There was recently a very public debate about how awful airline travel is…vs. how whiney airline passengers are. In the New Yorker, Tim Wu argued that airlines actually create “calculated misery,” in order to trick you into paying more. Criminy, people pay extra now just to board the airplane early,theoretically so they can ensure their carry-on bags will fit, and they can avoid bag fees. Any sane person would recognize this as madness, and Megan McArdle over at Bloomberg concedes this, but she goes for the economist-friendly, “the fault lies not in our stars but in ourselves” argument. People are so darned insistent on finding the lowest price that this race to the bottom is inevitable. “The problem isn’t greedy airlines. It’s us,” she writes.
Regular readers of this column, or of my book Gotcha Capitalism, should see the problem here – I call it “death of the price tag.” Because price tags no longer include the true costs of things — from cell phones, to cable TV, to airplanes — price has become a mere diversionary tactic. Sure, people sort flights on Expedia using “lowest price,” but it’s unclear what folks are getting for what they are paying. Could they pay $27 more and get two more inches of legroom? Or pleasant flight attendants instead of angry ones? Or a 2x chance the flight will be on time? Or a 3x chance their bag will be lost? Or a 4x chance the price of the ticket could double if any kind of life surprise occurs that requires changing a ticket?
These are big data questions that can only be answered by corporations who own the data and the big computers. No consumer can rationally decide how to buy an airline ticket today. So of course, they make the next best choice, and pick on price. It’s terribly unfair to blame them for this.
Capitalism has become information warfare, and consumers are at a massive disadvantage in this war, thanks to analytics.
What’s happening here is simple: Without any minimum standards for service, there is an inevitable race to the bottom. Airline pricing is trickery, a bait and switch designed to lure you in with a come-on price and then load you up with fees to make you profitable. It’s no way to run a business, or a country for that matter. This is why I say America is not a free market economy, but rather a Gotcha economy.
Congrats, airlines! The race to the bottom is almost complete. You know this based on nearly every conversation you’ve had with a friend who’s been on an airplane recently. But there’s even data to support this, as you’ll see below.
Before I get there, I must concede this point: Airline travel is cheap. Transportation expert Joe Sulmona, who helped me with my Ubernomincs story recently, cautioned me about going to far with my woe-is-travelers argument,and he’s right to point out that since de-regulation, prices have gone down. A race to the bottom that impacts safety is a big deal, and there is no evidence that’s happened in U.S. airlines. A race to the bottom of inconvenience? Well, not everyone believes regulators should worry about that. To his point, I’ve flown regularly between Seattle and New York for almost 20 years. My first flight cost about $400. I often pay less than that now. But I also arrive with more leg cramps, and I have a lot more options for flight times. And in the past, I sure never had to pay a $200 fee because I got sick and had to change my ticket.
Prices don’t reflect true costs. Airlines get away with it because they enjoy virtual monopolies or duopolies on many American routes. That’s what has to change. Because you should really ask yourself: How bad does airlines service have to get before someone does something? If you think market forces will correct this problem on its own, I have an ivory tower to sell you.
Now, as for the data supporting your miserable feelings…
(The story below first appeared on Credit.com. Read it there.)
If you feel like airline service is slipping, that’s because it is. In fact, it has slipped back to levels not seen since the recession, according to a new “Airline Quality Rating” report out this week. The rating considers four factors most important to travelers: on-time performance, involuntary bumping, mishandled baggage and complaints. Only Virgin America, Alaska and Hawaiian upped their game last year, according to the study, while all other major airlines offered worse service.
University professors Brent Bowen (Embry-Riddle) and Dean Headley (Wichita State) have conducted the research using Department of Transportation data for 25 years, and found that performance levels have sunk back to where they were in 2009, during the Great Recession.
“The Airline Quality Rating industry score for 2014 shows an industry that declined in overall performance quality over the previous year. As an industry, performance in 2014 was worse than the previous four years,” the authors say. “Of the 11,364 complaints registered with DOT regarding all U.S. domestic carriers, 62.7% were for either flight problems, customer service problems, or baggage problems.” Overall, complaints skyrocketed 22% in 2014.
So which airline attracted the most complaints? To adjust for airline size, the authors published a rate of complaints per 100,000 passengers. The industry average was 1.38 for 2014. At the “top” of the list is Frontier and United. Alaska and Southwest attracted the fewest complaints. These stats aren’t a fluke: Alaska also had the fewest complaints per 100,000 in 2013, while Frontier and United had the most last year, too.
The Most Complaints per 100,000 Passengers
- Frontier 3.91
- United 2.71
- American 2.12
- Envoy 1.59
- JetBlue 1.17
- Virgin America 1.14
- ExpressJet 1.01
- Hawaiian 0.89
- SkyWest 0.84
- Delta 0.72
- Southwest 0.53
- Alaska 0.42
Frontier didn’t immediately respond to a request for comment.
“I’m not surprised by the latest results,” said consumer travel advocate Chris Elliott, who operates Elliott.org. “Airline passengers are fond of referring to the industry’s customer service record as a race to the bottom. These numbers leave little doubt that the race is far from over.”
The results also reveal a backslide from improvements that airlines had made since the recession, Elliot said.
“These numbers suggest that the uptick in customer service was only temporary,” Elliot said. “The study is a big disappointment, both for airline passengers, and also for me personally. I had really hoped the industry had begun to turn a corner.”
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