at around 1:00 or so. 2 hour-layover, not so bad....I can do that with my eyes shut. 2 hours turns into 6 ( you should have seen the scramble for the few paltry power outlets) as the plane breaks and they have to fly one in from Tulsa. I left the hotel at 8:30 local and walked in my door at 3 AM local: 15 hours altogether for what should have been 8 or 9, if any airline had its shit together. Don't get me started on the hour I stood at the baggage carousel at 1 AM wating for my bag to appear.

The punch line is that I didn't fly out the day before, because I would have gotten home at 3 AM, having to leave on a late afternoon flight. I must have violated some cosmic order trying to get around that.

I know some of you will say, "15 hours? That's nothing!" and you'd be proably right compared to others, but I would have killed to take the bump they were offering before the delay. As a result, we got a shitty Sandra Bullock movie for our time wasted and not enough headphones to go around. (One joker on the plane said loudly in response to "free" headsets, "What are they 2 bucks? That's 50 cents an hour! I haven't been paid that little in years!")

We still had to pay for snacks. Way to go American. You sure know how to pamper your customers.

|8.16.07 @ 10:31AM|#

There is nothing wrong with the airline industry that less regulation and more Chapter 7 liquidations wouldn't cure. As long as the same idiot management teams and idiot unions are allowed to to go in and out of bankruptcy reorganizations ad nauseum, and the government continues to maintain substantial barriers to entry, you can count on United, Delta, Northwest, etc., to continue to treat their customers like shit.

|8.16.07 @ 10:35AM|#

Bubba got it right. Airlines actually overbook a LOT. Because a LOT of people no-show. When enough people don't no-show, then "Voluntary bumping" occurs. When enough people don't volunteer, then Involuntary bumping occurs. So far, only Involuntary bumping has government imposed rules and levels of compensation (which, like the minimum wage, are ususally LESS than what is offered to volunteers. The free market at work!)

Bad business model? YES!

I got into a long email battle with someone in "Revenue Control" (the folks who use black magic to determine how many seats to overbook) about the difference between "minimizing losses" and "maximizing profits". I was arguing that we should simply pull out of unprofitable markets. He kept arguing that we should discount prices to sell inventory before it "goes stale". I think it was about the third day of Freshman Econ 101, where I heard the teacher explain that a company that focuses on "cutting losses" will eventually, go out of business. Cutting losses just extends the when, but doesn't prevent it.

Until airlines (all airlines - discounters, full fare, foreign, domestic) begin to focus on selling seats at a reasonable price (reasonable = cover costs and make a little profit) and stop focussing on maintaining market share and reducing losses, the problem will continue; with government intervention or without it.

CB

|8.16.07 @ 10:45AM|#

The big issue that Chapman is missing is that airlines simply do not compete on service. I don't know enough about the economics of the industry to know why, although it's a safe bet that the continuing regulations and subsidies that Thoreau mentioned have something to do with it.

But anyone who flies even occasionally ends up with horror stories likes the ones recounted above. The level of incompetence, indifference, and rudeness you encounter is breathtaking.

I'll never forget a Northwest ticketing agent at the godforsaken Detroit airport named Falita (perhaps you've met her) who was verbally abusive to the couple with young kids in front of me, then refused to help me on a minor issue, and then (I'm convinced, although I cannot prove it) intentionally had my bag diverted to the wrong airport because I tried (without profanity or raised voice) to point out to her that customers need a little help now and then.

Let's let them all go bankrupt and see what rises to replace them.. It can't be worse.

Timothy|8.16.07 @ 10:45AM|#

"Don't do things we can't make money at" seems like a perfectly obvious business plan, and yet most of the airlines can't figure it out.

Seriously, I'm a total Southwest fanboy, and now that the Wright amendment has been repealed they fly pretty much anyplace I want to go. But the idea is pretty simple.

1) Fly point-to-point rather than hub.

2) Only fly one kind of plane to cut maintenance costs.

3) Don't bother with first class.

4) Load the plan efficiently by not assigning seats and boarding in groups.

