Why American Airlines' Big Public Sad Meltdown is Good

Posted April 11, 2008 | 05:23 PM (EST)



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It's one of those weeks where you should be happy to be you. Cause you could be this guy. Or you could be one of the thousands of displaced refugees formally known as American Airlines passengers.

As a (too) frequent flier of AA myself -- way to go three-for-three trips losing my bags! -- my heart goes out to all the stranded travelers. Though, I'm sure the American Airlines automated phone systems and the over-worked, underpaid employees are doing everything they can to make it seem as though they can actually do something for you.

By the way, AA CEO Gerald Arpey says he takes "full responsibility" for failing to meet FAA inspection standards which caused the cancellations. So I'm sure any minute now he's going to break off a piece of his reported $10,201,059 compensation to help pay for the mess. Any minute.

But while you wait...

If you travel with any regularity you know aside from the AA mess this is a crappy time all around for the airline industry.

ATA, Aloha Airlines and Skybus folded within days of each other. With oil toping $110.00 a barrel and fuel the single biggest expense of airlines, expect a few more to be crushed shortly. Add to the mix the safety issues with American and Southwest Airlines. And add to that The Annual Quality Rating Survey conducted by the Aviation Institute at the University of Nebraska at Omaha and Wichita State University (or, TAQRS by TAIATUNO&WSU for short) which found that customer complaints over issues like lost bags and delays are up 60% year to year.

It pretty much seems like air travel as we know it is done.

Thank God.

This meltdown is not the horrid end of getting from here to there by plane. What's happening now is more like a self-cleaning oven in that you're not really sure what's going on inside the thing, but you know when you open the door in the morning all that crap that was there before is gonna be gone.

And when the crap is gone -- crap being airlines that can't compete -- there will be fewer carriers carrying fewer people.

Fewer flights means less fuel used, less pollution, less congestion in the air and less noise and traffic around airports. With an antiquated system that carried 769.4 million domestic and international passengers in 2007, fewer flights means better service, more accurate departure and arrival times and, hey, know what? Your bags might even get there when you do.

What do we lose? Convenience. There might not be the flight you want leaving right....NOW! But even that might just be a paper loss. If the airlines can reduce the number of delays and the number of people bumped from overbooked flights, then when you get where you're going might actually be when you're supposed to be there.

So, luck to you stranded American passengers. And know that next week Tuesday when you eventually get where you're going, the beginnings of a better air transport system might actually be waiting for you.


 

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AA deserves this meltdown.

However this post is overly optimistic; Idon't know that much will change over the long haul.

favoriteFavorite Flag as abusive Posted 08:04 PM on 04/12/2008

I don't think that Americans will change their individualistic thinking (or give up their private cars, or retarded way of doing business by flying everywhere) until they have no choice.

The cheap oil party is over. It's not going back down under a hundred dollars a barrel:

http://futures.tradingcharts.com/marketquotes/index.php3?market=CL

favoriteFavorite Flag as abusive Posted 05:34 PM on 04/12/2008

There is a term that nearly describes your very point: Creative Destruction.

And I agree, we are probably way too overdependent on air travel and way too invested in the infrastructure that supports air travel. These events should be looked upon as an opportunity to start weaning off air travel and start investing in high-speed trains. Of course travel by air shouldn't be scaled too far down, it would obviously have an important role, but we need to get to the point where we don't need all the mega-hub airports we are currently trying to support.

favoriteFavorite Flag as abusive Posted 03:44 PM on 04/12/2008

It is time to re-regulate the Air Lines. I fault the Bush Administration and the Reagan administration for de-regulation which led to lax Government oversite and poor safety practices of the Airline Industry.
If the Air Lines industry continues to put profits ahead of safety then it is time for us to Nationalize the industry so that the taxpayers can reap the benefits of Save affordable Air Travel.

favoriteFavorite Flag as abusive Posted 01:55 PM on 04/12/2008

Blame Reagan and the greed is good and devil take the himdmost of raw capitalism which has caused the subprime fiasco and taxpayers bailing out the rich. Bush is just one who allowed rules and compassion to go out the window. Government has a purpose. They are the ones who see that water is good for drinking, that public land is for the public and not the bottom line of corporations who destroy it and leave the taxpayer to clean up after them. It is raw capitalism.

