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The business model of airlines is to shove as many people as possible into a giant tin can and deliver them from one hub to another. Despite the number of peopl

The business model of airlines is to shove as many people as possible into a giant tin can and deliver them from one hub to another. Despite the number of people and high cost of tickets, this alone is not enough to turn a profit, so the hubs are turned into high-priced shopping traps. When fuel prices are low enough, it is enough to keep the airships afloat. But it is a completely backward system of travel, where the actual travel becomes almost a secondary matter. It's all the fanfare and bazaar around it that drives the wasteful economics, and likewise the hate of it. An efficient and beloved system would turn to smaller planes and point-to-point trips. Smaller planes would allow automobile-like scaling of plane manufacture and point-to-point trips would provide a reduction in fuel costs. But we will never see it, b/c as it turns out, Capitalism is not about efficiency or catering to the common customer. Rather it is about moving around as many bits of currency as fast as possible. The airline industry is one the great examples of this.

lujim 11y ago
Traditionally the cost per seat/mile is lowest on wide bodies and skyrockets as you get towards regional aircraft. The higher (per seat/mile) cost of operating smaller planes is offset by the near poverty wages payed to regional airline crews. Maybe someday small point to point aircraft will be economical, but we aren't there yet. Southwest has done pretty well operating outside of hubs mainly due to smart management that knows when to hedge fuel costs and a fleet composed of a single type of aircraft (737).
- ju-st 11y ago
  No, narrowbodies have lower cost per seat mile because they weigh less per seat because they fly shorter routes (=less fuel and structures). Very small airplanes have the problem that many costs don't scale linearly like the wage for 2 pilots, structural weight, efficiency of combustion engines. I found this Wikipedia article interesting... https://en.wikipedia.org/wiki/Fuel_economy_in_aircraft#Example_Values https://en.wikipedia.org/wiki/Fuel_economy_in_aircraft#Examp...
  - lujim 11y ago
    Yeah agreed. That chart is great, but it's not telling the whole story. If you take a 747-400, 757, 737, and a CRJ (1 fuel stop) move a full load of passengers 3000 miles the widebodies will have better seat/mile costs. That chart compares the seat/mile of a 737 going 1000 miles to a 747 going 6000 miles. If you flew a 737 6000 miles (with stops of course) the seat/mile cost would be huge. Similarly a Cessna 150 could get you a better seat/mile cost than a CRJ if you're going 30 miles. A 747-400 going 6000 miles nonstop will have tremendous first hour fuel burns because it's carrying... tons of fuel. Each extra pound of fuel you carry requires that you take on.... yup more fuel. It compounds.
jessaustin 11y ago
I'm sympathetic to this sort of critique, but my impression after years of observing this industry is that anything that makes air travel less insane also makes it less affordable, so there is strong pressure toward insanity. It doesn't seem odd that a market for expensive short-term services would be like that, or at least would have a segment like that. After all the utopia you envision exists for those who are willing to spend more, e.g. on fractional ownership.
- lujim 11y ago
  Until a technological leap as large as the move from piston engines to turbine engine occurs and flight crews are replaced by computers, airlines will scrape by on the narrowest margins of almost any industry. As much as it seems like the airlines torture passengers for the shear joy of it, this model is the best thing that could come out of intense competition, high overhead costs, and the prohibitively high fuel costs of the early 2000's
- mikeash 11y ago
  It's absolutely this. Airline customers care about price above all else. A price differential as low as $5 is enough to get people to switch flights, even if the pricier flight is better. It's utterly cut-throat. Why do airlines cram people in so tightly you can barely breathe? Because that lets them shave dollars off the ticket price, which attracts customers from anyone who doesn't do this. Given the choice between a cheaper flight that's less comfortable, or one that's $5 more and has more room, people will choose the former. Why do airlines not serve meals anymore unless they absolutely have to? Well, those meals aren't free. People will choose the meal-less flight for $5 less over the flight with a meal that costs slightly more. Why does everybody charge for checked luggage now? Because it lets them shave the price of a ticket. If people wanted comfort, good food, free luggage, and all that, we would have it. But what people want above all else is to pay less. And actually, airlines have gotten pretty good at segmenting the market, which for their customers (us) means we can pretty much choose our own tradeoff there. You'd rather pay more money for a larger seat? Almost all of them let you do this now. You want a meal during your flight? Just about any suitably-long flight will have meals available for purchase. You want to check bags? Go for it, just pay for it. I hate getting crammed into tiny airline seats (I'm 6'3" and barely fit) and all the rest... but every time I get on an airplane and pass those better seats, I remember that I'm just voting with my wallet here, and clearly I value the $100 or whatever it is more than the space.
sbuttgereit 11y ago
So let me get this straight: airlines, for all their pseudo-efficiencies, cannot make a profit (since they really aren't efficient) so they rely on ground concessions. But to my knowledge airlines don't really participate in the ground concession profit stream... airports do, but not airlines. Yet, all these inefficient, unprofitable airlines care about is moving currency around quickly. All of this is spite of the customers. And this is Capitalism. Sorry to say I have to disagree. Not only is the appeal to chasing dollars in the last part of your argument contradictory with the loss statement of your first point, the behaviors of customers and the role of competition under Capitalism is completely ignored or misunderstood. Under Capitalism, trades are voluntary. If the common customer were not receiving sufficient value for their travel dollar, they wouldn't be spending it on air travel. It's true, I would love to have one of those Emirates private rooms on every airline trip I take, but even a cramped little chair across country is often sufficient... when it's not I upgrade. Sometimes that trade isn't worth it: if I'm travelling between the Bay Area and Los Angeles, I'll usually drive because of the security hassle, though the cramped seats don't help the airlines either. Mind you, efficiency likely does require that I settle for the sufficient rather than the desirable... at least to keep things at a price I am willing to pay. If the current system is not sufficient, under Capitalism a few things can happen. Airlines can go bankrupt if they don't attract customers or fail to keep costs reasonably below revenue. If you see an industry where the entrenched players are old, inefficient, and failing to genuinely meet customer needs, hell that sounds like a golden opportunity! Why not create an airline that is efficient and caters to the common customer and take advantage of the vacuum? If a record label executive can do it why not some of the YC crowd? I thought this group was about entrepreneurial disruption! That is the Capitalist solution to marketplace inefficiency and it happens all the time. So I have to reject your premise about what Capitalism is or is not about: your statement just doesn't make sense nor does it bear up under study of the facts. I suspect that the reason the airline industry is so apparently FUBAR is because it's not so easy to achieve that ideal you envision for it, at least not without stealing money from some people to subsidize the travel of others.
- SilasX 11y ago
  >But to my knowledge airlines don't really participate in the ground concession profit stream... airports do, but not airlines They don't participate directly, but they're still economically coupled the concessions (and various other surcharges like for taxis): to the extent that airports can charge extra for frills, they don't have to charge for the landing spots. The ability to do so may be what makes them viable (that landing charges + surcharges can cover operating costs).

