If there's a "tipping point" for gas prices (the price at which you change your driving habits), is there a "tipping point" for flying on an airline? If so, what is it?
Higher fares, a slew of tacked-on fees, flights that are late and crowded are the new standard in the airline industry. Does it make a difference?
I'll be live-blogging in the studio with Kerri Miller on Wednesday's first hour of Midmorning. Most of the time, Midmorning asks me when they want me to blog their show. This time, I asked them. The guests are: George Hobica, creator of Airfarewatchdog.com; Joe Schwieterman: professor of public service management at DePaul University; and Tammy Lee: Vice president for communications at Northwest Airlines.
I sense a pent-up desire to tell the airlines a thing or two, and to tell a few stories about your experience -- good and bad.
That's where the "comments" section below comes in. Let's start talking about this now, so that by Wednesday at 9, we'll have something to tell our radio friends.
9:02 a.m. - It occurred to me while getting ready for today's shows that I hear the word Northwest Airlines and blames in the same sentence quite often. A Google search reveals, for example:
9:09 a.m. Hobica is up first. He's in Boston on business and took the train to get there. He says the only reason people fly in the Northeast Corridor now is to get frequent flyer miles, which are tougher to spend.
9:11 a.m. Hobica says the stock market has been propping up "the ridiculously low airfares." This is why airlines are "cutting capacity," creating a shortage of available seats. Kerri asks why nickel-and-dime instead of raising fares? "They think demand will drop off," Hobica says. He also says the industry has been mismanaged since deregulation, so "what's new?"
9:14 a.m. Just reading Hobica's blog. Says airlines, having created an unpleasant experience, are now selling travel insurance to guard against such things.
9:17 a.m. Milan from Mankato calls. Flew for TWA for 50 years. "Given what airlines are charging, airlines are losing their shirts. Airlines have to increase fares by 20 to 30% but people won't pay it."
9:19 a.m. -- Cirrus (and I wrote about this a week ago) is depending on the current situation to market its VLJ (very light jet) business. Hobica just uttered the party line when it comes to general aviation (note: I'm not objective on this) by recommending private jets start paying for 'clogging up the skies.' In other words, airlines have something else to blame, now. What do private pilots say? They say "we're paying taxes to support the air traffic control system (via fuel taxes), so why can't we use it?"
9:25 a.m. Just read comments from Mary L. and Larry in comments below. And yours? Where's yours?
9:26 Delta will charge $80 for certain bags each way. Hobica sends his luggage via UPS to his hotel. Cheaper. You can find a chart that compares the cost of doing this here.
9:29 a.m.- Caller Diane flew in from St. Louis. Plane delayed for an hour, missed connection in Chicago. Ticket agents were surly. "Ticket agent said, 'look, all this crying for nothing.'" Hobica says "we're impoverished in this country when it comes to consumer protection." How much do the airlines worry about customer satisfaction? Southwest has very good policies, Hobica says. It's the older legacy carriers that are "ruining it for the reputation of the airlines."
Survey of the Day
This is as good a time as any for today's survey.
.. and now back to the show...
Joining the show now is Tammy Lee, a spokeswoman for Northwest and Joe Schwieterman: professor of public service management at DePaul University.
9:38 a.m. -- "We're in survival mode here," Tammy Lee says. She ran for Congress a couple of years ago. Does being the spokesperson for an airline ruin a political career? Just wondering.
9:39 a.m. -- People appreciate the fees as opposed to simply raising the fares across the board. Is that true? You tell me.
Observations for free: People seem more upset by poor service than higher fees.
9:41 a.m. -- Why not just raise air fares? "We can't get them to stick," Lee says.
9:44 a.m. I just read Erik's comment on service. Tammy Lee says the competitive advantage is the "service experience."
"Ultimately, at the end of the day, the customer is going to flock to the lowest price. If they get there safely, that's all they care about."