5) Be able to have your plane back on the taxiway ASAP, preferably only 15 minutes from landing, that way when delays happen you're ready to go.

Timothy|8.16.07 @ 10:46AM|#

4) Load the plane...

|8.16.07 @ 10:49AM|#

JW:
I feel your pain, man.
We were promised free headphones on a flight from Phoenix to Honolulu that was delayed 4 1/2 hours for no apparent reason, but they never materialized. It didn't matter to me because I had my own, but other people were like "hey wait, where are those headphones?"

Also, same delay, I couldn't find a power outlet on account of they were few and far between. I decided that next time I travel any distance I'm bringing a power strip in my carry on, and I'll be the most popular guy on the flight.

|8.16.07 @ 10:52AM|#

I think that applies more to specific articles than to the magazine as a whole.

Right, it's not the only thing the magazine writes about but sometimes the pro-corporate slant is so obvious that I wonder if the rest of the stuff is just window dressing.

Or if nothing else, Reason seems to have successfully wedded the idea that "liberty" includes the rights of large corporations to become as powerful and influential as they can.

|8.16.07 @ 10:54AM|#

I believe Mr. Chapman's argument was that, as bad as the current system of compensations for bumped passengers is, it does not justify government intervention to rectify. In that he is correct.

What he failed to mention in regards to this industry which has managed to "operate in the red for six straight years," is that they have been able to do so because of the government protections and subsidies they receive. This is the key point where government action needs to be reduced, so we can all marvel at the momentus collapse of the current gang of callous, myopic, incompetent carriers, and the rise of something useful in their place.

|8.16.07 @ 10:56AM|#

I fly Southwest. I don't see the problem. Furthermore, it is cheaper to fly Chicago>St. Louis to visit my parents than to drive.

|8.16.07 @ 11:03AM|#

I think much of the problem with air carriers is that there is no substantial difference between the services they are selling (with exception perhaps to Southwest, who offers a consistent service, which is different in that it is.. well.. consistent).

If airlines took to niche markets, or increased leg room by 3" per passenger in coach (or some upgraded name for it) and charged $50 more per seat, or offered restaurant branded or chef named (Wolfgang Puck, Emeril, etc.) food, or anything of that sort on the flights, they could charge different prices and not have to be engaged in price-based sales all the time. People might actually consistently come back to your airline because they like the services you offer, not just because they like the prices or belong to some frequent flyer program (another form of price-based sales).

|8.16.07 @ 11:04AM|#

I believe Mr. Chapman's argument was that, as bad as the current system of compensations for bumped passengers is, it does not justify government intervention to rectify. In that he is correct.

Why not? When one party is treated unfairly in a business dealing with another, than seems like the exact kind of situation that is appropriate for government involvement.

|8.16.07 @ 11:06AM|#

Let's let them all go bankrupt and see what rises to replace them.. It can't be worse.

I'm with you 100%, but I have a bad feeling that there would be a successful effort for a "national" airline run by the boobs and thugs rejected by the TSA. "We have a right to single-payer airlines!" would be the mantra.

It CAN be worse.

|8.16.07 @ 11:07AM|#

I guess what I'm saying is that a recognition by the airlines that air travel is unpleasant, and a $25 investment per person with a $50-$75 fare increase (on say, a previously $600 ticket) could go a long way. Just advertise your difference creatively, experiment in branding. Be creative for Zeus's sake

|8.16.07 @ 11:14AM|#

In regards to Southwest, yes they operate much more intelligently, but it cannot be emphasized enough what a difference is made when management and unions are dedicated to operating the business in a consistently profitable manner. Perhaps this is obvious, but, at it's core, this is why Southwest is so different than than the major carriers; both management and unionized labor have significant percentages their compensation tied to the overall profitability of the enterprise as a whole. This results in behaviors like pilots assisting in getting a plane cleaned before taking on a new load of passengers ( do you think United pilots do that?), and ticket agents who are much more consistently friendly and helpful.