lujim 11y ago

Traditionally the cost per seat/mile is lowest on wide bodies and skyrockets as you get towards regional aircraft. The higher (per seat/mile) cost of operating smaller planes is offset by the near poverty wages payed to regional airline crews. Maybe someday small point to point aircraft will be economical, but we aren't there yet. Southwest has done pretty well operating outside of hubs mainly due to smart management that knows when to hedge fuel costs and a fleet composed of a single type of aircraft (737).

ju-st 11y ago
No, narrowbodies have lower cost per seat mile because they weigh less per seat because they fly shorter routes (=less fuel and structures). Very small airplanes have the problem that many costs don't scale linearly like the wage for 2 pilots, structural weight, efficiency of combustion engines. I found this Wikipedia article interesting... https://en.wikipedia.org/wiki/Fuel_economy_in_aircraft#Example_Values https://en.wikipedia.org/wiki/Fuel_economy_in_aircraft#Examp...
- lujim 11y ago
  Yeah agreed. That chart is great, but it's not telling the whole story. If you take a 747-400, 757, 737, and a CRJ (1 fuel stop) move a full load of passengers 3000 miles the widebodies will have better seat/mile costs. That chart compares the seat/mile of a 737 going 1000 miles to a 747 going 6000 miles. If you flew a 737 6000 miles (with stops of course) the seat/mile cost would be huge. Similarly a Cessna 150 could get you a better seat/mile cost than a CRJ if you're going 30 miles. A 747-400 going 6000 miles nonstop will have tremendous first hour fuel burns because it's carrying... tons of fuel. Each extra pound of fuel you carry requires that you take on.... yup more fuel. It compounds.