Well, there it is in English. We don't CARE about the attitude we have, because you'll put up with it if you save a buck.
Sun Country tested this theory in a recent marketing campaign. Does it work?
9:47 a.m. "When you choose between survival and service, survival wins," Tammy Lee says. I'm immediately reminded of the the story of how a small hardware store in Brattleboro Vermont ran Home Depot out of town
9:50 a.m. - Schwieterman says there's a future for Southwest in the Twin Cities. He says that airline is starting to compete head-to-head more with "the big boys."
9:53 a.m. - Advice from a guest. Get rid of your frequent flyer credit card and ge a cash-back card. You have to pay an $80 fee and now you're paying more to cash in the miles.
Last word on fares We've been tracking the cost of a ticket to Midway from Minneapolis St. Paul for the last few months. Today, it's going for $496.75, and that doesn't include the fees. In March, it was $114 (there was a competing airline flying the route, then).
Ok, I'll start.
I used to fly regularly for business and actually enjoyed it. I liked the fun of flying and the feeling of being away from everything up in the clouds. My feelings didn't change even after 9/11.
Now I rarely fly and when I do, I can't find anything to love. The planes are packed to the rafters with people and luggage. The fees are ridiculous (and did I hear that I'm going to have to suffer through ads on the video screens?). 5 years ago I would easily have booked a ticket for a personal and fun event. Now the destination has to be really important for me to get on a plane.
I love flying if I get a window seat. You just don't get the view any other way. However, with the outrageous fuel usage and CO2 emitted, it takes an event like a funeral an important educational or service trip to justify flying for me. I won't do it to lie on a beach somewhere. Like high gas prices, hopefully high airfare will force us to finally reduce the damage we do to the earth. We should have been payng attention to this all along.
It has been a while since I reached a 'tipping' point with the airline industry.
That point occurred in San Antonio, Texas a few years back where I had traveled
for a family Thanksgiving Day gather.
Departing San Antonio the Tuesday morning following the gather I arrived at SAT
airport in essence 3 and a half hours prior to flight time. My brother in law
took me there en route to work; hence the early arrival.
When I entered the terminal; the line for security wound from the entrance of
security to the far end of the airport. It then curled back on itself for near
half of the terminal. Feeling self satisfied that I had arrived with enough time
to cope with the wait. I joined the line - and waited - and shuffled - and
waited - and shuffled, until at last I was at the beginning of the security
ribbons to contain the masses. I thought that I had everything organized - and
went through another 15 minutes before I at last reached the metal detector and
the security people. I was informed that I had to remove my shoes (tennis shoes
at that.) I advised the agent that I suffer from an impact fracture of the lower
back and bending over was difficult for me. I had no issue removing my shoes -
it was the doing so that was a problem. From the reaction of the individual it
seemed that I had personally threatened the security of the free world.
Two agents approached me - took me from the line, after sending my carry-on
through. On the far side I was wanded top to bottom, and in places I can not
imagine anyone concealing any form of weapon. From there, I was escorted to
'holding area' and ordered to sit down. When I asked about the shoes, I was
curtly informed that someone would be along to help. In retrospect, I suspect
that the purpose of the holding area was to convince me to endure the pain of
removing my shoes and get on with it, so I would not miss my flight. I saw no
reason to do so, since I still had an excess of time to make the gate.
At long last, 30 - 45 minutes estimated - a young female Hispanic arrived to do
the shoe removal for me. I recall specifics here because she was one of the few
agents who I felt cared. From that point on, things became ludicrous. All my
luggage was sent through the bomb sniffer (or whatever the explosive detecting
device is called) without a trace of anything hazardous. Since that was not
rewarding, I was then ordered to open my carry on luggage for inspection. Since
I suffer from COPD, I carry my CPAP and assorted paraphernalia along with my
camera and license, and a collection Rx's in that case. Nothing escaped inane
scrutiny. After some 20 minutes of this I was at last handed my shoes and told I
could proceed. When I asked if someone would help get them back on, the agent
turned his back and walked away. I scuffed into them and wore them untied for
the rest of the trip until my life partner met me at aMSP.