Absent Chapter 7 liquidations, with every employee fired, and the assets being broken up, it is just about impossible to change a bureaucratic culture enough to make a difference.

|8.16.07 @ 11:15AM|#

All I want is the opportunity to pay more for a confirmed seat, or pay normal for a lottery ticket.

|8.16.07 @ 11:16AM|#

Will Allen: good point. Pilots in the Delta system recently took a huge pay cut, 20% or more. They are a lot more cavalier about calling in drunk, er, sick these days.

|8.16.07 @ 11:17AM|#

I'm with you 100%, but I have a bad feeling that there would be a successful effort for a "national" airline run by the boobs and thugs rejected by the TSA. "We have a right to single-payer airlines!" would be the mantra.

The airlines failed because they were greedy big business! And for many people, air travel is the only way to get from one place in the country to another! We need a nationalized centrally planned system to make sure that everyone can fly from wherever they want, whenever they want, for a reasonable price! It's the only way!

|8.16.07 @ 11:18AM|#

There's always an available seat in my flying car. We need to end our dependence on Big Plane. Where do the presidential candidates stand on this issue?

What he failed to mention in regards to this industry which has managed to "operate in the red for six straight years," is that they have been able to do so because of the government protections and subsidies they receive. This is the key point where government action needs to be reduced, so we can all marvel at the momentus collapse of the current gang of callous, myopic, incompetent carriers, and the rise of something useful in their place.

That sounds great on paper but the problem is that the economy and culture of the United States depends quite a bit on reliable air travel. The subsidies and occasional bailouts are probably worth the cost if they prevent a full-scale collapse of the airline industry, which would be catastrophic for everybody, not just airline shareholders.

|8.16.07 @ 11:19AM|#

And a nationalized airline wouldn't emit any carbon or use any fuel, because the corporations wouldn't be able to make their greedy backroom deals to pollute the world and reap the profits!!

Urkobold™|8.16.07 @ 11:23AM|#

PROGLIBMINION IS RIGHT. BIG PLANE WAS RESPONSIBLE FOR 9/11, AFTER ALL.

|8.16.07 @ 11:25AM|#

Timothy|8.16.07 @ 11:26AM|#

Will Allen: Yes, you make a point I neglected, Southwest definitely understands not to do things they can't make money at. Which is smart, and their success reflects that. Also, 87% of their employees are subject to collective bargaining (read that in their little inflight magazine, FWIW), so it's not like the BIG BAD UNIONS are the sole cause of headache for other airlines. It really is just dumbness all the way to the top coupled with repeated bailouts for failure.

|8.16.07 @ 11:26AM|#

Timothy: Point to point is a better way. If I'm not mistaken, Comair is a profitable section of Delta. Delta can't seem to right itself, but its small, efficient point-to-point fleet turns a profit.

Bee|8.16.07 @ 11:27AM|#

I almost never pay for an airline ticket. Between my miles plan and bumping certificates, I basically fly for free. All over the continental US.

Involuntary bumps may be a small number, but nearly every Southwest flight I take requests passengers to voluntarily give up their seats. It happens so often, people build "bump" time in to their schedules. Don't book the last flight of the day - book one maybe 3 before the last. Then volunteer to get bumped, and collect your travel-anywhere-in-the-continental-US certificate. Sit in the airport bar until your flight comes, and then board. They will have bumped people on these later flights to make room for *you*.

I have had so many of these, I can't use them all. They are transferable, so I give them as gifts to people, or trade them. Southwest doesn't fly to Canada, so I traded a certificate with someone last year to get a free flight to British Columbia on Delta.

