Major Airlines Will Fail

[danielsexton]

[ QUOTE ]
Major Airlines Will Fail
By Mathew Emmert (TMF Gambit)
August 30, 2004

It's difficult to find companies that have destroyed more investment capital over the past few decades than the major airlines. While it's true that they have suffered their share of, well, just plain awful luck recently, the history of failure surrounding the dominant carriers goes well beyond any particular event-driven malaise.

These businesses are largely failing for two reasons. One, their antiquated structure makes it exceedingly difficult to bring costs in line with revenues. Two, they provide a commodity product in a service industry, yet overall they offer an abhorrent level of service to their customers.

Case in point: My wife and I just took a trip to Boothbay Harbor, Maine, where we quietly slipped away from reality for a time. We have returned from this beautiful land -- where rugged fellows named Travis and Natty guide you on sea-kayaking adventures that boast incredible scenery and plenty of curious harbor seals -- feeling refreshed. However, our refreshed state did not have much to do with our travel experience.

Before recounting our little day of delight aboard US Airways (Nasdaq: UAIR), I feel I should be clear that this story is just an example, and one of many fairly similar experiences that I could share. You see, in our former lives as consultants, both my wife and I have accrued some fairly extensive airline travel experience. I'm simply sharing this most recent example because I think you might find it entertaining -- or at least be able to commiserate -- and because it supports the general conclusion that I'm making here.

Here, in basic timeline format, is our departure flight from Reagan National Airport:

8:15 a.m.: Arrived at the gate for our 9:30 a.m. direct flight to Portland, Maine.

9:00 a.m.: Informed via barely audible loudspeaker that boarding would be slightly delayed because the airline was having a spot of trouble "locating our flight crew."

9:30 a.m.: Informed via barely audible loudspeaker -- by an attendant who sounded very annoyed about the information she was having to convey -- that the airline was still attempting to "contact our flight crew."

10:30 a.m.: Informed "operations" was trying to find us a new flight crew because of a "scheduling problem." (Translation: There was no flight crew to "contact" because we forgot to schedule one, but we're gonna give that a shot now.)

11:30 a.m.: Informed that our flight was canceled because they were unable to "obtain a crew."

11:31 a.m.: Nearly trampled to death during the mad rush to the podium by those seeking to make alternate flight arrangements.

11:50 a.m.: Made it to the podium, where -- after he made about 8,000 keystrokes on his computer -- a polite but barely discernible attendant (i.e., it wasn't the loudspeaker after all) informed us that our only chance to make it to Maine before 7 p.m. was to hotfoot it over to a new gate, fly to La Guardia, and catch a prop plane to Portland.

11:51 a.m.: My wife and I say "Book it!" in unison.

11:52 a.m.: While booking the new flight, the barely discernible attendant assured us that our luggage would be "taken care of." (Note: Remember this -- it will be important later.)

11:53 a.m.: Hotfooted it to our new gate and barely made the flight to La Guardia.

12:30 p.m.: Landed in New York, hotfooted it to our next gate, and barely made our flight to Portland. (I was, however, pleasantly surprised that the plane wasn't filled with crates of chickens.)

1:30 p.m.: Landed in Portland, Maine.

1:45 p.m.: Arrived at the baggage carousel.

2:15 p.m.: Having stood at the baggage carousel for 30 minutes, another barely audible attendant informs us that our baggage has actually not been "taken care of."

2:16 p.m.: Nearly trampled to death during the mad rush to the lost-baggage counter.

2:30 p.m.: Informed that our luggage would be delivered to our hotel by 6 p.m.

6:30 p.m.: Called the number that I was given by the barely audible lost-baggage attendant and am told by the happiest computer-generated voice that I've ever heard: "I have good news! Your bag has been found and picked up by our courier service! It will be delivered within four to six hours."

10:45 p.m.: The hotel front desk calls to inform us that our luggage has been delivered.

10:46 p.m.: Relieved that we have survived another airline experience -- and pleased that we won't have to wear our hotel robes for the rest of the week -- my wife and I begin to dance like wild folk around a pile of burning airline ticket stubs.

Is it really a surprise that US Airways is likely heading for its second bankruptcy filing, or that Delta (NYSE: DAL) is knocking on the default door as we speak? How about American (NYSE: AMR)? Are Northwest (Nasdaq: NWAC) and Continental (NYSE: CAL) looking good to you these days?

Certainly these companies have -- with your money -- helped to build the infrastructure that makes modern air travel possible. But it would take a complete rewrite in order to make these dinosaurs competitive with the JetBlues (Nasdaq: JBLU) and Southwests (NYSE: LUV) of today (not that I'd recommend those stocks either).

Personally, I believe a fundamental change is taking place in the airline industry as we speak. Further, this change will ultimately create a completely different view of what it means to travel by air in this country, and the major carriers simply won't be able to reinvent themselves in time.

All of the majors may not be headed for the trash heap, but there are certainly better risk/reward opportunities available. In other words, skip these flights.

Mathew Emmert enjoys flying -- he just wishes the experience didn't add so much gray hair to his growing collection. He doesn't own shares of any securities mentioned in this article, but he is the editor and lead analyst of the Fool's dividend-oriented stock newsletter, Motley Fool Income Investor. The Fool has a disclosure policy. Motley Fool

[/ QUOTE ]

[Doug Taylor]

Great, another journalist doesn't get snack mix and throws a hissy fit.

I figure just major airlines have crew problems, pshaw'right buddy!

Last I went to McDonalds, the Big Mac was nothing like the picture.

