Why you should fly the big airlines

Over the past few days, the big airline news has been the bankruptcy proceedings for Delta and Northwest. The major US airlines need no introduction. Many of us who have flown, have used one of these airlines at one point or the other. I for one and a die-hard delta fan, and have accumulated enough skymiles, to use them for a very special trip in the coming future.

 Consumers build mutually beneficial relationships with providers of goods and services

On the other hand, most of us also look for cheap flights and in recent years JetBlue, SouthWest and others have been gaining ground with rock-bottom prices, and better planes, and customer service to boot. 9/11 was the proverbial straw that broke the camel’s back when it comes to the airline industry. United and US Airways filed for bankruptcy soon after 9/11.

Sky-rocketing oil prices havent helped the airlines either. Cost-cutting is the name of the game. How many times have you flown across the continent, and been served a small pouch of peanuts or pretzels and a coke ?? Alcoholic beverages are now $4 a pop on all flights. Blankets and pillows are scarce. Interior cosmetics of many an aircraft leaves a lot to be desired.

Having flown JetBlue several times, I can surely say that they have a great product, their aircrafts are great, the snacks are worth their while, the entertainment package on-flight is great, and the air-hostesses smile genuinely

But they fly to a very few locations, as compared to the majors. Flying on busy routes takes care of filling up their seats. But not everyone lives in NYC, SFO, LAX, Miami, Chicago or Seattle. What about the people in Des Moines, Butte, Chattanooga and Tuscaloosa ? If low cost airlines start to fly there, they wont be able to offer the same low prices. That is my understanding.

This should be of concern to India too. With a plethora of new discount airlines like Air Deccan and Kingfisher, two that come to mind, the field is open for the cheap seats. Many of these airlines advertise Re. 1 seats, of course with a nearly impossible set of conditions and terms. Till now, the Indian government has a stranglehold on Foreign Ownership of Indian airlines. Sooner than later this is bound to change, and with bigger fish entering the market, and driving prices down, where will that leave Air-India and Indian Airlines.

Let me categorically state, that I for one look out for the cheapest ticket to get me from point A to point B. If I am paying for the ticket, my finances do not allow me the freedom to choose a major player all the time. And I am sure most of you are in the same boat.

Conventional consumer logic today demands that we all patronize the cheapest airline available.

In this very interesting article by Joel Widzer, argues against the whole notion of going cheap.

“Why should we reward the major U.S. airlines?

he asks and argues that without the major U.S. airlines,

“my neighbor would not be able to visit her brother twice a year in Israel; she would not have been able to explore Central and South America, taking time to become fluent in Spanish. Without the major airlines, many Americans would be unable to share Thanksgiving and Christmas with their families. “

It would be interesting to get a more educated analysis from some economists. So if you can shed some light on this, do so in the comments.

Till then read on !!

Joel Widzer
Why you should fly the big airlines

The future of American air transportation rides in the cabins of the nation’s big airlines. For more than 70 years, airlines like American Airlines, Delta Air Lines, and United Airlines have proudly served the interests of American travelers. Along the way, they have helped businesses earn trillions of dollars, worked with the government to secure our borders, and given travelers a way to explore the wonders of the world.

And what have they gotten in return? Travelers have taken advantage of airlines’ willingness to maintain competitive fares and repaid it with fleeting loyalty and indifference. At the same time, selfish labor unions have drained the big airlines’ coffers and predatory upstart carriers have poached their routes.

In other industries, consumers build mutually beneficial relationships with providers of goods and services. Wal-Mart shoppers won’t shop anywhere else, just as BMW owners won’t let anyone else service their $70,000 vehicles. These consumers are fiercely loyal, no matter their income bracket.

But when it comes to air travel, consumers toss loyalty aside in search of a better deal. I call this the “Southwest Effect” — the naive idea that the best deals will be found on Southwest Airlines, JetBlue, and other low-budget carriers, as well as on third-party Web sites. Not only do these better deals not exist, but this greedy strategy is wreaking havoc with the U.S. air travel industry.

In my opinion, it’s un-American.

Whenever travelers fly a low-cost carrier, they disrespect the contributions that the major carriers have made to the United States of America. Failing to repay the debt of gratitude we owe the major U.S. airlines is unpatriotic.

Why should we reward the major U.S. airlines?

Without the major U.S. airlines, my neighbor would not be able to visit her brother twice a year in Israel; she would not have been able to explore Central and South America, taking time to become fluent in Spanish. Without the major airlines, many Americans would be unable to share Thanksgiving and Christmas with their families.

During the past 10 years, the airline industry has been in turmoil. In that time, we lost several great American companies, including TWA, Pan Am and Eastern. Chock it up to competition — that’s the American way. The remaining big airlines have answered their challenges with innovation and reinvention — that’s also the American way. Responding to market conditions, the airlines have whittled their cost structures and profit margins to the lowest in any industry.