Perhaps flight space to/from some areas, like LA, is at a premium. Perhaps there are places where there is not routine overbooking and bumping. Things do generally seem more calm at smaller airports.....the problem there is delayed flights, not overbooking.

|8.16.07 @ 11:29AM|#

Overbooking might not be a huge problem, but it is a morally dubious practice to sell something you know you don't have. Like you said, you have so many bumping certificates that you can't use them all. Basically, that means you got bumped for nothing in return.

|8.16.07 @ 11:32AM|#

Hey, Bee:
How much you want for one of those you won't be able to use? ;)

|8.16.07 @ 11:33AM|#

Yes, Timothy, it is most frequently the case that BIG STUPID MANAGEMENT, or BIG SELF-DEALING MANAGEMENT is what leads to BIG BAD UNIONS. Once BIG STUPID or BIG SELF-DEALING MANAGEMENT has fostered BIG BAD UNIONS, then liquidation is the only reliable way to effect the needed revolutionary change.

|8.16.07 @ 11:39AM|#

Dan T., if United were to liquidate, and there were no government erected barriers to entry in the industry, the planes would get parked in the desert for a very, very, short while, get repainted, and then be purchased by better operators, and flown by employees who had a more realistic view of what their job depended on. No catastrophe would ensue.

Well, that's the theory at least, and maybe it would happen that way.

What I'm saying is that as a country we could not afford to have a large percentage of our airplanes sitting in desert for even a very short time. Especially a "short time" would probably mean at least several months in this kind of situation.

|8.16.07 @ 11:47AM|#

Dan T. If that was the case the government would need to get involved in how the government treats all workers unfairly. I don't see them jumping up to do that anytime soon.

As I aid the airlines have become so cozy with subsidies and bailouts they now have the same overall outlook as government in general. They can openly and directly screw the public that finances their existance since the public has no recourse to take.

If they can't make money let them fail and go under. If the business is viable to begin with someone will come in and take it over, if not then it will go away as it should.

They overbook on the better flight times to get the peoples money and them to the airport thinking they have a ticket already. Then once there they are informed they do not have a seat BUT there are several other flights in the next few hours with plenty of seats on them. So why then did they not start selling those seats when the better slot times were filled. Its like once they have you in the airport they have you by the nads. They know you have a trip planned or you wouldn't be there. Your already there when they tell you your bumped to another flight so whats the customer to do if they need to get someplace but go along.

One thing is for damn sure. So long as tax payers are forced to bail out these mismanaged airlines no CEO's or any other employee should be getting any bonuses or other form of compensation above the normal daily wage for their job.

|8.16.07 @ 11:55AM|#

Dee, it's not that I disagree with your assessment at all, it's just that I don't know if the price of letting the market do its thing would be less than the price of keeping such companies afloat.

If the airline industry went under, an awful lot of companies that depend on it would go under as well. We should probably consider airline subsidies and bailouts to be a cost of doing business at this point.

|8.16.07 @ 11:56AM|#

Dan T., we have seen major carriers park all their planes during strikes, and no catastrophe has occurred. In a deregulated environment, it would not take several months to regain capacity.

|8.16.07 @ 12:02PM|#

Will, even assuming that there could be a very quick turnaround in an unregulated environment (quite an assumption giving the complexities of dissolving a large business and starting a new one), there's really no way air travel could function in an unregulated environment.

If for no other reason than there's only so many planes our nation's infrastructure of airports can handle at one time.

Rhywun|8.16.07 @ 12:09PM|#

it is cheaper to fly Chicago>St. Louis to visit my parents than to drive.

That's a big part of the problem right there. NO WAY is it *really* cheaper. It's only cheaper to you because of the price wars facilitated by subsidies and bailouts.

|8.16.07 @ 12:21PM|#

Fine, Dan, I'll say, "far less regulated environment". Dan, most of these planes aren't even owned by the carriers. The gates can be sold quickly. If it took months to rebrand the assets, and rehire the people worth rehiring, it would only be due to government erecting barriers to new sources of capital.

|8.16.07 @ 12:35PM|#

Will, even if your assumptions about how easy it is to start an airline are correct, we still have to consider that if several of the major airlines ceased operations two things may happen:

a) investors might see an opportunity and quickly pour money into creating a profitable airline, or

b) investors might think that it's not possible to make money in the airline business and we're stuck with no air travel whatsoever.

I mean, it is at least a possibility that air travel is not an activity that is sustainable in the free market. In which case, we'd have to decide between subsidizing and doing without air travel.

