Deregulation

Can the Government Save the Airlines?

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Bloomberg News via the Cincy Enquirer reports on government plans to create a "roadmap" (skymap?) for the flagging airline industry.

Carriers in 2009 have offered the fewest flights in six years as demand slumped during the recession. The 9/11 attacks, record fuel costs and other hurdles have also buffeted airline earnings this decade. North American carriers are likely to lose $2.6 billion this year, the International Air Transport Association said in September.

There are some serious issues facing the industry," [Transportation Secretary Ray] LaHood told reporters after a four-hour meeting with industry officials on Thrusday. "A lot of businesses have cut back on travel. It's really caused some economic hardship on the airlines."

Hang in there, baby, because "a government advisory panel will be formed and will conduct its work for about a year," says LaHood. More here.

That should fix it all, right? Here's one thing that certainly won't help consumers (and hence the industry in the longer run): The AP reports that

Three decades of airline deregulation have helped make air travel more accessible to consumers through lower fares.

Now labor unions are questioning whether the industry is paying the price, and the Obama administration is listening….

"A safe, secure, stable industry can't be driven by lowest common denominator," said John Prater, president of the Air Line Pilots Association. "The cheapest fare out there will not give us a transportation system that works for everyone."

Actually, when you look at, the past three decades have been safer than ever and basically cheaper than ever. And for all the airline's bellyaching, the downturn is clearly mostly related to the recession. Whether specific airlines go in and out of business (who mourns for Eastern? Braniff? TWA?) is less important than whether air travel is more widely available. More on that here. (Hat tip: BretJacobson.com).

Coming this week: A Reason.tv video that explores the politics of air-traffic delays.

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  1. But. But. But. What if OMG they all go out of business and nobody takes their place? How will people get around? The highways are already crowded? The Government has to do something!

  2. Can the Government Save the Airlines?

    FTA: “LaHood … asked … what five issues the committee should address.”

    So, no.

  3. This is BIG. Blue Ribbon Panel BIG.

  4. “The cheapest fare out there will not give us a transportation system that works for everyone.”

    Make that the cpeapest fare out there will not give us a transportation system that will alow union slugs to properly leech off the system.

  5. We need to expand AMTRAK to include the airlines. That would help.

  6. I’m calling bullshit on any “government advisory board” ever lasting just a year. That fucker will have 100,000 employees in 2050.

  7. I flat out refuse to fly if I can drive there in a day or less because I hate the TSA. If I didn’t have to deal with that collection of tools, I would fly more often.

    1. So true. You know, somewhere buried deep is a study on how much business the TSA has cost the airlines. And I bet its not a trivial amount, either.

      1. TSA certainly hasn’t helped. But the airlines are just assholes to. They essentially make a federal case out of any disagreement with one of their employees. I get into with the guy at the grocery store I get asked to leave. I get into with an airline employee, the FBI halls me off.

        Gee treat people like cattle, refuse to upgrade the air traffic control system so they spend hours locked up in a metal tube on the tarmac, and threaten them with jail every time they compain sounds like one hell of a business model to me.

        People only fly when they have to and drive whenever they can. It takes a lot of effort on the part of a lot of idiots to make what really is one of the miracles of modern life into a complete clusterfuck to be avoided at almost any costs.

        1. And when the airlines get what they want (more Federal involvement) they can blame the government when their pax get stranded on the tarmac.

          The solution for us is to obtain our own aircraft and provide our own air transport. Of course, that has its own list of pitfalls and pratfalls.

          Here’s a bit of fun for the really bored:

          http://rgl.faa.gov/Regulatory_…..enFrameSet

          This link opens the list of current Federal Aviation Regulations under Title 14 of the Code of Federal Regulations. For an interesting exercise in futility (before reading the hint below), try to find the part that pertains to commercial air carrier operations.

          (HINT: It’s Part 121 – OPERATING REQUIREMENTS: DOMESTIC, FLAG, AND SUPPLEMENTAL OPERATIONS.) It’s pretty pathetic when you can’t even find rules in the rule book.

