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Flying the Dysfunctional Skies

I recently had the thrill of two flights, each more than five hours, on an airline where I enjoy no exalted frequent-flyer status. On United Airlines' glad-to-see-ya scale, I rated somewhere between a homeless wino and a bag of snakes. True to my status, I paid too much for too little leg space, paid extra to check luggage, was told personally that I get no blanket — and got a dirty look when I asked for a glass of water.

Like my fellow sufferers in airborne steerage, I understood why United had to treat all but a few of us like something stuck to a steward's shoe. United is one of 48 US airlines that have gone bankrupt since 1991. This includes all of them. In the airline racket, the terms “business as usual” and “Chapter 11” are synonyms.

The misery of flying “coach” anywhere these days is symptomatic of deeper troubles for both the air travel and air freight sectors. As insolvent airlines merge to survive, consolidating around a shrinking number of mega-hubs in major cities like Chicago, Atlanta, and Los Angeles, dozens of smaller cities find themselves shunted off onto what the railroads used to call “spur” lines. Travelers end up switching planes two or three times before reaching their destinations. According to the Next Republic Project, a round-trip between Pittsburgh and Washington (less than 200 miles each way) now costs as much as $1,000, consuming two travel days because there are no non-stops between these two cities.

An important article by Philip Longman and Lina Khan in the March/April issue of Washington Monthly discusses the long-term consequences of the chronic airline instability on the US economy. A typical example cited by Longman and Khan is the decision by Delta — now America's biggest airline — to close its Cincinnati/North Kentucky Airport (CVG) hub. The drastic reduction in traffic at CVG forced business travelers to add a stop every time they flew in and out of Cincinnati. This change choked air freight into Cincinnati and compelled several loyal local companies, including the huge Chiquita Brands International, to leave town.

All this mishegoss started, the authors explain, in 1978, when two liberals, President Jimmy Carter and Senator Ted Kennedy, teamed up to dissolve the Civil Aeronautics Board — the agency that for 40 years had regulated fares for US carriers, making sure that all routes were fairly served. Total airline deregulation was completed a few years later by conservative President Ronald Reagan, highlighted by Reagan's legendary destruction of the Professional Air Traffic Controllers Organization.

The competitive frenzy that followed these deregulatory bombshells lowered fares and introduced dozens of upstart airlines to the market. Hooray for capitalism?

Well, for a while. But today, those low fares are a memory, and so are all those cute little entrepreneurial airlines. And the reason, as Longman and Khan are not the first analysts to point out, is that networked industries like air travel are “natural monopolies.” Any form of mass transportation, as well as utilities like sewer, water, and electric power, cannot provide what is essentially a vital public service and, at the same time, conform to conventional free-market principles.

“And when it comes to such natural monopolies that are essential to the public, there is no equitable or efficient alternative to having the government regulate or coordinate entry, prices, and service levels — no matter how messy the process may be,” write Longman and Khan.

My favourite analyst of our dysfunctional skies is James Fallows, an editor at the Atlantic Monthly and author of Free Flight: Inventing the Future of Travel . I asked Fallows about the growing crisis in air travel and air freight, especially as it affects so many companies in midsized cities whose spokes are no longer connected to the shrinking pool of mega-hubs. Here's what Fallows told me:

    Over the past few decades, everyone has absorbed the idea that there is such a thing as too much regulation. People seem to have lost sight of the idea that there is also such a thing as too little regulation.

    We briefly learn that lesson after each new financial crisis — and then promptly forget it, or are persuaded to forget it by interested lobbyists. The current shape of the air transport system is providing another extended lesson. Like other forms of transportation — by road, rail, or water — air travel can be thought of purely as a business, but it also has profound “externality” effects on regional growth, environmental protection, and new-business formation that are not fully reflected in any airline's profit-and-loss statement.

    That's why all forms of transportation have historically been shaped both by business interests and public policy. Thirty years ago, the airlines were regulated too much. Now, too little.