favoriteFavorite Flag as abusive Posted 05:40 PM on 04/12/2008

Airline travel may become as obsolete as the snail-mail letter. With IM and meeting software there is really no reason for much of the business travel that goes on today. Is it coincidence that the companies that cater more toward customer service, like JetBlue and Southwest, are doing the best?.

favoriteFavorite Flag as abusive Posted 01:42 PM on 04/12/2008

The reason the airline industry is so terrible is because the prices are too low to pay for a decent service. I can get a round-trip flight from Detroit to Sarasota for about $330, how can they make any money at that price? When the airlines were regulated the seats had more room, the flights weren't crowded and they gave you food on real plates with silverware, even in the back of the bus. Prices were higher but it was a very pleasant experience and worth the extra money.

favoriteFavorite Flag as abusive Posted 12:34 PM on 04/12/2008

The airlines are just a symptom of a failing economy. Everything you see now has to
do with the stupididest, most obtuse political system the U.S. has ever faced. This is what can be expected from the "New feudal system" Where wealth is gravitiating out of the general population
and into the hands of a relative few. The rich fiddle while rome burns. While thousands (soon
millions) are losing their homes. Sadly the ones who are destroying our economic way of life
are simultaneously, vastly profiting from it..

favoriteFavorite Flag as abusive Posted 11:46 AM on 04/12/2008

This is the time to FINALLY develop a real rail system like Europe.

The airline and oil company lobbyists are finally going lose control over the goverment that prevents a energy kinder system like electric trains from existing. Yes!

favoriteFavorite Flag as abusive Posted 11:11 AM on 04/12/2008

and

how does

the free market

replace the airlines

that are lost does the gas

get cheaper

heh...

favoriteFavorite Flag as abusive Posted 10:53 AM on 04/12/2008

The free market rebuilds the railroads. The free market views canals as an incredibly cheap way to move heavy carg which doesn't need to arrive yesterday.

favoriteFavorite Flag as abusive Posted 05:42 PM on 04/12/2008

"So, luck to you stranded American passengers. And know that next week Tuesday when you eventually get where you're going, the beginnings of a better air transport system might actually be waiting for you."
"MIGHT" "MIGHT" "MIGHT" "MIGHT" "MIGHT" "MIGHT" "MIGHT" "MIGHT"

So what your saying is less SUPPLY and more DEMAND is a good thing for the consumer.
Brilliant! Georg W. Bush economics 101. You should run for President. Now I know why your such a devote supporter of the Republican party.

favoriteFavorite Flag as abusive Posted 10:49 AM on 04/12/2008


Since when does less competition translate into better service?
Fuel price and being screened like a terrorist aside, air trvel nose dived when ticket prices fell low enough to let the riff-raff aboard.

favoriteFavorite Flag as abusive Posted 10:45 AM on 04/12/2008

flatus;

I am happy to think you will no longer be allowed to board. Hig fuel prices have a lot of positive spin offs.

favoriteFavorite Flag as abusive Posted 05:44 PM on 04/12/2008

Thank goodness the airlines are failing. Now the remaining ones still can't afford to both maintain and fuel their aircraft. The customer base becomes less and less thrilled with the ORDEAL of air travel. Customer service is a thing of the past. I'll pay for the fuel and lodging of a 3 day trip from CT to TX to see my father, rather than face the limitless paranoid security hoops and self-appointed Nazis that is the current airline industry.
I couldn't be the only person that has given up commercial flying since the "security for profit" people took over.
Thanks John, it sure looks rosey now.

favoriteFavorite Flag as abusive Posted 09:59 AM on 04/12/2008

I welcome the collapse of the airlines. So whatever happened to a good rail system? Oh I know, the lobbyists got rid of it for cars, which kill tens of thousands a year, and passenger planes. At one time, from Chicago's Grand Central Station, any train could almost reach any part of the U.S. in one day. Yep, folks we've come a long way, from civilized rail trail travel to packed freeways and flight delays. This is progress?

favoriteFavorite Flag as abusive Posted 09:57 AM on 04/12/2008

To be fair, the railroads wanted out of the passenger business so they could concentrate on hauling freight, which is much more profitable.

favoriteFavorite Flag as abusive Posted 04:07 PM on 04/12/2008

I don't see how this is going to make the air travel industry any better. It just means that there will be MORE inconveniences for travelers - less flights, more crowded flights, worse service (less competition is ALWAYS bad), reductions in services to the planes because of cost, etc.