          BTW, the rest of those parts outline all the various and sundry requirements and restrictions of pilot and aircraft certification, operation, maintenance, modification, etc.

          Is it any wonder it costs some $6 to $10 thousand to become a certified pilot? Is it any wonder one can’t purchase a new, modern, FAA-certified full-capability personal aircraft for less than half a million dollars?

          1. The Feds have pretty much killed civilian aviation.

        2. John, the FBI can only haul you off if you threaten a crew member. Actually, flying is one activity where you can be a total asshole and not be asked to leave. Your contract of carry requires by law for the airline to get you from point A to point B. If the airline wants to kick you off for being an asshole, then they have to refund you your money.

          …and driving can suck as well. Highway Patrol speed traps, asshole drivers, poor road maintenance, government decisions to ‘enhance’ public transportation at the cost of improving freeway infrastructure, etc.

          1. YEs, the govenrment has managed to ruin driving as well. But it still beats flying.

            1. Jphn, completely agree with your take. Its just not the government, the airlines provide horrible customer service.

              What does one do if one resides in New England and one has family, friends and such in Florida? Since 9/11, I have driven more often than I have flown to Florida-and I take two nights on the road, each way.

          2. the FBI can only haul you off if you threaten a crew member.

            Heh. That might technically be true, but in practice it is not. At the very least, the feds have complete freedom to detain and interrogate you as long as they like for any reason they like. They just face the very, very slight risk of getting in trouble afterwards.

    2. I flew recently with a carry-on bag. Before it was X-rayed I was asked if it contained any “electronics”. When I said yes I was cheerfully asked to remove the device, which I did. I was then taken aside, patted down, and sent on my (at that point not too) merry way to repack the device, which had been given a perfunctory look.

  8. Another classic case of calling for more government oversight because there wasn’t enough government oversight before…and there just isn’t anyway that previous inept government oversight might be the reason for the state of things today.

    As if aviation only exists today because of innovative, cutting edge use of new technology by the FAA, fair-minded rulings by the DOT and incredible industry-saving decisions by bankruptcy judges.

  9. Surely, you can’t be serious? I mean, Nick, you can’t be serious?

    1. He is serious. And don’t call him Shirley.

      Hey, somebody had to bite.

  10. So, Southwest reported annual profit of $178 million for the year ending Jan 2, 2009. Granted, that’s down from $645 milllion the year prior, but it’s still a profit.

    Anyone know the status of unionization at Southwest?

    1. Southwest bests the other carriers for a number of reasons, not the least of which is the fact they operate only one type of aircraft — the venerable Boeing 737.

      Operating more than one type of aircraft means more than one kind of training, more than one set of specialized tools, more than one set of FAA-approved operating requirements and guidelines, etc, etc.

      Southwest also did some interesting things with fuel purchasing that gave them a serious operating cost advantage over other carriers.

      According to wikipedia, Southwest is approx 87% unionized. I don’t believe there are any domestic airlines operating free of union employees.

      1. Southwest heavuly purchased futures, that’s all, something any airline could have and should have been doing. When prices were sky high they were paying lower prices from 2 years before. It wasn’t rocket science, just really really poor management by the other companies.

    2. Southwest is unionized, but the Southwest Airline Pilots’ Association is not associated with the Air Line Pilots Association.

      The Air Line Pilots Association represents the pilots at (among others) Continental, Delta, and United.

  11. One of the first projects I worked on as a professional coder was for an airline reservation system. The background I picked up on that industry has never failed to amaze me.

    10% of the flyers (business folks) account for 80% of the revenue. At least that is what I remembered from the mid-90’s.

    It would follow that if businesses are hurting they will probably cut back on flights and that is going to really impact the airline’s bottom line.

    Given the advances made in virtual meetings, I’m not sure businesses will be hurrying back to lots of flights when the economy recovers. You can get a lot done via Skype or some other desktop sharing software now.

