As anyone who reads this blog knows, I’m a big free enterprise advocate. Still, there are certain businesses where free enterprise just isn’t working, or perhaps it just can’t work for some reason. One of those areas is airlines.
Airlines were heavily regulated through the 1970’s, and despite the government setting prices, or perhaps because of it, it was typical for flights to cost $1000 or more. There were just a few big airlines and little competition since the prices were basically the same no matter the airline you flew. Note that this is fairly typical in a regulated industry where the companies in the industry will act like the regulations place a significant burden on them and yet they actually like the regulations because they have the resources to comply but the high costs of compliance keep competitors out of the market. Consumers think the government is looking out for them but really the effect is to keep prices high and service quality low because of the lack of competition and the ability to blame everything on the regulations.
Then came deregulation and airlines like Southwest in what I like to call the golden age of air travel. Airlines like United, American, and Delta always seemed elitist with their first class passengers who were allowed to board early even though they were at the front of the plane and everyone else would need to traipse by them. They also had the little curtain so they wouldn’t need to look at the chattel behind them. They even had their own restroom so they wouldn’t need to pee with the common folk.
Part of what always gulled me (and still does) is that a lot of the people sitting there in first class were people working for the companies of which I was a shareholder. I was the owner of their company and they were the employee, and yet they were using my money to fly first class while I was stuck in coach. I’m sure that most of the people in first class are either people flying with a business paying for their tickets or those annoying people who go up and ask for an upgrade before the flight, many of whom are also flying for business and therefore have a lot of airline miles that I paid for. After all, there can’t be that many people stupid enough to pay an extra $1000 for china dishware and “free drinks”, can there? Anyone out there fly first class and actually pay for it? But I digress.
Then there came Southwest with their boarding groups instead of assigned seats. They seemed to be more of a people’s airline, where everyone was relatively equal. They also tended to do things that encouraged people to do things that helped everyone else on the plane. You could get a good seat just by showing up an hour ahead of time at the gate, which helped the plane leave on time since you don’t have everyone waiting for you to saunter onto the plane and find a place for your two oversized bags that you really should have checked. The other thing they had was much lower prices than the other airlines. Even their flight attendants and pilots seemed happier.
I remember when I first flew Southwest. We were going from Tucson to San Jose for a student conference. A friend was checking on airline fares and I expected something like $500 each. He said that it was $99, for both of us, both ways! I was incredulous. For the next several years one was able to fly all over the country, rarely paying more than a couple of hundred dollars each way.
Slowly but surely, however, elitism crept into Southwest. First they eliminated the crowd entry I was so fond of because it meant you didn’t need to stand in line for an hour to get a chance at being near the front of the boarding group. Instead, they put in the cattle gates where you were in a line with little chance of getting anything but the end of the boarding class unless you were willing to stand in line for a half hour or more. They then made it worse by assigning actual numbers in the boarding group and then selling out the best numbers in the group for an extra fee so you have no chance of getting on near the front unless you paid an extra fee. Yes, elitism has arrived at Southwest. The worse part is they have eliminated the incentive to show up early and be ready to board. Like the other airlines, you will get the same seat whether you are their an hour early or just show up as they start boarding.
This is not to say that things are any better at the other airlines. They finally have obtained their lifelong dream of nickel-and-diming their customers for every little thing, from $3.00 for a bag of M&M’s or a soda, to even $25-$100 for checking a bag. So instead of encouraging people to check their bags, which would make the security lines go faster and make it less likely that the flight would be delayed because people can’t find a place to put their bags once they get on the plane, they are encouraging them to drag everything onboard by penalizing the people nice enough to check their bags and then wait for them another 30 minutes after their flight is in to retrieve them.
If you’re like me, you’ve stopped flying if you are within about 7 or 8 hours of your destination if you drive. Actually, since I live about an hour and a half away from the airport, it is actually faster for me to drive for those types of trips by the time I drive to the airport (1.5 hours), find parking (15 minutes), take the shuttle (15 minutes), check my bags (15 minutes), go through security (30 minutes), wait at the gate (1.5 hours), fly to the destination (2 hours), collect my bags (1/2 hours), get a rental car (1/2 hour), and drive to the hotel (1/2 hour). I am also not eager to fly and will drive instead even for longer trips just because of the cost and hassle involved. It seems just like the bad old days when the airlines really didn’t like their customers and could care less if they pleased them or not.
If you aren’t flying for these reasons, the airlines may eventually see their revenues drop off as more and more of us stop flying. They could probably sell a lot more tickets if they did a better job with customer service and didn’t gouge their customers, but they probably think all of those fees are a gold mine for them. When people stop flying, which will happen as they make it less and less pleasant to fly, the airlines will probably think the drop in paying customers is just due to economic conditions or other factors that are beyond their control. No, the issues that will cause people not to fly are very much within their control.
Maybe if we would call the airlines or write a letter each time we don’t take an airline because of the hassle and fees we told them about it, rather than just not flying, they might start to see the issues and work to correct them. So, next time you decide to drive instead of fly, drop the airline you would have taken a note and let them know why. If they get enough notes, maybe things will change. Then again, maybe they won’t. Then we’ll just need to wait for the next SouthWest Airlines to come along and disrupt the industry. Maybe the existing SouthWest will remember its roots as well.
By the way, for about $10 you could get a box of about 20 packs of M&Ms. Next time you fly US Airways or one of the others charging $3.00 for a bag of M&Ms, think about getting a box and passing them out to your fellow passengers. For $10 you could cost the airline $600. Now that’s leverage.
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Disclaimer: This blog is not meant to give financial planning advice, it gives information on a specific investment strategy and picking stocks. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.