Also, I'm sure the government will bail out the bigger airlines, with taxpayer money, as they've done before. This isn't going to make anything better at all.

more on this at my blog...

favoriteFavorite Flag as abusive Posted 09:06 AM on 04/12/2008

Sounds to me like it's the right time for a national high speed rail system.

favoriteFavorite Flag as abusive Posted 08:45 AM on 04/12/2008

If you were ever skeptical about whether our air transportation system is broken, then maybe this will convince you. I think a big part of the problem is simply capacity -- the system is not designed for this many people and this many flights. The other part is over-regulation by the FAA. Yes, the industry is supposedly deregulated, but the TSA and FAA have their hands in every inch of getting from here to there. And every time I take a flight, part of me believes that the terrorists have won. Of course, most sane people want the airlines to be safe, but as system capacity has shrunk and demand has skyrocketed, regulations have only grown broader and more impractical. So the government expects airlines to comply with all these regulations, but takes a hands-off approach when it comes to subsidizing the industry. The chaos is not a result of the free market working itself out because the airlines do not have a free market -- like it or not, they are intimately tied to many layers of government regulation. It seems to me that we need to make a choice here.

favoriteFavorite Flag as abusive Posted 08:01 AM on 04/12/2008

Deregulation has been a complete disaster for the airlines, and the flying public. Just like deregulation has been a disaster for so many other aspects of American life. I used to swill the kool-aid of the free-market, but no more. The last two decades have proven to me that American businesses, large and small, can't be trusted. They don't give a damn about America, American workers or American citizens (unless they're investors). We need strong re-regulation of all major industries in the countries.

favoriteFavorite Flag as abusive Posted 07:56 AM on 04/12/2008

Jeesh, the number of grammatical typos in my post are embarrassing!

favoriteFavorite Flag as abusive Posted 02:29 AM on 04/12/2008

I despise airline travel. It's THE worst form of travel ever invented. It's fast. That's it's ONE positive quality. It's fast. Unless of course the airlines overbooked or their grounded or it rains, then it could take several hours to several days longer. You must travel to the edge of town to get to the airport, you're virtually strip searched to get to the airplane, you're shoehorned into narrow, what feels like cheap shoddy bus seats. God forbid they should serve food. It could kill you. The air dries your head out and gives you a sore throat. You fellow passengers act as if you're all in a big huge elevator as they sit stone faced, terrified that someone, that they, will fart. The reading material is geared to corporate American tastes. You can not smoke, anywhere. Airline travel sucks.

Bring back the trains!

favoriteFavorite Flag as abusive Posted 02:27 AM on 04/12/2008

Airline travel is one giant, polluting, degrading, slab of corporate/government welfare. The world would be much better off if we had a little less 'convenience'. Flying shouldn't be 'discount'. And airlines shouldn't be subsidized. That alone would cut down air traffic and put people back on trains. And even if Amtrak is subsidized by the Government (since the government subsidized the auto and highway industries and put the passenger trains out of competetive business), it is such a leaner, cleaner, nicer form of travel.

favoriteFavorite Flag as abusive Posted 08:17 AM on 04/12/2008

took me 49 hours to get from columbus to portland, oregon last year. six cities, lines, frustrated people, lost luggage, and four hours trapped in an amer airlines plan on the tarmac, and finally, they
SOLD people crackers and cheese for five bucks. a pox on a.a. and all the other b.s. airlines. i hope they all go bankrupt. eff 'em.

favoriteFavorite Flag as abusive Posted 05:00 AM on 04/12/2008

A friend of mine just got back from Portland, Oregon to Dayton, Ohio via Greyhound and had a great time traveling. He said that the only problem with the bus is the loud, obnoxious white hillbillies (we're both white, by the way).

favoriteFavorite Flag as abusive Posted 10:46 AM on 04/12/2008

For those awake and aware (probably two of you here, maybe), the airlines' demise is due to Peak Oil. This is just the tip of the iceberg, folks. Get ready.