    1. Yeah, what he said.

    2. Don’t say that too loud…the Feds will mandate slowing down the internet

  12. Fuel costs are way down from a couple of years ago, so that’s a ridiculous excuse on the part of the airlines. What’s killing them more than anything in my opinion is the rise of easy videoconferencing, which cuts way back on the number of business trips being made. And that’s going to be a permanent change, even after the recession ends. They’re simply going to have to adjust their business model as other industries have when demand went down.

  13. Last paragraph:

    “Pat Friend, president of the Association of Flight Attendants-CWA, said in an interview before the meeting that LaHood’s agency should focus on steps to make the industry more sustainable. Higher barriers could be erected for new-entrant carriers, which can be under-financed, go out of business, disrupt service and cause job losses, she said.”

    Kind of like Southwest and Jet Blue, right?

    It’s all about using the government to eliminate the competition.

    1. Look at United Airlines. They had an employee buy out by most of the employee groups (Mechanics, Pilots). Those employee groups had their Union Bosses on the board of directors.

      Those employee groups blame Corporate America. In reality they can blame Corporatism for not jumping in and saving them and their good paying jobs soon enough. Very ironic indeed!

    2. Any jobs that are lost because an underfinanced upstart goes out of business are jobs that would have never existed if that upstart hadn’t been allowed to enter the industry.

      1. Yes, you’re dealing with zero-sum gamers. Once a job is gone, it is gone forever! It couldn’t possibly resurface somewhere else.

        Irony is that many of these people believe in reincarnation and transmigration of souls, etc.

      2. What they don’t come out and say is that what happens is that the new market entrant undercuts the established airline, and the new job created at the new market entrant destroys an existing job at an established airline.

        Even though there are always the same number of jobs, because new entrants enter the system as companies fail, they still use the expression “jobs are lost” because they’re talking about the jobs they think are the most important – the marginally least efficient jobs, the ones that are lost first due to competition from new entrants.

        Competition is evil to these people, it really is. Competition that succeeds is evil, AND competition that fails is evil.

  14. I wonder if John Prater, president of the Air Line Pilots Association would be willing to move to a pay-for-performance model; he and his buddies only get paid if the plane is on time.

  15. Whether specific airlines go in and out of business (who mourns for Eastern? Braniff? TWA?) is less important than whether air travel is more widely available.

    Classic mistake. In Liberal Land, producers primarily exist to provide jobs. Whether or not they actually produce anything of value is secondary at best.

    1. Don’t you know the liberal answer to this?

      Efficiency and the resulting profits are only a way for rich/top 1%/elites to get richer while the middle and poor class get screwed; then they add in some things about offshoring, Asian child slaves, Wal-mart, not paying a living wage, etc.

  16. LOL< anything the Government ends up meddling in gets screwed up. Never fails.

    Jerry T
    http://www.online-privacy.at.tc

  17. They really need to make wholesale changes in how they treat customers. They need to make flying more comfortable. They have all these planes that are grounded right now due to lack of interest from travelers. They better be updating their passenger cabins. Americans are twice as wide as they were 50 years ago. Put in larger, more comfortable seats with more leg room. Basically make it all first class. If the plane won’t be full anyway, might as well expand the space for those that are flying and charge a little more. This is 2009 where people’s cars are as roomy and comfy as their living rooms and with all the same stuff. Instead of 3 seats, there will be 2. But people will LOVE to fly if it’s comfortable. People will take more 3 day weekend trips to Miami if they don’t have to wait 2 hours in security and 2 more on the tarmac and the plane is a recliner in the sky.

    1. Nick, are you on the government task force? Let’s face it, most of us are willing to be uncomfortable to save money.

      To prove my point, next time you fly bring a couple of crispy $100 bills and offer the person sitting in the coziest-looking seat one of the bills if they will change seats with you. If that doesn’t work, try a second bill. You’ll see that you can get what you need even though you can’t always get what you want.

      1. I think you’re right, but marketing came overcome it. I’d expand the seats and tell customerst that you won’t have to pay extra because you like doughnuts like that other airline, and we won’t make fun of you but cater to your special needs. All the overweight people will fly my airline, paying extra because I’ll make them feel good about themselves instead of bad like the other airlines. And the number of obese people is not going down.