I guess it's a moot point, really. We'll never know because the government simply is not going to let the airline industry collapse. Thank God.

|8.16.07 @ 12:37PM|#

Thank God.

God has better sense than these mortal fools to bail out perpetual chumps.

He would have smite them a looooong time ago.

|8.16.07 @ 12:38PM|#

Also, why is it that we don't have anything in the mid-price decent-service range?

I'd much rather pay an extra 30% on the ticket and get back decent service, good food, and my luggage delivered on time.

One of the reasons that when I fly to Japan I will willingly pay an extra $300 to fly JAL or ANA. I'm sick of what's called "service" on US carriers.

|8.16.07 @ 12:50PM|#

grumpy realist:
see my comment at 11:03am

Short version: I don't think the issue is that people wouldn't pay for decent service, but that the airlines have failed to differentiate themselves based on anything but price and frequent flyer programs.

|8.16.07 @ 12:56PM|#

"I'd much rather pay an extra 30% on the ticket and get back decent service, good food, and my luggage delivered on time."

"If airlines took to niche markets, or increased leg room by 3" per passenger in coach (or some upgraded name for it) and charged $50 more per seat, or offered restaurant branded or chef named (Wolfgang Puck, Emeril, etc.) food, or anything of that sort on the flights, they could charge different prices and not have to be engaged in price-based sales all the time"

Unfortunately, both of these statements have proven, time and again, to be false. People will not pay for service, or food, or legroom, or anything. Price is the only item that matters. If Delta is charging $100, but USAir is charging $95, everyone will fly USAir. It's an incredibly price sensitive market.

I'd love to tell you why point-to-point won't work in large numbers, but... leaving now to DRIVE to Florida. Six hours Atlanta to St.George Island, but thanks to the TSA ("We put the Line in AirLine") it's faster to drive that 300 miles than it is to fly it.

Buh bye! Thanks for choosing Delta!

CB

|8.16.07 @ 12:59PM|#

Dan, given that there are mountains of capital being prevented from entering the industry by government regulation right now, despite the prospect of competing against companies which have been continually insulated from competition, there is no reason to believe that your fears of the industry failing to attract capital are rational. The planes aren't going to be melted down to make soft drink containers. They simply will be leased by people who manage them better.

|8.16.07 @ 1:02PM|#

The planes aren't going to be melted down to make soft drink containers. They simply will be leased by people who manage them better.

Maybe, maybe not. Like I said, we'll never know because the risk is too great.

|8.16.07 @ 1:08PM|#

I've mentioned this here before, but the solution to all our problems is to (1) for maximum security, make everyone fly stark naked (no carry-ons, either) and (2) convert planes to racks of capsule rooms, à la the Japanese capsule hotels. But smaller.

Here's another look at the capsule rooms for those who don't like videos.

"Like I said, we'll never know because the risk is too great."

Investors want to get into the airline business. I'm not so sure they want to be burdened with old planes. I think they want to finance new planes that are under maintenance contracts, offer low fares and high service until the maintenance contracts end, then retire/get fired and blame it on an ice storm.

poco|8.16.07 @ 1:12PM|#

Why aren't we allowing foreign airlines to run domestic flights?

We are now, sort of. Anyone flown Virgin America yet? If it's half as fun as Virgin Atlantic, I might like to give it a shot.

|8.16.07 @ 1:14PM|#

(while I know you won't get this...)

CB -
You couldn't be more wrong (especially in your exaggeration). Specific to your example, if you got to the check-in counter and they asked you if you wanted to upgrade for another $5 to get you another few inches of legroom, increase the liklihood of you/your baggage getting to your destination, and some decent food, I wager most people would pay it. The question is profitability and how well you can inform people of this difference before they make the flight purchase.
I would easily pay an added 15% for a flight to France if it meant flying Air France instead of Delta/KLM or whatever. Why? Because I know that Air France does (or did) serve cheese and wine and have nice planes with little screens to watch whichever movie you want and comfier seats and all that.