At the time I was near, or just past, age 65. I am of Scandinavian, and other
Northern European ancestry. My hair was close cut, and I had shaved that
morning. I do not think that I fit the profile of an incipient terrorist. After
graduation from college, I fulfilled a lifelong dream and became a Designated
Naval Aviator. During my USN service I was awarded the Air Medal twice, and
earned a 3rd. As part of my duties, I needed high security clearance. At one
time I held the highest security rating given to active duty military. I could
go on; my point is that I find it deeply offensive to be treated as if I am
about to hazard a country I served for more than 9 years to the best of my
The security situation is ridiculous. It does not address security, it addresses
harassment. With the current restrictions on food and beverage carry on from
home, I am never going to board an airliner again. I once enjoyed leisure and
some business flying. Today, there is no reason for me to fly; if I can not do it
by car or train, it will have to be without me.
At this rate, air travel will only be used by the rich and by people in an emergency situation. When I needed to get to Chicago last month for a seminar, I took Megabus. It was a LOT less hassel and 1/7th the price.
Ok - so am I crazy to think that the new $15 bag-check fee will cause big conflicts between passengers as they all try to grab the overhead storage space to avoid the fee? I can envision fist fights! I'd much rather they just add a few dollars to everyone's ticket cost!
As for flight attendants and service staff. I have very little sympathy for them. In their personal lives , I am CERTAIN they would not tolerate the horrible level of service, quality and attitude from others that they, themselves perform in their job. There is still opportunity in America, and if a flight attendant don't like the pay or work conditions...they can seek other employment. In the end, they simply use the situation as a crutch to justify their poor behavior.
Comments I emailed to Karri for the show.
1. In theory I am for the choice of whether or not to pay extra for perks. I would be happier if the cost of the perks were proportional to the cost in fuel or service.
2. It is going to be very hard for us to adjust to the idea that flying will be again only for the jet set and the rest of us can’t afford it.
3. I have been saving my money but I may have to spend a lot of it to fly to a funeral. It is hard for me to think of having to choose.
4. I think our society is going to have to get used to the idea that Middle Class does not necessarily include owning a home and flying on vacation.
5. I have been taking the bus from Minneapolis to Detroit for the last year and half on Megabus instead of flying. Round trip can be less than $100.
6. I say have huge fees on the private Jets to force those people back into first class.
7. A large Carbon tax would push those private jet people back to First Class.
8. One concern I have is that it would cost tremendous amounts of money to protect our bus systems from Terrorism.
9. How did new airlines get into the market when they couldn’t charge enough to pay their expenses?
Air travel is not a uniqely negative experience, nomoreso than inflation as measured by today's CPI, 2nd worst in 26 years, home foreclosures, bank failures, stagnant wages, record gasoline prices...if this happened in another country we would most likely see it as one with a crumbling infrastructure, increasing poverty and an unraveling social fabric.
I'm taking a new job that requires me to travel to a different city each day of the week -- with several appointments each day. I'm trying to find out how the airline delays and schedule cutbacks will impact my abililty to make these appointments. I've asked my new employer if they think oil prices /airline troubles will impact my job and they said they hadn't thought about it. I have to assume this could make my job much harder to do. And this doesn't even factor in the higher costs to do the work!
Ever since my 8 hour layover in Frankfurt, Germany due to a flight delay, this past spring, I am more than willing to spend extra money for special amenities such as a private movie screen, friendly flight attendants, extra leg room and non stop flights but only for long haul flights. Unfortunately, many of these perks seem to be solely limited to foreign airline companies. In my opinion, expecting peanuts and a soda on an hour and half flight seems a bit ridiculous however we should always demand on time flights and good customer service regardless of the flight and airline.