favoriteFavorite Flag as abusive Posted 01:48 AM on 04/12/2008

Ridley's right! Who the needs an American airline industry...we can let the Europeans and Asians carry the heavy lifting for us! Right...and they will most certainly pump our money back into our economy (who cares if this money comes in the form of loans). Along with our textile, auto, steel, and whatever industry...who needs them! All that matters to folks such as Ridley are the blessed free markets. Nope, this recent industry melt down is exactly what America needs at this time...and American passengers are sooo fortunate that the FAA decided to do their job after 8 years of sitting around doing not much of anything. Yep, Americans ought to be thankful that Reagan began the dwath of the airline industry in the US 27 years ago....Congress should name a few more airports after the man.

favoriteFavorite Flag as abusive Posted 01:08 AM on 04/12/2008

I think the FAA should have let the airlines alone. If the planes crash then there would be less people wanting to fly which then means it would be easy to get a seat with fewer delays. I really like the way I think> I bet I would make a good airlines exec!

favoriteFavorite Flag as abusive Posted 12:07 AM on 04/12/2008

One flaw in your business plan is that capacity would be reduced with each crash. Although there is a pretty good supply of parked planes in that desert storage facility that your airline could draw upon for the first few years.

Another inconvenience would be that it would really cause problems with your ontime performance statistics, not to mention lost baggage.

favoriteFavorite Flag as abusive Posted 12:31 AM on 04/12/2008

The on time stats are a myth anyway, so that wouldn't be an issue. If a plane is OUT it's ontime, veven if it's not OFF for another hour.

favoriteFavorite Flag as abusive Posted 06:52 AM on 04/12/2008

This problem started when the late Freddie Laker started his, unheard-of at the time, ultra low cost , no-frills air service a couple of decades ago. Since then, the passengers have felt that they deserved cheap seats, whether the companies made enough profit or not, causing airlines to cut corners to make ends meet. We all know the result of this: poor baggage control, poor maintenance , unreliable scheduling, grouchier stewardesses etc.

favoriteFavorite Flag as abusive Posted 11:33 PM on 04/11/2008

Sea is right. I have found that air travel is no more than glorified bus travel. Based on the current cost of doing business, tell me how an airline can fly from NY to Fl for $49.00. That will not fill the tank of a SUV. I have cut my air travel to a minimum, drive or train when I can. When I do fly, I get tired of watching the dregs stuff the overhead with shopping bags, eat Mc Donalds next to me, refuse to keep children under control. There are levels of homes, cars, cloths and education. There are also levels in modes of transportation,I feel some people belong on buses. Low fares have ruined the air lines and the joy of flying. Raise pricing to a reasonable pofit level and lessen the flights and overcrowding. The flying public and airlines will be better off.

favoriteFavorite Flag as abusive Posted 12:23 PM on 04/12/2008

They just better not ask for another government handout. They get a welfare check and then layoff employees while CEO's salaries, bonuses and perks improve.

We can only dream the airline companies are about to do a turn around and start providing the type of customer service due to their patrons.

favoriteFavorite Flag as abusive Posted 11:23 PM on 04/11/2008

I've worked as a consultant and spent many hours in the air (many more in the terminal) and I always wondered the same thing; why don't some of these heavy hitter consulting firms (IBM, Accenture, Microsoft etc) buy up small sagging carriers to use for employees?

This would allow the bigger airlines to focus more on the passengers who actually pay for their own ticket instead of the thousands of consultants and execs flying daily who bill their clients for travel. Small carriers could avoid bankruptcy by selling outright to corporations to use the planes for private commercial use. Carriers that offer low fares might not consistently overbook. Consultants' and executives' time waiting for flights would be a thing of the past. The benefit of a flat project travel fee could be extended to clients. And best of all, the big airlines would have breathing room to regroup.

Think of it this way: Krispy Kreme trucks are full of donuts destined for your local 7-11. They don't pick up people who need a ride to the 7-11 on the way. And you don't see Krispy Kreme using public transportation to make deliveries. Business travelers are like donuts. In order to stay hot and fresh, they need their own trucks.

favoriteFavorite Flag as abusive Posted 11:16 PM on 04/11/2008

Great business plan. You told the Donald of your idea yet?

favoriteFavorite Flag as abusive Posted 02:36 AM on 04/12/2008
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