21 comments on “Flying the Dysfunctional Skies

  1. Ariella
    May 9, 2012

    You end with “Thirty years ago, the airlines were regulated too much. Now, too little.”  From what I understand, though, many people don't enjoy their flights today precisely because of regulation — the regulations that require them to check in hours before takeoff and submit to invasive security checks. 

  2. bolaji ojo
    May 9, 2012

    Ariella, That may be right but how about the high cost of flying? If you don't have direct flight, you'll pay a bundle and still spend hours on the road. We can't blame everything on the regulators especially once you are on the flight. Regulators didn't tell airlines to cut food or reduce snacks or eliminate movies on medium range flights (4-6 hours). Please spread the blame.

  3. David Benjamin
    May 9, 2012

    Ariella, your irony is well-taken. In fact I'm on a Lunatic Watch List in most airports after one too many incidents of throwing things at the impassive but intrusive minions of the TSA (Thousands Standing Around). Benjamin

  4. Ariella
    May 9, 2012

    Wow, you made a watch list! Love the abbreviation, too.

  5. Ariella
    May 9, 2012

    @Bolaji That's true. Those are the choices the airlines make in the attempt to cut costs and maximize profits. It's not necessarily mean-spirited, though it may come across as such. The rising cost of fuel really does take a bite out of the airlines' bottom line, and so many have felt they have no choice but to add on fees for baggage, etc. Regulations do require that all such fees be disclosed — even government fees: Regulations are now going to even call for airlines to include government fees in fares.  http://www.usatoday.com/money/industries/travel/story/2012-01-10/Government-forcing-full-disclosure-on-airfares/52486078/1

  6. bolaji ojo
    May 9, 2012

    I bought an international ticket once and was happy I would only be paying just under $1,000 for a trip of almost 14 hours. When I proceeded to “checkout” online, the fuel surchaged slapped on it took the total to more than $1750. Had to cancel! Is somebody really going to bring “Beam me up” to real life?

  7. Ariella
    May 9, 2012

    @Bolaji That is a most unpleasant form of sticker shock! Hiding those types of fees is what got Spirit Airlines fined last year as “DOT rules require any advertising that includes a price for air transportation to state the full price to be paid by the consumer, including all carrier-imposed surcharges.  ”  I very rarely fly myself but notice other puzzline inconsistencies in the industry. For example, it ususally costs far less to fly to Florida from NY than it does to fly to Canada despite the fact that Canada is much closer. But I'm glad not to have to fly anywhere now because the last time I was on a plane, the turbulence even made the captain nervous.

  8. Anand
    May 10, 2012

    I very rarely fly myself but notice other puzzline inconsistencies in the industry. For example, it ususally costs far less to fly to Florida from NY than it does to fly to Canada despite the fact that Canada is much closer.

    @Ariella, I guess the price depends on the number of people flying between that route and on the number of flights between the routes. I guess more number of flights between the busy route brings down the cost of the travel because of competition.

  9. Anand
    May 10, 2012

    When I proceeded to “checkout” online, the fuel surchaged slapped on it took the total to more than $1750.

    @Bolaji, 75% percentage variation in the displayed priced and the actual price is unacceptable. Did you approach any higher authorities to flag this malpractice by the airline?

  10. Nemos
    May 10, 2012

    “and got a dirty look when I asked for a glass of water.” Almost all the Airline companies around the world have made cut offs in their servicing. It is sad to give a normal amount of money buying airplane ticket, and you don't even take a small snack.

  11. Susan Fourtané
    May 10, 2012

    Hi, David 

    Your first paragraph really impressed me. I used to enjoy United Airlines, and my frequent-flyer status many moons ago. I considered United one of the best airlines in the world. Learning now about the leg space problem, extra pay to check-in luggage, no blanket, etc, saddens me. I still keep my UA Mileage Plus card as a nice memory of how much I enjoyed flying United.