Traveling by other methods (train, bus, driving) isn't always a walk in the park either. I recently took a train from Fargo to Minneapolis that was 3 1/2 late (the amount of time it takes to drive there). Delays and stuff happen no matter which method of transport you choose.
I really worry for the idea of Family in the Middle Class. First, to maintain our expectations of buying a house, saving for retirement, and saving for children's college requires two incomes. Now as jobs dry up we have to move to other areas to find work. This plays into airfares because we have to move farther from family to find work and we can't afford to visit as often. Kids just won't see grandparents or other family as often.
Hear, hear, Jonpaul. We are lucky in that my parents (who live in NC) are able to come visit us (and their 1 year old granddaughter) every 6-8 weeks or so. But we can't afford to go there (and see the rest of the extended family - her cousins, my sibling, my grandparents, etc.). So our little one gets to see her grandparents, but no one else.
The increase cost of flying has not changed my flying plans. I would have taken the bus when I could anyway because it was always cheaper and less carbon impact. The rising prices have really just caused me much more economic stress as I have to save to travel to a funeral for my sick grandmother.
The harassment of the security experience here in the States is truly ridiculous. I find it hard to believe that it's actually an effective "method" of screening– it seems to be more of a gesture or posture of an effort vs. a truly effective process for our protection. We all really still need to take off our shoes, really?
Having just travelled internationally, our security experience overseas was dramatically different – it was efficient, smart, and courteous while still being taken very seriously. We never felt as if it was hasty nor porous. Conversely, everyone going thru security here in the States is treated like a criminal, in great part b/c the staff often seems to take great pleasure in abusing their authority by harassing people and being excessively rude. This experience here does little to boost my confidence in our REAL safety–it actually does the opposite.
My wife is a violinist and must check her luggage because she must carry-on her violin. Musicians are special class of folks who don't make much money and somehow always are disadvantaged. The luggage fee is a double whammy because you have to pay it both ways.
Why not charge by weight instead of number of items?
As a 25-year flight attendant at United Airlines, I am looking forward to retiring, since the industry has turned me into the kind of flight attendant I hate to fly with. As the "suits" line their pockets and cry "foul" because of oil prices, I am getting paid less and less, lost my retirement, flying more hours in order to make up lost wages.
I am "surly" and "indifferent" because I have absolutely no back up from my company. It is no longer about the customer. Clearly. I do not mind apologizing for my mistakes, but to apologize 20-30 times A DAY for items that are basic, such as a reading light for a trip across the ocean, or audio for the movie.
I just heard Kerri say she thought the airlines must care about the comfort of the customer, since they ARE the customer. Sorry, nope. Planes are full. There is more demand than capacity. So, the powers-that-be are sitting in the cat-bird seat.
The sweet days after deregulation, when we still had money and ameneties, we gave the flying public amazing services. Now, that there are more costs related to flying, all services have been stripped down to bare minimums. However, the CEO and shareholders are still walking away with the money.
And, why should I be pleasant? By the time the customer gets to the airplane, they have been battered by traffic, TSA, crowded airports, constant communication (TVs in airports, cell phones, laptops), difficult gate agents, extra charges for luggage, the people boarding are loaded for bear! Then, I am expected to find space for your bags, a pillow or blanket (gone), or a magazine or newspaper (gone). The flying public is aware of the FAA rules, yet, I still have to remind them to turn off their cell phones, turn off their laptops, stow their luggage. Why?
I could go on, and perhaps I'll return later.
Thanks for the topic.
I don't mind all the additional charges at all - I think someone who gets stuck in the middle seat shouldn't have to pay the same fare as the person on the aisle or window. Every suitcase adds weight to the plane and it burns more fuel - all that makes sense. And I agree with the caller who said we expect too much service - airlines are buses in the sky really and there's nothing wrong with that. If you want extra service you buy a first class ticket.