|8.16.07 @ 1:21PM|#

The solution to the airline problem is so simple I'm surprised it's not been examined. First, the airline industry should be far more regulated; the gov't should triple or more the taxes on tickets and should do so on a graduated basis such that one would pay a severe premium for shorter flights. The taxes raised should be used to pay back money to the most efficient airlines to compensate for the loss of ridership; the inefficient airlines would go bankrupt significantly reducing the number of available flights. Second, a dress code should be clearly adhered to for those wanting to fly; those who don't adhere to the code would not be allowed to board. Finally, to help with global warming, only weight appropriate people should be allowed on passenger planes. Voila! The amount of air traffic would be reduced by 50% or more! Freguent Flying would be prohibitively expensive for the masses but far more pleasant for the moderately well heeled, of appropriate weight and able to dress in appropriate business attire.

Now, we're getting somewhere!

The problem with regulation is that it allows the airlines to get away with massive amounts of theft but point the regulations, which allow them to do what they're doing.

Around Christmas I had my flight canceled the day before I was due to fly. Because the previous two days of flights were canceled due to weather, it was going to be a week before they could guarantee that I got out. They offered me a $400 refund to cancel the ticket. I called back again to confirm the $400, and I agreed to it. Of course, the money never was refunded. Eventually they refunded $200 telling me that they weren't legally obligated to refund the whole amount because the cancellation was due to weather (apparently my plane was used as an extra flight to get people out of Denver because Denver flights had also been canceled the previous days due to weather). If this happened at a store, it would be theft. But in the airline industry it's standard operating procedure.

In April I was told that might flight had been made about three hours longer with an additional three hours of sitting in Atlanta. In any other industry if this happened I could get a refund of my money. But no -- regulations say you can only get a refund if the departure time or arrival time is moved by 90 minutes, and mine were moved by 85 each, so they are not legally obligated to give me a refund.

|8.16.07 @ 1:31PM|#

Does anyone REALLY like Southwest better? Having to get to the airport extra early and stand in a big cattle queue so I can make sure my husband and I get to sit together never fails to put me in a rotten mood. It reminds me of going to movies on opening nights.

|8.16.07 @ 1:34PM|#

Shannon:
I believe you can check in online in advance so you get an "A" ticket.
Does that help?

|8.16.07 @ 1:52PM|#

Holy cow, Shannon, even if you for some reason can't print your boarding ticket online in advance, is it really a big deal to not sit next to your husband for a couple of hours? I dumped a girlfriend once because she got terribly upset when we had to sit apart after getting to Midway a little later than usual.

Sheesh, ya' can't stay in junior high forever! Assigned seating just means it takes longer to get the passengers seated.

|8.16.07 @ 1:53PM|#

No, Dan, the "risk" is only in your head. We won't see it because of regulatory capture.

|8.16.07 @ 2:12PM|#

Reinmoose,

My dad just flew them. I believe that you can do that only in the last 24 hours before the flight.

|8.16.07 @ 2:16PM|#

Dan T. - That looking at things as the cost of doing business is exactly why we have 9 trillion in debt racked up.

Its not a matter of the cost of doing business. If the business can not keep its costs competitive and provide a product people want they should go under not be bailed out just for the sake of keeping them alive.

If they went under it wouldn't take long for the vacuum to be filled if there really is potential for profit in doing so. If there is no profit for the routes they will be cut out. Its really simple either you have a business that makes money or you don't. You could extend the logic of how it will affect other business's to any other industry as well but you do not see tax payer bail outs of those companies based on that reason.

Wouldn't we all love to open a business where we could have a model that is not profitable and yet we still get to stay in business? Where do I sign up? I am pretty sure I can run any company into the ground as well as any CEO out there now can.

|8.16.07 @ 2:33PM|#

One more thing-

If you look around you will notice the only entities that can manage to stay open for any length of time while running at a loss are the government and those the government decides to bestow other peoples money on to keep them afloat. So unless you are the Government or sucking on the governments tit if your not making money your going to be closing your doors no matter what you do or who elses business is affected. Why do you think so many groups fight for that all mighty government tit? They do it because its fat and the milk never runs out, plus once you get hooked on it there is no way off it because government subsidies are the gateway assistance to long term government oversight and regulation. Just like the politicians like it!

|8.16.07 @ 3:25PM|#

One of the reasons that when I fly to Japan I will willingly pay an extra $300 to fly JAL or ANA. I'm sick of what's called "service" on US carriers.