        1. Southwest also provides horrible customer service. Atrocious.

          Let’s face it-the airlines provide third world level service. All of them.

      2. You start waving around c-notes to get someone to swap seats and I see lots of questions from the TSA in your future.

      3. I’m coming at this from a libertarian standpoint. Use this time of empty planes to retrofit the cabins to accommodate what customers want. Give them an enjoyable trip. People don’t fly because of things that suck about flying. Eliminate what sucks.

        1. It is cheaper to mothball older less fuel-efficient planes. Besides, airlines already offer big comfortable seats in First Class. Problem is that no one wants to pay for them. Most of us bitch about shit we aren’t willing to pay for. We might bitch about having to connect in a hub city but we aren’t willing to pay the premium to fly non-stop.

          It is precisely this unbacked bitching that gives the govmint the sense that they need to fix the airlines.

          If you don’t like the crowds and shitty waiting lines and poor customer service at A, then go to B which may well have higher prices.

        2. Also, I doubt many of us would complain if we got our whole seat grouping to ourselves. Why not suggest airlines should only try to book only half of the seats and save retrofitting costs? Either way, doesn’t make sense. Buy two seats. I have seen this done by a precious few but only when fares are cheap.

    2. I wholeheartedly agree. While I dont care for how Southwest operates from a “cattle call” perspective they clearly are doing something right.

      While they have had some high profile gaffs in the last couple of years, JetBlue is who I would model my airline along were I King for a day. Comfortable seats, a staff that has always been friendly and TV in every seat.

      A cross country flight doesnt seem nearly as long with them as it does with the legacy airlines.

      Regarding the TSA…ugh. Never has more time and money been spent to create the appearance of effectiveness vs actual effectiveness.

  18. Haven’t read any other comments so this is a fresh to me question…

    Guys, is it me, or does it truly seem like the Government is trying to take over or at least get a hand in the workings of everything? And I’m not asking this in the paranoid way but trying to be as rational as possible.

    1. The Unions have asked for Government intervention and the MGMT for the big airlines are complicit because they realize it will stifle competition and make their jobs easier. Can’t you see that 1970s United Kingdom is a great formula to follow?

      1. Come on now. My British Leyland is a great car.

        Ever watch the Brit show Top Gear? They did a challenge once using old British Leyland cars from the 70s. It was hysterical how poorly these things were made. And the Top Gear hosts absolutley destroyed the “British Communists” who made them.

  19. The government having an airline summit? I defer to Adam Smith:

    “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

  20. Why doesn’t the President and the rest of the Democrats just come out and say they hate poor people? All their policies are anti poor. “Airline prices are too cheap! People are able to travel! We have to stop this!”

  21. whatever they do, they better continue to pay for my baggage dammit.

  22. “Airline prices are too cheap! People are able to travel! We have to stop this!”

    The great unwashed masses have ruined everything.

    1. Honestly, I think there is something to it. I think your typical politician or asshole Washington journalist really hates to half to rub elbows with people from exotic places and cultures like Birmingham and who do bizzare things like have children, dress unfashionably, and take family vacations.

      1. I knew this deep seeded hatred and annoyance with commoners has existed among the left for quite some time. If nothing else, the tea parties have been instrumental in bringing out the left’s true feelings about average Americans.

      2. Once I read a comments thread at the Guardian website about transatlantic air travel. The vast majority of posters were horrified by the thought of traveling in the economy class.

    2. That’s not quite fair. It’s more that the Democratic party is not based around a coherent political philosophy, but rather satisfying the “gimme gimme gimme” demands of whichever faction is most prominent at the moment. That’s why you have actions of Democrats that are blatantly contradictory to their rhetoric, not some deep seated hatred of the poor.

      1. That’s not quite fair.

        Not quite fair, or, more accurately, ridiculous in the extreme.

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  25. shutting them all down would be the greenest thing to do.

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