4 ms·

These days, it's not the legacy. It is mostly regulation pushed by Chuck Schumer[1]. Predictably, the policy has made it much more profitable to outright cance

by nanis 9y ago

These days, it's not the legacy. It is mostly regulation pushed by Chuck Schumer[1]. Predictably, the policy has made it much more profitable to outright cancel flights at the first sign of trouble. Add to that the consolidation that occurred since then, we are left with: > Four carriers with over 80% of domestic capacity: > - Three large, hub-oriented, global legacy carriers (American, United, Delta) > - One large, point-to-point oriented ‘low cost’ carrier (Southwest) > Six much smaller carriers, each with less than 5% of the market > - Three smaller, primarily hub-oriented carriers (Alaska, jetBlue, Hawaiian) > - Three much smaller point-to-point travel merchandisers, heavily reliant on ancillary fees, so-called ‘ultra low cost carriers’ or ‘ULCCs’ (Spirit, Frontier, Allegiant) The main legacy are the huge health care and retirement obligations. Baumol (1982) discussed the airline industry as an example of a contestable market[3]. Free entry & exit no longer applies. [1]: https://www.nytimes.com/2009/12/22/business/22passengers.html https://www.nytimes.com/2009/12/22/business/22passengers.htm... [2]: https://www.eyefortravel.com/revenue-and-data-management/us-airline-consolidation-what-happens-next https://www.eyefortravel.com/revenue-and-data-management/us-... [3]: https://econpapers.repec.org/article/aeaaecrev/v_3a72_3ay_3a1982_3ai_3a1_3ap_3a1-15.htm https://econpapers.repec.org/article/aeaaecrev/v_3a72_3ay_3a...

toomuchtodo 9y ago
The US airlines industry is a public utility that attempts to operate (poorly) as private corporations.
- hueving 9y ago
  Not quite because adding new companies and routes is significantly easier than laying new utilities.
  - toomuchtodo 9y ago
    It barely ever turns a profit over the long term was my point.
bogomipz 9y ago
>"These days, it's not the legacy. It is mostly regulation pushed by Chuck Schume" The OPs comment was that the airlines were burdened by legacy from the 1950s. Mr Schumer's legislation is quite recent. Additionally the legislation "Passenger Bill of Rights" is quite reasonable - let your customers off the plane after 3 hours of delay. It's pretty easy to avoid that penalty. It's also worth pointing out that legislation was in response to unreasonable practices by the airlines in the first place. I'm not sure why it is even relevant here. >"The main legacy are the huge health care and retirement obligations" How is this relevant to discussion about the practice of intentionally overbooking?
- nanis 9y ago
  So-called "Passenger Bill of Rights" takes away options from passengers[1]. "We found that for every minute of tarmac time being saved there is, on average, a three-minute increase in the total passenger delay," said Vikrant Vaze, an assistant professor at Dartmouth's Thayer School of Engineering who co-authored the study. Adopted in 2010, the Transportation Department rule requires that passengers be allowed to deplane within three hours of boarding or landing for domestic flights. Airlines are subject to fines of up to $27,500 per passenger for violations. Hoping to avoid fines, airlines have been quicker to pull the plug on flights, Vaze said. That forces passengers to scramble to find another flight to reach their destination, something that has become increasingly difficult as industry consolidation reduces the number of available seats on planes. Flights that are not canceled have to start lining up anew after letting passengers deplane and then reboard, adding to the ultimate delay. "Most of these extra delays are being felt by those exact same passengers," Vaze said. "It's just that they're not on the tarmac." [1]: http://www.chicagotribune.com/business/ct-tarmac-delays-0105-biz-20160104-story.html http://www.chicagotribune.com/business/ct-tarmac-delays-0105...
  - bogomipz 9y ago
    Again there is no reason the airlines can't let people off the plane after a couple of hours in order to avoid penalties. And it's unclear why you are holding this up as "burdensome" legislation.
classichasclass 9y ago
I'm not sure that "cancel[ling] flights at the first sign of trouble" is the issue either. I had my flight on Air New Zealand cancelled after four hours in the air, forcing us to turn back due to a mechanical problem. After three hours on the ground, they gave up. I ended up with a night's stay in Auckland, a free breakfast, a new flight to LA first thing in the morning and double points. I'll probably be an Air NZ customer for life as a result. Even United can sometimes rise to the occasion. They cancelled our flight to San Francisco because of SFO's typical shenanigans with fog and not allowing small commuter jets in. We got rebooked the next day, though all they had were economy class seats. We said fine, at least we're on our way. We got upgraded at the gate and we didn't even ask for it. If a company wants to make customer service a top priority, they can do it.

by nanis 9y ago

toomuchtodo 9y ago

The US airlines industry is a public utility that attempts to operate (poorly) as private corporations.

hueving 9y ago
Not quite because adding new companies and routes is significantly easier than laying new utilities.
- toomuchtodo 9y ago
  It barely ever turns a profit over the long term was my point.

bogomipz 9y ago

>"These days, it's not the legacy. It is mostly regulation pushed by Chuck Schume" The OPs comment was that the airlines were burdened by legacy from the 1950s. Mr Schumer's legislation is quite recent. Additionally the legislation "Passenger Bill of Rights" is quite reasonable - let your customers off the plane after 3 hours of delay. It's pretty easy to avoid that penalty. It's also worth pointing out that legislation was in response to unreasonable practices by the airlines in the first place. I'm not sure why it is even relevant here. >"The main legacy are the huge health care and retirement obligations" How is this relevant to discussion about the practice of intentionally overbooking?

nanis 9y ago
So-called "Passenger Bill of Rights" takes away options from passengers[1]. "We found that for every minute of tarmac time being saved there is, on average, a three-minute increase in the total passenger delay," said Vikrant Vaze, an assistant professor at Dartmouth's Thayer School of Engineering who co-authored the study. Adopted in 2010, the Transportation Department rule requires that passengers be allowed to deplane within three hours of boarding or landing for domestic flights. Airlines are subject to fines of up to $27,500 per passenger for violations. Hoping to avoid fines, airlines have been quicker to pull the plug on flights, Vaze said. That forces passengers to scramble to find another flight to reach their destination, something that has become increasingly difficult as industry consolidation reduces the number of available seats on planes. Flights that are not canceled have to start lining up anew after letting passengers deplane and then reboard, adding to the ultimate delay. "Most of these extra delays are being felt by those exact same passengers," Vaze said. "It's just that they're not on the tarmac." [1]: http://www.chicagotribune.com/business/ct-tarmac-delays-0105-biz-20160104-story.html http://www.chicagotribune.com/business/ct-tarmac-delays-0105...
- bogomipz 9y ago
  Again there is no reason the airlines can't let people off the plane after a couple of hours in order to avoid penalties. And it's unclear why you are holding this up as "burdensome" legislation.

classichasclass 9y ago

I'm not sure that "cancel[ling] flights at the first sign of trouble" is the issue either. I had my flight on Air New Zealand cancelled after four hours in the air, forcing us to turn back due to a mechanical problem. After three hours on the ground, they gave up. I ended up with a night's stay in Auckland, a free breakfast, a new flight to LA first thing in the morning and double points. I'll probably be an Air NZ customer for life as a result. Even United can sometimes rise to the occasion. They cancelled our flight to San Francisco because of SFO's typical shenanigans with fog and not allowing small commuter jets in. We got rebooked the next day, though all they had were economy class seats. We said fine, at least we're on our way. We got upgraded at the gate and we didn't even ask for it. If a company wants to make customer service a top priority, they can do it.