I couldn't help but notice on a recent trip to Europe the INCREDIBLY large difference between a flight on KLM and a flight on Northwest on the Detroit-Amsterdam route.

*Warning- NW is flying a single aisle 757 trans-atlantic. It's a miserable experience. Avoid at all cost. The KLM flight was a nice big luxurious A330.

Patrick|8.16.07 @ 4:01PM|#

The writer and everyone on this thread has missed the only important point:

The amount refunded for bumping a passenger is already regulated.

What consumers want is to adjust the amount for inflation. For some stupid reasons I can't fathom, Gov'ts all over pass laws with dollar amounts that don't adjust for inflation. Libertarians can argue over whether the laws should be passed, but it makes no sense to pass laws with monetary penalties that don't adjust for inflation.

This creeps into all Gov't endeavors. For instance, look for people to realize that much of the housing market slump in the Northeast and California is due simply to the Gov't set limit for standard and jumbo mortgages. While core inflation has risen and housing prices have skyrocketed, the cutoff for a jumbo mortgage is stuck at $417,000. Why? Disregarding the assinine idea of one national number, this is now stifling markets because step up houses have risen to prices above that in more wealthy geographical areas but step up buyers can't afford them because jumbo mortgage rates are higher and are now very hard if not impossible to get at all.

If this number had risen along with housing prices (and/or set locally), it would be nearer $900K and there would be much more liquidity in the housing market.

The only reason I can think of why this number has not been adjusted is that banks make jumbo loans (and political donations) while FNMA markets standard loans. Banks do not want the competition and pay the politicians to keep it that way.

miche|8.16.07 @ 4:50PM|#

Holy cow, Shannon, even if you for some reason can't print your boarding ticket online in advance, is it really a big deal to not sit next to your husband for a couple of hours? I dumped a girlfriend once because she got terribly upset when we had to sit apart after getting to Midway a little later than usual.

My oldest daughter flew NOLA to Dallas Love a few weeks ago. She has an infant (5 months) and can't check in online. We arrived to Love early to find the line unbelievably long. Her flight was to depart at 6:35am and we were standing in line when it left. With one exception, the staff was rude and unhelpful. In the end, she left on a 10a flight for which they attempted to charge a change fee. We were at Love at 5a so she spent 5 hours waiting to take a 1.5 hour flight.

I fly >50k miles/points yearly on AA; travel is my family's drug of choice and none of the miles are paid for by an employer. Internationally, we fly business. When I think back to my first ever flight- when I was 12- there is no way that I can call what is received today, in business or first, as service.

I quit taking the girls to amusement parks years ago because I hated feeling like a member of a cattle herd. Air travel today is similar and it doesn't matter which domestic airline you fly.

The marketplace accepts the shitty service because, with government regulating the industry, we can't demand better.

miche|8.16.07 @ 4:52PM|#

I should have pointed out that my daughter experienced the problem on the return portion of the trip.

|8.16.07 @ 5:20PM|#

The marketplace accepts the shitty service because most of the flying public will absolutely put up with it to save $20 on a ticket.

Premium services at extra cost haven't been doing all that well. Most airlines sell very few F seats on domestic routes. Even initiatives like United's Economy Plus and Northwest's premium seats (bulkheads and exit rows for a charge) haven't been game changers for the industry. The overwhelming market feedback since deregulation has been: Cheap Seats Above All Else!

|8.16.07 @ 5:25PM|#

Dr. K:

Screw the size of the seat. That's a joke only a 6 footer cares about. I want to purchase a ticket with a guarantee that I will be on the plane if it takes off.