The bottom line about not flying is the price, not the service or "experience". I used to fly 30,000 miles a year, much for work but also a lot for leisure travel and I just plain can't afford it any more - it's just one of those things I can't afford to do. And I work for a small business, so we watch our costs carefully, too - we all travel less because it costs more.
I fly frequently to Brazil, I have noticed an increase of almost 50% on the prices of the tickets (Delt, Continental, United, American).
Discount-Airlines don't fly to Brazil, so they Big Airlines are increasing the prices where they dominate the market.
Why do people feel that they have a right to fly on the cheap? Shouldn’t people pay the full price of the service they receive? Just do the math – add up the weight of the person and luggage and the distance traveled and figure the foot/pounds of work that is being done to move person and luggage from point A to B, then calculate in the weight of the airplane and crew and divide that weight by the number of passengers on the airplane, so if each person pays for their share of poundage traveled air travel is insanely cheap which seems to be creating waste. This seems to be an issue of too many people/planes/fights in the sky, I think it is time for downsizing the whole industry.
Ok, so talking about bags: Recently, my bag's entire wheel and wheel mount area was ripped out of my bag during bag handling. Several others on my flight had similar bag dammage but the "customer service" person told ALL of us that they don't cover damage if it's a wheel, since wheels stick out beyond the bag. This seemed quite disingenuous to all of us.
Be careful what you wish for. I'm all for Southwest showing up in MPLS for the competition, but ask anyone who has them available in their market, they avoid them if they can. Barebones air service, equipemnet, and zero customer service are their hallmarks.
Mr. Dugan you must be an engineer, I like how you think. I've been harping on that for the last 15 years.
It's simple math.
The airline industry as a whole is in the red since 1903.
It has NEVER made money.
And that DOESN'T include the trillions that the government has spent on air traffic control and airport construction.
Oh, Sorry, I forgot the war tax that adds ~$5-$15 per gallon on petro since WWI.
I don't think anyone has a number on the environmental cost per gallon of petro yet.
I recently flew round trip to and from Detroit for a 3 day business meeting, short notice, full fare ($900.00+). I packed light, a small duffel and a lap top bag. On the return flight, a late loading passenger pulled my bags out of the overhead and jammed in her maxi sized roll on. The flight attendent then advised me that I'd have to stow my bags under the seat. Needless to say, I was appalled (as were other passengers that witnessed the violation). Talk about lousy service! Follow the guidelines, get screwed over anyhow...
Airline need to charge by the pound since they already do for baggage.This will save them $275M/year
You were far too nice to the NW representative.
1) Not being able to book baggage (except by fee) means you can't take nail scissors or any larger fluids with you!
2) She excused fuel surcharge by saying prices set by the cheap airlines. Then why do fuel surcharges vary so much ticket to ticket and airline to airline on the same route? There should be no fuel surcharge anywhere. I made a contract at a particular time and airlines can hedge their fuel costs.
3) $250 compensation for a lost bag is a joke. What can that buy you. Think 1 suit, 1 shirt and 1 decent pair of shoes, let alone socks and underwear! It's rediculous.
4) overbooking, lack of compensation for delay, and lack of flexibility in ticketing are just three of the innumerable advantages the airlines hold over and frustrate the passenger.
The main point is there are NO consumer rights and it didn't sound like the NW official admitted that at all.
I agree with Peter. It is time for a downsizing. I also agree with John C. If you want more leg room pay for first class tickets.
I just don't understand how market forces have not taken care of this a long time ago. It seems like airlines have been charging less than the cost of service for years and years. How could they do that?
I think it's interesting that Tammie Lee is taking customer comments at face value. As a former market researcher, one of the cautionary tales was that customers often don't know what it is that they want, that they aren't necessarily aware of what influences them and what they like. (One cautionary tale was that when Sony tested the Walkman in market research, that the majority of potential customers said they didn't want to carry their music around, and that music was for listening at home, sitting and relaxing. We know that isn't true.) Just because most customers say they would rather pay fees piecemeal, and say that they most important thing is getting to their travel destination and that customer service matters less, does not necessarily make it so. Look at Nordstrom and REI - two companies that are famous for marking up their products but having outstanding customer service - these companies do just fine. My bet is that people would be willing to pay more per ticket and maybe a little more in various fees, if their face-to-face interactions with company representatives (e.g., when you ask for water, when you have missed your connection, when they have lost your bag) was positive.