At the same time, the full-service airlines have continued to serve the American public with pride, especially in times of trouble and hardship. When America was terrified by the events of 9/11, the big airlines responded quickly and got passengers on their way. When winter storms pummel the Northeast, the major carriers still take you anywhere in the world. When Americans become displaced by harsh hurricanes, the major U.S. airlines offer their services and ferry those in need to safe ground.

During such difficult times, major airlines also waive their usual change fees, rebooking rules, and refund policies. Unlike other businesses, the big airlines typically forgo opportunistic practices in order to serve their customers’ needs.

Think about it. At a time when gas prices make it more expensive to drive than to fly, airlines have done their best to maintain low fares (and they have high fuel costs, too). In fact, today you can fly from coast to coast and stay in a five-star hotel for less than it costs to drive the same distance.

The major airlines are big contributors to charity, too — and not just in times of national tragedy. In fact, they routinely donate miles and services to such causes as the Make-a-Wish Foundation, the American Red Cross, cancer victims and their families, and many other worthy causes.

What is the problem here?

The scourge of the big U.S. airlines is their labor costs. Even after running the automotive industry into the ground, highly bureaucratic labor unions have yet to realize that their services are obsolete. Northwest Airlines rightly stood up to the unrealistic demands of its mechanics union, filling open positions with readily available, highly qualified mechanics with an average of 20 years experience servicing airplanes.

The striking mechanics did not have an opportunity to vote on Northwest’s final offer before union officials called the strike. Their union has no strike fund, and the workers’ last paychecks were paid weeks ago. Currently, workers are without health benefits, and these hard-working Americans are now struggling to make ends meet because the egoistical union leaders cannot see through their own foggy thought.

Forcing airlines into bankruptcy in order to renegotiate an antiquated labor contract is un-American. Relying on the courts to handle a company’s labor woes is bad business. Supporting this type of behavior is clearly not in the best interests of a free capitalist marketplace economy.

I say to the labor union: Remember the Reagan years and the air traffic controllers’ strike.

Where is this all going?

To those who think that the new low-cost carriers like Southwest and JetBlue are the future of the U.S. airline industry, I say: Think again. Will they get you to Des Moines to see Grandma at Christmas? I think not.

But Delta will.

In fact, the major airlines have maintained many unprofitable routes to responsibly serve their customers. Southwest and JetBlue cherry-picked their routes, offering limited service and poaching customers from the big carriers. With the major U.S. airlines, you can fly anywhere in the world. Southwest and JetBlue take you only where they want to go. Is that the kind of company you want to do business with?

The reality of the current U.S. airline industry is that the big airlines are shrinking their operating costs while the so-called low-budget carriers are increasing theirs. David Neeleman, CEO of JetBlue, expects JetBlue to operate more than 275 planes by 2010; those planes will include many new Embraer 190s to go with JetBlue’s current fleet of Airbus A-320s (the company doesn’t even buy American!). This plan will more than triple JetBlue’s fleet and workforce. Sounds like a lot of added costs to me.

I fear for Northwest and for the economy. Losing yet another major airline will hurt our transportation industry badly. It is time to reward airlines that have graciously withstood economic recessions, terrorism, high oil prices and labor disputes.

Showing support for the backbone of the U.S. airline industry shows support for the ideals of America. Don’t let labor unions rob the United States of well-paying jobs with their inflated demands. Instead, fly an airline faced with a labor dispute, and keep flying even when the carrier faces bankruptcy.

My advice? Commit to one major airline and let their planes fly you anywhere you need to go. You’ll be better off for it, and so will America.



  1. Joel Widzer’s analysis is so off the mark that I can almost rank him in the same league as Tom Friedman. He would fit in very well with the “world is flat” crowd.

    Anyway, I really cannot afford the time to fix his reasoning. He will have to get himself an undergrad education for that.

    The bottom line: Joel’s recommendation does not make sense.

  2. Arzan, I think Joel’s analysis is somewhat naive and ignores ground realities and the history of the big airlines. The primary reason why the ‘big’ airlines face bankruptcy is years of financial neglect and bloated structures. The recalcitrant labour unions are the airlines’ problem, not consumers’.

    Both AA and Delta have attempted to stay afloat through pay cuts post 9/11, but even while AA was negotiating a pay cut with the unions, there were newspaper reports that AA’s chairman got a multi-million (in excess of a million, at least) dollar bonus (under the desk, so to say). That is symptomatic of the financial mismanagement and refusal to take tough measures.

    I was a Delta frequrent flyer, but on the occasions when I flew Airtran, I found absolutely no difference in the service levels even as the price differential was quite pronounced. I agree that currently budget airlines only fly profitable routes, however, as long as there is a demand, someone will step in. Airtran and JetBlue could well be the big airlines of tomorrow, but with a better operating structure.

  3. Atanu

    Thanks for the heads up.

    Maybe I should have been more emphatic in saying that I don’t agree with the article. I posted it as a counterpoint.

    Kishore thanks a lot for a very detailed comment. You hit the nail on the head. Airline industry is already in the throes of withdrawl syndrome. All unions are slowly getting the messages. They rather have a job than none at all, and if the airline goes kaput, they are in a limbo.

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