As a lot of you know, American Airlines is merging with US Airways. Actually, it’s the latter that is more or less incorporating the former. More on that in a minute. Matthew Yglesias says that this means the end of cheap airfare:
But now the party’s over. A key stated goal of this merger—as in the Delta/Northwest and United/Continental deals—is to reduce “excess capacity” in domestic passenger aviation. That’s a polite way of saying less competition and less service. This will take a few forms. There are currently a half dozen US Airways flights from its hub in Philadelphia to Dallas. Dallas is a key American hub, so American also flies six times a day from Philadelphia to Dallas. The combined entity probably won’t need 12 flights a day to serve the route and definitely will have more power to raise prices than either airline would separately. Smaller cities will also see the pinch. Right now, US Airways and American both serve Tallahassee, the former seeking to route passengers through its Charlotte hubs and the latter through its Dallas and Miami hubs. A merged airline might cut that Charlotte service, figuring that network access through Dallas and Miami is ample to compete with Delta’s service through Atlanta. By the same token, when airlines merge the smallest hubs in the new larger airline tend to lose out and shrink.
It’s been a good ride, but I am inclined to agree that it wasn’t going to last. My hope is that they basically find a way to insert price discrimination where possible. There’s a solid argument that they will. They can charge for carry-ons, for instance, and keep working towards variable seating arrangements so that those who are inclined and have money can spend it on more legroom while those who are hard-up don’t have to.
I am, I should say, less enthusiastic about plans to upcharge for window and aisle seats, primarily because for families it means spending extra money to sit together and that doesn’t sit right. I also have serious issues with cancellation fees because that’s not a variable expense so much as punishing someone for having a change of plans.
This could theoretically be mitigated by reducing the costs borne by redundancy. Which is to say, empty seats ultimately cost passengers money. But, really, it sure seems like most flights are full these days. Or something close to it. I think they’ve figured out the empty seat problem (another reason I am not big on cancellation fees – they don’t seem to have trouble putting a new passenger in that seat.
Anyhow, I don’t really fly American and I avoid US Airways when I can. US Airways, see, isn’t US Airways. It’s America West. And now American Airlines is America West, too. The thing about America West is that I have flown with them once. Due to various mishaps, it was a trip that took about 36 hours and six airports. I can’t blame them for the weather problem that got the ball rolling, but after that it was mechanical failures, missed connections due to delays, no available flights to rebook me on, and the continuous adding of more legs to get me where I wanted to go
And those people will be operating the largest airline in the country.
I hope this means more trains in the future.
I really hate flying. It’s the whole airport thing that gets me down.
And that whole “Show up an hour early” business tells me that the Terrorists won. They were able to reduce the productivity of all Americans ad infinitum based on nothing more than “Remember when . . . ?”
But I love trains.
The NE typically has very good rail service comparatively.
The Southwest Chief is a really nice train, but it was prone to delays back in the day.
Those problems have cleared up for the Missouri Runner. They coal companies got sued for intentionally placing freight cars in the way of passenger trains a couple of years ago.
I stayed where I’m at now because of the rail service. There are six trains going either way every day.
If I buy in advance, I can be in Springfield for $5, and there’s an Enterprise one block away from union station.
Here’s a tip:
Always pick the next destination out when going to an urban core, unless you know the area.
When going to St. Louis, get off at Kirkwood.
When going to Chicago, get out at Joliet or Dyer (Dyer is much nicer), and take the drive in.
Etc.
I love trains as well. One of my favorite journeys is the Amtrack between NYC and Boston and back. I love looking at the old New England landscape. That journey takes me around 5 hours. It also takes around 5 hours to fly from San Francisco to New York.
Trains work where the population is dense and the area covered is small. I don’t mind spending 4 or 5 hours on a train in the Northeast. I think a train ride from SF to Portland or Seattle would take too long.
The Shinkansen in Japan and the multitude of high speed rail routes in Europe go a long long way to soothing the jangled nerves that exist after dealing with the absurdities of air travel to get there.
I’ve heard that gate availability is a major competition limiter in some markets, for example flights to and from Washington National (which US Air and AA mostly control). If USAir/AA is required to give up gates at airports as part of the merger, so that for example Southwest and JetBlue can fly more flights into them, that could mitigate some of these effects.
I am, I should say, less enthusiastic about plans to upcharge for window and aisle seats,
Or are they giving a discount for the middle seat? 😉
Apropos of your criticism of America West, I heard some airline “expert” on NPR argue that while both American and US Air have lousy customer service, by merging their customer service will (magically, I guess) improve. I wasn’t persuaded.
Of all the things not upon which not to have instituted market-flexible pricing in the airline industry at this point, the more desirable seat placements seems the most bizarre to be included in that group. Certainly better to charge for that than to charge for checking any luggage, which from what I’ve heard (haven’t flown in years) has the side effect of creating a complete horror show of a stampede for overhead stowage space, and also a presumably undesired process of removing tons of baggage that can’t be stowed in the cabin – after boarding but before departure – and getting it into the freight compartment of the plane or one with the same destination.