I also just want to voice that my experience with flight attendants in the past year has been fine - nothing outstanding either good, or bad.
Do any of you actually know what the difference between coach and 1st class is? It's thousands!
Delta just announced a $1 billion loss in the quarter.
Northwest's stock responded by increasing 23%.
I don't get it.
As a former flight attendant who left the airlines after 22 years I still dislike the sentiment that flight attendants should leave if they don't like their jobs. Many flight attendants like their work and fellow employees and are naturals at giving specialized care to passengers; they are just fininding it difficult to work for employers who do not seem to value and have cut compensation for the "soft skills" they bring to the table and who have taken away amenities flight attendants feel the passengers deserve. All in all passengers and employees have more in common than less.
In the airline industry safety might be king, but service pays the bills. Service IS survival.
The airlines can blame fuel (which was at $35 a barrel when Bush took office), but clearly they could have hedged fuel. Why didn't they - except for Southwest? Is the problem mismanagement?
So, we shouldn't all quit, we should advocate for better and more inspired airline leadership that values people - employees, passengers, the taxpayers who prop airlines up and the communities airlines serve.
We chose to drive to The Black Hills for vacation this year, it was wonderful and cost about $300 in gas. We had been planning a trip to Orlando to see grandma for her 80th birthday, but a family of 5 flying was cost prohibative! I felt really bad but we are living a month to month as it is and prices like this mean a change in Vacation plans and seeing family a lot less. It is sad but we also rediscovered the fun of an old fashioned car trip(NO DVD OR VIDEOGAMES IN THE CAR EITHER). My airline horror story is from a flight to Hawaii 3 years ago so bad service is nothing new! Despite making seat arrangements and confirming them I was given new seats at the gate, they had given mine away!I was 5 months pregnant, was seated in an exit row and my 2 year old was seated 5 rows behind me...alone. Needless to say I complained, I was told I had to ask if someone would switch, I asked the man next to my 2 year old to switch he said no( he wanted an aisle seat and didn't want to be in an exit row) NO ONE else was willing to switch. The attendant refused to help even when I pointed out I was pregant and SHOULD NOT sit in an exit row. Fuming I sat back in my seat because the attendant ordered me to sit down. My 2 year old took off next to a stanger! The after the 2 year old kept screaming through take off and me not being allowed to go to him until the seatbelt sign went off I went and crouched in the aisle near him trying to calm him down, again I was reprimanded by the attendant. I angrily said what choice do I have when no one will help me and I rattled off my complaints. I was told I would be detained by security if I didn't calm down, I started bawling. THEN the man next to my two year old said " I'll switch, this kid won't stop crying anyway" Finally I sat next to my son a bawled for another 1/2 hour. That was the last time I got on a plane. By the way, it was Nothwest. Oh and baggage broke my stroller!
How much has the security since 9/11/01 added to the cost of flying? There must be at least a half dozen employee's at each line and many more wandering around treating travelers like criminals.
The security lines and requirements have greatly increased the pain of air travel and for no reason. Remove your shoes? Why? I would guess it is only to humble and humiliate the passengers. Has anything ever been found which would endanger anyone? Of course not.
Liquids in small quantities? Why? The quantities required to cause concern and the techniques necessary to mix any combination into something dangerous make the whole process a farce.
Can't take our beverages and food from home? Only benefit here is to increase the concession sales beyond the security lines. This serves only to make the flying public miserable and poorer.
Have you ever gone through customs entering the U.S.? These people have to be the most uptight, sour people on earth. They must have to pass an intimidation test in order to get hired.