I don't care about the seat. I want to get to the destination. If I can pay a little more for service I would. It just isn't worth it to pay $800 more for first class.

|8.16.07 @ 5:38PM|#

I have no problem with nailing the airlines to the wall over what is, at heart, plain and simple fraud: Selling a confirmed reservation on a plane for which none is available. Like the esteemed Mr. Chapman I'm very skeptical consumers' salvation on this issue will come from more regulation.

The reverse-dutch lottery proposal (raise the offer for VDB pax until you get enough takers) is probably the most fair all-around. Far from being unworkable, this is the basic system used at the gate today. Problem is, some airlines (I'm looking at you Continental) generally refuse to offer more than $400, since they can just IDB people at that price level.

|8.16.07 @ 5:56PM|#

miche, I don't know what your experience has to do with someone feeling put upon if they couldn't sit next to their husband during the flight.

miche|8.16.07 @ 8:13PM|#

Will,
Looking back at it, you are right. I'm trashed in the Bahamas right now and had to rebuy my connection during my comment. Sorry...

|8.16.07 @ 10:56PM|#

This has got to be one of the most unlibertarian threads I've seen in a while. Yes, it's a pain in the okole to fly. I've been bumped both voluntarily and involuntarily. I've had airplane flights that were delayed overnight. Yes, it sucked.

But, the airlines overbook because it results in lower ticket prices, and people put up with it because lower ticket prices are what they actually want (in terms of what they actually DO), no matter what they may say -- in economic terms, it's a revealed preference.

Would I pay 1% more for a guarantee that I absolutely will not get bumped? You bet -- on those flights where getting there on time matters to me. Sooner or later some carrier will get a clue and offer that deal -- and limit bumps to those people who were too cheap to spring for the extra 1%.

Will I pay 10% more for a few extra inches more legroom? Again, you bet. And sooner or later, some smart airline will offer that amenity for a price that people 6' tall or more will pay, rather than the inflated first class rates I've never paid.

The solution is less government, not more, and to quit whining and instead quit flying with airlines that treat you badly.

Man up already. (Or woman up.)

poco|8.16.07 @ 11:26PM|#

And sooner or later, some smart airline will offer that amenity for a price that people 6' tall or more will pay

So why hasn't this happened yet?

|8.16.07 @ 11:54PM|#

jh: I think the "unlibertarian" point to be made is that the industry is so heavily regulated that it can commit fraud with impugnity. Instead of the market correcting that model, the gov't regulation of other aspects of the industry encourage that fraud.

But I guess it's like Jerry Seinfeld said. They know how to take the reservation, they just don't know how to hold the reservation.

DanT's point about the commercial implications of an airline meltdown are somewhat valid, at least to the extent that they spur gov't action. There's really no other explanation for the continued reliance on a model designed to piss people off.

Jennifer|8.17.07 @ 12:52PM|#

When a passenger is bumped, that means the airline sold something it did not have to sell: an empty seat. How is this not fraud?

|8.19.07 @ 11:59AM|#

I couldn't enter the discussion until today because in the last week alone I've traveled across the country 4 times. In each case, my trips were last-minute. Rarely do I get more than a week of notice, and I can only think of a handful of flights I've made with more than two weeks notice. I always fly economy. About half of the time, I have to check in at the airport due to time constraints.

I have NEVER been bumped.

I don't see any reason for the government to get involved in how much I will be paid if I DO get bumped.

What I do see the need for is an airline to take the lead with a 100% "Buy a ticket, Buy a seat" policy (and ad campaign to go with it). If it works out for them, the others will jump aboard and the problem is solved.

BTW, Crackers Boy, I've ALWAYS found it more efficient to drive than to fly when the trip is under 450 miles.

6 - 7 hours of driving as opposed to 2 hours wait time, an hour flying, an hour dealing with baggage, car rental and the traffic getting out of the airport (which is usually miles away from where I'm really going) . . .by the time it's all done, the time difference point to point is about an hour. It's generally not worth the extra money to save that hour or two.

Driving also means that I can take everything that I THINK I will need, not just what fits the weight limit.

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