If there are, by aggregate preference, more and less desirable seats and you have the ability to set their rates at prices that somewhat reflect those preferences, then by all means go ahead and do it!
…not not not, whatever you get the point.
I am on board with charging more for desirable seats seen as being in the front of the plane or back of the plane. My issue with window/aisle is that it splits up families or charges families more to sit together. That, in my view, shouldn’t come with an up charge.
Charging for checked luggage but not carry on is pretty dumb. Kazzy and I talked about that yesterday. The personal item should be free, but after that start charging, is my opinion.
Will, do you think the window/aisle pricing risks being discriminatory in a legal sense? Or should be considered as such? Or do you just find it problematic?
Just problematic. I am open to being convinced that it’saactionable discriminatory, but I am not seeing it.
I’m not saying this does anything but fulfill my sense of justice, but charge extra for the good seats while rebating that if all adjoining seats are purchased together.
My favorite trick when flying alone in 2-3-2 seating is to find the furthest row back where only one seat in the center section is occupied, and choosing the seat in the same section on the opposite aisle. The middle seat has a very good chance of going unsold. Several times last year, I was sitting next to the only empty seat in the plane. (Though once I was sitting next to a guy who must have topped 300 pretty easily. God has a sense of humor.)
Mike, I was thinking along the same lines. Basically, if people buy adjoining seats, charge them the cost of the cheaper one. Think of it like a “multiple ticket discount” of sorts.
That doesn’t handle my second objection, which is that it muddies the water on price transparency. But I think that would be a suitable compromise.
I think you can still maintain price transparency. Whenever I buy a ticket with reserved seats, I am allowed to choose my seat. They are usually color coded to indicate if there are any special restrictions or additional costs. Continue that practice, perhaps coding windows/aisles differently, but include a rebate if seats are purchased together and are adjoining.
Another thing you could do is have an option where families or other group bookings can guarantee seats together at the lower price but they can’t pick which specific seats they get. So a family of three can be assured of three adjoining seats without paying a premium, but they can’t also insist on having those seats be at the front of the plane, unless they want to pay more.
Kazzy, generally speaking, if I go on Hotwire, there is a reasonable likelihood I can get the tickets for myself, Lain, and Clancy for the posted rate. That changes if thoseprices only apply to ccenter seats. Unless we want to sit apart. It’s not that I won’t know what I’m paying until I buy the tickets, but that comparison shopping becomes more difficult. Not insurmountable, but more complicated. Price uniformity and reliability, to a degree, has its virtues. It’s why I can go sit in any open seat for any movie at a theater (forgetting 3d for a miment) at a given theater. It saves hassle and makes things easier, even if some are seeing a blockbuster and othersa mmovie a wek away from video release. I think there’s value in that and would gravitate towards the airline that gives it to me.
Does Hotwire have different prices than the airlines themselves? I often use Kayak or Orbitz to comparison shop, but I can always get the same price (usually off by a few cents for some reason) at the airline itself. Orbitz, I believe, charges a fee, whereas Kayak usually connects you directly to the airline’s website.
If Hotwire works differently, than I can sense your frustration. However, if Hotwire’s prices are better, than perhaps you are simply opting to exchange convenience for a lower fare. As it stands right now, if I go onto AA’s website, I can search for tickets, select my seat (INCLUDING the option to select a “Premium” seat for an additional price) and know exactly what I’m getting and how much I’m paying.
On all the price comparison websites, they show the Lowest ticket price and you can buy up from there. Which we sometimes do and sometimes don’t, but the exercise, to me, depends on the ability to see a viable price without having to click through. That changes if less than a third of the seats have that price and nine are adjacent. That means that either the search mechanism is going to get more complicated. How much it costs will suddenly become a lot more dependent. Which is different than optional upgrades from a reliable base price.
But how is that any different than any other surcharges? Kayak doesn’t tell me that Spirit charges for everything save for a toilet. Had I not clicked through to verify their fees, I likely would have chosen them as they had the cheapest base fare.
Or is the problem that you might see three seats listed at $300 each and presume they are together only to click through and find out they are not and getting them together would be extra?
I can avoid Spirit. Beyond which, what we’re talking about is on a per-flight basis. Now, if the airlines said “We are going to uniformly charge $20 extra for a window or aisle seat, I can factor that in. My impression, though, is that it’s going to vary from flight to flight the same way that Economy Plus varies from flight to flight.