I have generally found the flight attendants to be amazingly cheerful and helpful, considering what they have to face each day. I have seen them attempt to solve seating problems on totally booked flights where families with small children have been split up, where it seemed most travelling companions on the plane have been assigned seats far from each other.
"Be afraid! Because paranoia is patriotic!" There is no evidence whatsoever that highjackers with box cutters took over four planes on 9/11. That is a story created to keep the sheep in line.
I do have empathy for Laurie (25 yr. flight attendant) but cannot condone her attitude that there was no reason for her to be pleasant or accomodating with passengers since she assumed that everyone else the passengers had had contact with (the airline, security) before boarding had already been rude to them.
I was a cabin attendant 50 years ago before deregulation, when the federal government doled out the routes and competition between carriers focused on service - service - service! People dressed up to get on airplanes and we would slice off prime rib to your taste (rare, med, well) from a heated cart in an aisle that was wide enough for two adults to pass without touching. Remember the stratocruiser?
I am a reluctant passenger today. It's a chore to travel by air. I agree that folks are not willing to pay for adequate service these days and still they complain bitterly when services go away. This was true before the days of hedging fuel, bankruptcies and mergers. But maybe it is time to look again at regulating airlines. We are looking at the need for regulating banks, mortgage companies and wall street as a result of the sub prime home loan fiasco.
But caution here: did you know the Dept of Homeland Security has solicited a proposal from a Canadian security company to develop an airline passenger stun bracelet? YIKES.
In the meantime, US Airways is selling advertising space on its passenger tray tables, ticket jackets and airsickness bags (yes, even burp bags) and expects these ads are worth $20 million a year to US Airways, which ain't hay as they scramble for revenues.
Check out my blog at www.ladyskywriter.com
Baggage Fees. I doubt that the purpose of the surcharges is either fuel savings or user-option revenue. More likely the idea is to handle fewer bags, thereby handling fewer bags and cutting baggage handlers and clerical staff needed to keep passengers and bags on the same flight per security rules. Probably, fuel savings during hub airport rush hours is related to lower safety margins. Congestion will be just as problematical whether departing planes are loaded with bags and fuel or packages and fuel.
I suspect it is true that NWA will increase revenue (from selling hold space to shippers) and raise fares anyway. NWA schedule reductions do save fuel, but the remaining flights are more likely to take-off at maximal gross weight and waste fuel in delays caused by concentration (congestion) at MSP and other hubs.
MSP’s High Fares. Fewer flights per day but more per hour, more often, isn't done to save fuel costs (fewer hubs makes every connecting trip longer), but to thwart competition. Last month, NWA CEO Doug Steenland said that every airline has high fuel costs , but the merger is needed because of low-cost competition. Not only is this statement contradictory on its face, it is code for one-class airlines.
There are four classes of fares, and “consumers” at hubs like MSP can only search a limited inventory for economy fares: for them, poor service and non-refundable tickets are a given on Northwest Airlines.
The other classes are: good for passage (Y-class); first class, and business class. I call these interline, luxury, and captive. Control of these markets is the basic idea of a fortress hub. Interline reservations are only offered through partners or though agencies at high fares. Luxury demand is limited but remains consistent independent of economic conditions. Captive demand may fluctuate with the state of the economy, but premiums are still extracted by “blocking” advance economy seats. Here, there is always a limited supply of business seats, with no choice of carrier for the most part. Business class may be treated a bit better by the airline, but service and comfort is about the same and fares lower on one-class carriers.
Under monopoly conditions, profit more than cost drives fares up. If a Southwest, Jet Blue, or other one-class carrier ventured into MSP, then American, Delta, Northwest and United would temporarily reduce business fares and unblock economy class until they went away. Controlling supply works. Also,
additional arrival and departure slots at business-convenient times are unavailable, so local businesses would often choose Northwest, fares being comparable that day and mileage-club balances important.