Up, Up, and Dismay…
January 4, 2009
It’s been my lot, over the last thirty years or so, to travel a great deal, mostly by air. With accumulated mileage comes airline status, and while in one way (as one friend put it) that’s the mark of a badly-lived life, those “elite” rankings mean that, when there’s a problem, I get treated better than most… for the airlines, it’s all about keeping the business of frequent travellers like me.
So if someone with all of the rare benefits that I enjoy is finding travelling to be an increasingly-impossible trial (in the U.S., anyway; some international travel on foreign-flag carriers is still comfortable), things are bound to be bad… really bad.
During the Holiday season that’s just ending, cancellations, with all of their attendant dislocation, were up by 70% over the same period in 2007. From December 19 through December 28, U.S. airlines cancelled almost 9,000 flights, affecting over 1 million passengers, Against a backdrop of 10% fewer flights, due to the airlines’ route reductions over the last several months, those “interruptions” of passengers’ travel plans tended to be more impactful, more major than ever. (For more, see here or here).
Lest one chalk this up as a hiccup, one should note that, according to the 18th annual national Airline Quality Rating, released April 2008 (a report issued by the University of Nebraska at Omaha and Wichita State University, that ranks the largest U.S. airlines) the decline in service/quality has been steady since 2003– when the overall on-time arrivals rates was 82.1%. By contrast, in 2007:
On-time arrivals: 73%
(3% decrease vs. 2006)
Mishandled baggage: 7.01 per 1,000 passengers
(6% increase vs. 2006)
Involuntary denied boardings: 1.14 per 10,000 passengers
(13% increase vs. 2006)
Consumer complaints: 1.42 per 100,000 passengers
(61% increase vs. 2006)
And, while 2008 data’s not yet in, the experience of the year, capped by the end of December, suggests another step down. Passenger satisfaction– a measure of the experience of all of this– is even worse; it’s at the lowest level since 2001. Indeed, airlines now score lower than the IRS in customer satisfaction– and show every indication of continuing to disappoint.
Some (and on some days, much) of the aggravation can be chalked up to weather. Much of it, on a flight-by-flight basis, is maintenance-related, as aging fleets fall prey to accelerating problems. But there’s something more fundamental at work, as well– and it’s the reason why I despair of the future of air travel in the U.S.
In an earlier post, I cited James Fallows’ discussion of the John Boyd Conference, and its focus this year on the perils of optimization:
The search for efficiency and the urge to consume has set us all up like a row of dominoes – there is no buffer, no resiliency. As one problem rises it causes another. As one solution is tried it drives another problem. We all pull back and the consumer economy stalls…
The U.S. airline industry today– at least the legacy carriers that dominate it– epitomize this problem.
Back in the late 70s, Jimmy Carter was elected President, and appointed Alfred Kahn to Head the CAB (the Civil Aeronautics Board, which oversaw commercial airline fares)– and, as it turned out, to begin the wave of deregulation that rolled over the U.S. for the next 30 years. Kahn cut the airlines free to organize themselves and to compete among themselves however they wanted.
In the old days, planes (and the crews on them) tended to fly point-to-point on dedicated routes– from San Francisco, say, to New York, and on to Boston, then back again. But after deregulation, in an effort to maximize the “feed” of passengers to profitable (usually longer-haul) flights and to “optimize asset and personnel utilization,” these airlines organized their routes in a hub-and-spokes configuration: passengers travel from point A to point B via hub C, where they change planes (unless they’re travelling from a very remote point A, say Santa Barbara, to a really rural point B, say Asheville, in which case there can be two changes involved).