And more generally, it’s a question of how easy the surcharges are to avoid. That’s one of the reasons I object to exorbitant flight-change fees. If you’re changing your flight, it’s probably because of something external. I can work around the costs of food by taking care of that myself. With luggage, I know what that’s going to cost before I buy the ticket (and it’s uniform across flights and pretty uniform across airlines, I think). The “all of these seats are going to have different prices” just throws a wrench into it, in my view. It means I am going to have to price up to three different ticket prices on every flight I am interested in, to know what the minimum price is going to be if I don’t want to split the family up. Right now, it’s only one.
Got it. I see what you’re saying. I don’t travel a ton, but when I do, it often seems to end up in bunches. The first search is laborious, because I have to check each airlines’ website to confirm their fees. By the third search, I know that AA charges this for bags and United charges that and I just factor that into the flight prices.
Variable seat pricing complicates things because of the things you note. So unless the process results in possible savings, I understand your frustration.
I worry about charging less for the middle seat because I hate the middle seat but am very price conscious about travel. So my incentives will conflict, which will stress me out. In other words, as a consumer I don’t want to have to make tough choices–I want the supplier to bear the cost, not me. In other words, I’m rational.
But I see pricing by seat as being problematic for the airline. I always select my seats when I order tickets, but I don’t always (usually, but not always), get put in the seats I selected. And one time we bought tickets and selected seats for the family, but before we flew they reconfigured the seating on the plane, which resulted in them apparently randomly reassigning seats.
So either they’re going to have to shift to making certain passengers always get precisely the seat they selected or they’re going to have to deal with even more irate customers and issue refunds by the shipload.
I think a dramatic upcharge for families sitting together would be wrong; if the demand set middle seats dramatically lower, I’d maybe offset that with an explicit family discount of some kind. (Though it’s not clear that families would get hit all that hard by this, because the prices of less desirable seats that they need to sit together would fall – but there could be some increase.) But at reasonable levels, I don’t find it unseemly to essentially offer a small discount to families who are willing to be sit in multiple groupings.
Now, of course, it may just be true that the difference people are willing to pay for better seats just doesn’t make it worth airlines’ costs to go to all this trouble.
Surcharging anything creates an incentive to gamesmanship. For instance, ever since airlines began surcharging for checking bags, I have refused to check bags. I do not believe I’ve checked bags on more than three flights in the last ten years. Cancellation and rescheduling fees are particularly bothersome for the reasons that Will mentions — when plans change, often due to circumstances beyond your control, you get to pay hundreds of dollars more. Some charge to make up for the expenses the airline incurs from your change of plans is fair, but when the fees approach the level of buying a new ticket you’ve passed the point of reasonability. Add surly counter service, an internal scheduling mechanism still bound to legacy programming from the era of punch card programming, and a paralytic response to baggage handling, maintenance, or tarmac problems, and you’ve got yourself a powerful brew for making the already-tedious experience of travel on a bus-with-wings positively unpleasant (and substantially longer than it needs to be).
Southwest Airlines has become my preferred way to fly simply because they don’t do this. I have to imagine that they have looked at their experience of how many customers do actually change their plans, how many do check bags, overhead and labor, and then build the expenses of those experiences into the ticket price they charge, rather like the way an insurance underwriter determines a premium. The result is that I pay the price they offer and they treat me fairly in exchange for it — and I become a more loyal customer because I believe I have found a vendor who actually wants to deliver a service in exchange for my money.
I tend to use Southwest, though I do have one major issue with their approach: they back up flights too closely together, meaning any delay causes huge ripple effects. They often leave themselves less than 30 minute turnaround time between flights, which really isn’t enough time to deplane, clean the cabin, take care of whatever technical tasks they need to take care of, and board for the next flight. Even with fewer carry-ons, it still doesn’t work. We’ve had one nightmare travel situation caused by a plane that was delayed on the first flight of the day and which never caught up, causing us to risk missing a connection and being stranded in Chicago for two days, at which point we opted to fly out the next morning. Such an approach may be necessary to maintain competitive fares, as it might get them some extra flights in each day, but it seems like unsound strategy to me.
Still, I work with them because I like the flexibility, I like not having to pay for checked bags (though I fully realize I’m still paying but it is just folded in to the ticket price), and their rewards program is pretty straightforward and actually works. They also go to places I tend to go to, at least right now. Nashville, Austin, New Orleans… and they fly out of Newark.
On the plus side I guess this means that now instead of having to remember the names of two overpriced, s**ty airlines I won’t fly if I can avoid it, I now only have to remember one.
Pretty much how I feel. I miss Alaska Airlines, which has limited flights outside of the West Coast.
I’d be content with 100% price transparency.
Give me the option to see the fare, taxes, and any options available as checkable boxes with price right then and then a total. Car manufacturers do this.
Despite the fact they usually cost $25 to $40 extra round trip, I regularly use Virgin America because you’re at least treated somewhat like a human being. Then again, I’m a single guy without kids or a SO who doesn’t have to travel for business, so my situation is slightly different than a lot of people.