jessaustin 11y ago

I'm sympathetic to this sort of critique, but my impression after years of observing this industry is that anything that makes air travel less insane also makes it less affordable, so there is strong pressure toward insanity. It doesn't seem odd that a market for expensive short-term services would be like that, or at least would have a segment like that. After all the utopia you envision exists for those who are willing to spend more, e.g. on fractional ownership.

lujim 11y ago
Until a technological leap as large as the move from piston engines to turbine engine occurs and flight crews are replaced by computers, airlines will scrape by on the narrowest margins of almost any industry. As much as it seems like the airlines torture passengers for the shear joy of it, this model is the best thing that could come out of intense competition, high overhead costs, and the prohibitively high fuel costs of the early 2000's
mikeash 11y ago
It's absolutely this. Airline customers care about price above all else. A price differential as low as $5 is enough to get people to switch flights, even if the pricier flight is better. It's utterly cut-throat. Why do airlines cram people in so tightly you can barely breathe? Because that lets them shave dollars off the ticket price, which attracts customers from anyone who doesn't do this. Given the choice between a cheaper flight that's less comfortable, or one that's $5 more and has more room, people will choose the former. Why do airlines not serve meals anymore unless they absolutely have to? Well, those meals aren't free. People will choose the meal-less flight for $5 less over the flight with a meal that costs slightly more. Why does everybody charge for checked luggage now? Because it lets them shave the price of a ticket. If people wanted comfort, good food, free luggage, and all that, we would have it. But what people want above all else is to pay less. And actually, airlines have gotten pretty good at segmenting the market, which for their customers (us) means we can pretty much choose our own tradeoff there. You'd rather pay more money for a larger seat? Almost all of them let you do this now. You want a meal during your flight? Just about any suitably-long flight will have meals available for purchase. You want to check bags? Go for it, just pay for it. I hate getting crammed into tiny airline seats (I'm 6'3" and barely fit) and all the rest... but every time I get on an airplane and pass those better seats, I remember that I'm just voting with my wallet here, and clearly I value the $100 or whatever it is more than the space.

sbuttgereit 11y ago

So let me get this straight: airlines, for all their pseudo-efficiencies, cannot make a profit (since they really aren't efficient) so they rely on ground concessions. But to my knowledge airlines don't really participate in the ground concession profit stream... airports do, but not airlines. Yet, all these inefficient, unprofitable airlines care about is moving currency around quickly. All of this is spite of the customers. And this is Capitalism. Sorry to say I have to disagree. Not only is the appeal to chasing dollars in the last part of your argument contradictory with the loss statement of your first point, the behaviors of customers and the role of competition under Capitalism is completely ignored or misunderstood. Under Capitalism, trades are voluntary. If the common customer were not receiving sufficient value for their travel dollar, they wouldn't be spending it on air travel. It's true, I would love to have one of those Emirates private rooms on every airline trip I take, but even a cramped little chair across country is often sufficient... when it's not I upgrade. Sometimes that trade isn't worth it: if I'm travelling between the Bay Area and Los Angeles, I'll usually drive because of the security hassle, though the cramped seats don't help the airlines either. Mind you, efficiency likely does require that I settle for the sufficient rather than the desirable... at least to keep things at a price I am willing to pay. If the current system is not sufficient, under Capitalism a few things can happen. Airlines can go bankrupt if they don't attract customers or fail to keep costs reasonably below revenue. If you see an industry where the entrenched players are old, inefficient, and failing to genuinely meet customer needs, hell that sounds like a golden opportunity! Why not create an airline that is efficient and caters to the common customer and take advantage of the vacuum? If a record label executive can do it why not some of the YC crowd? I thought this group was about entrepreneurial disruption! That is the Capitalist solution to marketplace inefficiency and it happens all the time. So I have to reject your premise about what Capitalism is or is not about: your statement just doesn't make sense nor does it bear up under study of the facts. I suspect that the reason the airline industry is so apparently FUBAR is because it's not so easy to achieve that ideal you envision for it, at least not without stealing money from some people to subsidize the travel of others.

SilasX 11y ago
>But to my knowledge airlines don't really participate in the ground concession profit stream... airports do, but not airlines They don't participate directly, but they're still economically coupled the concessions (and various other surcharges like for taxis): to the extent that airports can charge extra for frills, they don't have to charge for the landing spots. The ability to do so may be what makes them viable (that landing charges + surcharges can cover operating costs).