The airline industry was building on the success of Delta, a upstart at the time, which had adopted Atlanta as a hub in the 50s in an effort to compete with their (then much bigger) rival, Eastern. Meantime, earlier in the 70s, Fred Smith had used a hub-and-spokes to famously good effect in building FedEx. and indeed, early returns were terrific: profits of the airlines that pursued the strategy rose, even as air fares fell and routes multiplied. Everyone was happy… except for the carriers who stuck to their point-to-point guns: their business suffered, and they became acquisition targets for the rapidly-expanding “wagon wheel” carriers (…and except for Braniff, which pursued the hub/spokes strategy too aggressively, over-extended, and Eastern, whihc was just plain stupidly managed; both went bankrupt.)
As the 70s became the 80s, then the 90s, the analysts at the airlines refined their scheduling, tuning it to make ever more efficient use of plans and crews. The FedEx model of yo-yoing feeders into a hub gave way to an intricate web of planes and crews, all allocated separately to maximize their use. As a major airline CEO responded to me back in the 80s, when I suggested an increase in customer service as a way of differentiating his carrier, “Nice idea– but it’s all about price, so it’s all about cost.”
And with each tightening turn of the screw, a little bit more slack went out of the system. Ever more frequently ever more passengers heard “Our flight to [City A] is delayed; we’re waiting for a crew that’s on the flight from [City B], and it’s running late. So, until they’re here…”, or some similar tale of systemic woe.
The newer players in the business, JetBlue and Virgin America, for example, and the likes of SouthWest, which largely avoided the hub/spoke approach, are doing relatively better (in both commercial and customer satisfaction dimensions). So why don’t the dominant carriers simply “switch back”?
Alas, all those years of tweaking the hub-and-spoke system, of optimizing, involved making hundreds of changes to personnel policies, union agreements, sourcing contracts, lease agreements, partnership/codeshare deals, airport contracts, etc., etc., etc. Like the auto companies that find, now that they finally feel the need to change, that they’re prisoners of their union/pension/dealer agreements, the dominant airlines are pretty dramatically ham-strung.
So What Do We Do?
While there may be, in the offing, leadership at the hub-and-spokes airlines sufficiently adroit to manage that extremely difficult transition, we’ve not met them yet. So, as sad as it is given the pain and dislocation that it will cause, the faster, more “natural,” and ultimately more effective path for these carriers is simply to fail. (I should be clear: I mean “fail” as in “disappear”; several of the big carriers have already tried “reorganization,” to demonstrably unsuccessful effect.) This requires no special action on our parts; airlines are busily failing on their own.
As for what civilians like us can do… In Free Flight James Fallows describes a technologically-enabled future in which air travel is safe, convenient, and comparably-priced to today’s nightmare– more like air taxis than air lines. I’m convinced that the future Jim describes is on the way… though the going is slow (see here and here, for instance).
Meantime, we can and we should patronize the newer airlines that aren’t encumbered by the rococo madness that hub-and-spokes has become. It ought to come naturally to us: they are as safe or safer, they are as cheap or cheaper, and the level of service is higher… it’s hard to characterize commercial flying on any carrier these days as a pleasure; but relatively speaking, Virgin is a treat.
It seems to me important that we make this determined shift in order to encourage these newer carriers to expand, to add routes… because unless they spread to cover more of the country, it’s going to be that much harder to get from some places to others if–when– the major hub-and-spokes carriers fail.
Now surely, the simple laws of competition ought to take care of this– and over time they will. But competition in an ingrained market like air travel isn’t simple; dominant carriers use their considerable clout– from teasing consumers with frequent flyer benefits to strong-arming airports to refuse landing slots to new entrants– to maintain their dominance… Ultimately, gravity will win; a system that can’t work will fail. But the transition to what comes next could be bloody… which is where our concerted efforts as customers come in. To the extent that we can patronize the more sensible system, it will succeed and grow. And to the extent that it grows, the failure of the old hub-and-spokes players will leave fewer folks stranded.
This is no long-term fix; any solution becomes the next problem– we have to look even further out to the prescription that Jim wrote. But making an effort to fly on airlines that are organized in a way that can work is likely to improve our chances of recovering an air travel infrastructure that operates passably well in the intermediate term… And besides, it’ll be a lot more fun.