    As in Europe distances are so short I can't compare with any five-hour flight anymore. I can only say that I am happy to enjoy free in-flight Wi-Fi in one-hour flights.   

    -Susan 

  12. Susan Fourtané
    May 10, 2012

    Hi, Ariella

    “… the regulations that require them to check in hours before takeoff and submit to invasive security che cks.” 

    The last time I flew from the U.S. the security check was able to make me feel as if I were a terrorist. Security is Okay until it becomes too invasive, or when they start looking suspiously at you when they can't recognize a roll-on deodorant, and then ask you what that is as if it were some sort of bomb.

    -Susan  

  13. Susan Fourtané
    May 10, 2012

    Hi, Bolaji

    Yes, that's true about the high cost of flying.

    The cost of flying today doesn't limit to the cost of the plane ticket. You have to take into account expenses at the airports if you are not on a direct flight, or in the city. I don't mind the airlines not showing movies anymore, but the cuts in snacks, food, and soft drinks/tea/coffee that now many airlines offer on a paid menu is quite annoying, especially is you are paying a high price for the ticket.

    It's different when you fly an airline that offers you low-price tickets, and then you have the option of getting extra stuff on the flight if you want. This is what most of the airlines are doing in Europe. Some still give a little snack, though.

    -Susan  

  14. Susan Fourtané
    May 10, 2012

    Bolaji, 

    “I would only be paying just under $1,000 for a trip of almost 14 hours. When I proceeded to “checkout” online, the fuel surchaged slapped on it took the total to more than $1750.” 

    That's almost double the price you were going to pay, and quite shocking. It sounds to me a little suspicious, and also very disrespectful from the airline to let you know about the huge difference you would have had to pay only when you were checking out after having spent a considerable amount of time on your booking, to finally have to cancel. May I ask what the airline was? 

    -Susan 

  15. Ariella
    May 10, 2012

    @anadvy Yes, I figured that. But there is still the cost of the trip itself, which largely depends on the amount of fuel needed.  A flight of less than an hour takes up less than a flight of more than 2 hours. However, there is more competition for popular routes, which is probably the real reason the prices come down.

  16. Ariella
    May 10, 2012

    @Susan It seems a whole industry has sprung up around such regulations for acceptable carry-on items, small sized toiletries or containers that are guaranteed to fall within the TSA guidelines. And for all the safeguards, some things that are officially forbidden still slip through.

  17. Susan Fourtané
    May 10, 2012

    Ariella, yes, just some officials exaggerate a bit, and make things more difficult for the passengers, which makes no sense. 

    -Susan 

  18. David Benjamin
    May 10, 2012

    It occurs to me that the Washington Monthly article mentioned in my column ought to be available to readers. Here's the URL: http://www.washingtonmonthly.com/search2.php?search=Phillip+Longman+and+Lina+Khan%2C+Terminal+Sickness%22

    Benjamin

  19. FLYINGSCOT
    May 11, 2012

    Your article is bang on.  I firmly believe that basic services like health, transport, mail, food supply should be a balance between open market and public policy.  Luxury and non essentials should be left to the open market.  My granny taught me all I need to know about geopoliticalsocioeconomics and that is “too much of anything is bad”.

  20. Barbara Jorgensen
    May 14, 2012

    “Too little regulation” is the last phrase that comes to mind when I'm going through the airport security line, but the analysis provided here is fascinating. Air transit is crucial to all of those enternal elements you mention, not just to passenger transit. The air travel industry as a whole has teetered on the brink of bankruptcy several times, so the winnowing out process seems to be over. Too bad, because as you point out, it was the competition of smaller airlines that made air travel better, as well as keeping prices manageable.

  21. Mr. Roques
    May 15, 2012

    Too much of everything is definitely bad… but its a natural evolution. Too few competition (monopoly, etc) then a move towards a more competitive market… but then we go too far and since the barriers to go in and out of the market are so high, it makes all the players to have loses until a few can't make it anymore, then we see a more stable market and that leads to new entrants and so on… it wont stop.

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