[Ryan]

Whatta baby, because I'm sure that everytime he goes out to dinner the restaurant a.) delivers the food promptly b.) brings the right food c.) delivers food that is free of human hair samples d.) is cooked right. Why doesn't he cry me a river [img]/ubbthreads/images/graemlins/smirk.gif[/img]

[FL270]

Speaking specifically about US Airways at DCA, even money says the crew had nothing to do with the cancellation. The agents there generally don't get the real story and will make up just about anything they can blame on somebody else to tell the passengers. In any case ... I agree, what a whiner! Things don't always go smoothly ... but they usually do! Try showing up at the airport 18 days a month, buddy ... we run on time or better 15 of them.

NEWS FLASH: Sometimes airplanes are late. Sometimes airplanes cancel. Sometimes luggage gets misdirected. GET OVER IT.

[Doug Taylor]

He's a consultant!

Those than can, do. Those that can't, consult! [img]/ubbthreads/images/graemlins/smile.gif[/img]

(mad props to the consultants that aren't part of the evil empire)

I oughta write him, include some snack mix and a USAir travel voucher for $500 then wait for the glowing press release about the re-emergence of USAir.

[Cosmo1999]

Actually this one was not US Airways fault. This was a flight operated by mesa airlines and this is all too common lately. Last week I showed up for my flight guess what they couldnt find a captain for it. This is not an isolated incident and too bad he couldnt tell the public what airline this really happened on. They are so short people here that they can not cover all flights. Thats crap that he said it was US Airways when it was operated by a mesa ERJ. I looked at the flight table and the 9:30 am departure is always a Mesa Flight. Just because the ticket says US Airways/United or whatever doesnt mean the blame should always fall on the major [img]/ubbthreads/images/graemlins/banghead.gif[/img]

[Kristie]

yeah.. i just got this in my inbox and luckily, i looked for it ahead of time - otherwise it would have been postd twice! haha [img]/ubbthreads/images/graemlins/blush.gif[/img]

the thing about people like this is that they go for the lowest fair they can find and then bitch about the "lowest they can find" service... maybe if people went for quality, there would be more quality???

[tonyw]

Dear Mr. Emmert:

Would you like some cheese with that whine?

Also, when your flight is cancelled, do not be like the lemming you seem to be. Simply dial the toll free number that ALL airlines have and rebook.

Moron.

Yours Truly,

Tony W

Okay, now that letter's out of the way, let me say that it is truly a pleasure to work with journalists who do their jobs and don't just say, cut wages, cut wages, cut wages.

[OCflyguy88]

Why am I all of a sudden hearing violens. [img]/ubbthreads/images/graemlins/insane.gif[/img]

Seriously, those people are so whinny about every little thing. An FA could had them a full can of soda, not one but two bags of peanuts, and they'd get pissed because the FA didn't ask them nicely what they wanted.

Blah!

[JHines]

His delivery is certainly over the top, and I'm sure some of the problems he attributes to "majors" could apply to any airline, but he does identify some real problems:

1. Poor communication of important flight information to paying customers.

2. Crew scheduling errors (okay it happens).

3. When #2 happens, poor accommodations for large group of passengers who need to reschedule.

4. Poor quality control on bag handling.

I wouldn't consider those "optional, luxury" services or "bitching about the peanuts", yet all the comments in this thread so far equate to "take your crappy service, Mr. Emmert, and shut up".

That doesn't seem like any way to run a service business to me.

[TheWife]

I agree with you! It seems like everyone lately has the "stuff happens, too bad, go home and cry about it" attitude. I UNDERSTAND that stuff happens and that because of the sheer volume of travellers it can't possibly go smooth all the time, every where. But it seems to me that in the last few years, problems with baggage and cancelled flights has gone from being occasional to being the norm. You almost have to count on having a problem and preparing to deal with it before you even leave. Maybe I just don't have a clue what I am talking about--but it really seems to me that there is a lot of room for improvement in the efficiency department, and that if it doesn't change soon, people will get sick of flying and not go as often. JMO.

[Kristie]

hmmmm when i think about it.. this almost sounds like a repeat article from not too long ago.

[kellwolf]

[ QUOTE ]
8:15 a.m.: Arrived at the gate for our 9:30 a.m. direct flight to Portland, Maine.

[/ QUOTE ]

Hahahaha. Yeah, try arriving that late at MCO for a 9:30 AM flight. Yes, an hour and fifteen is considered late by TSA here (er, there), especially for the covetted 9 am-3 pm time slots.

[ QUOTE ]
10:30 a.m.: Informed "operations" was trying to find us a new flight crew because of a "scheduling problem." (Translation: There was no flight crew to "contact" because we forgot to schedule one, but we're gonna give that a shot now.)

[/ QUOTE ]

How about "we pay crap wages here at our airline, therefore we barely have enough staffing to cover your precious flight."

[ QUOTE ]
fly to La Guardia, and catch a prop plane to Portland.

Wah! We're sorry not all planes are 757s. Get over yourself.

[ QUOTE ]
(I was, however, pleasantly surprised that the plane wasn't filled with crates of chickens.)

[/ QUOTE ]

We'd be happy to arrange a flight to Puerto Rico for you on Castro Air. They might leave on time, since that seems to be your main complaint so far.

[ QUOTE ]

2:16 p.m.: Nearly trampled to death during the mad rush to the lost-baggage counter.

[/ QUOTE ]

Um, I doubt it, especially if you flew in on a "prop plane."

[ QUOTE ]
Mathew Emmert enjoys flying -- he just wishes the experience didn't add so much gray hair to his growing collection. He doesn't own shares of any securities mentioned in this article, but he is the editor and lead analyst of the Fool's dividend-oriented stock newsletter, Motley Fool Income Investor.

[/ QUOTE ]

Ah, silly me. Now I see. Of COURSE he's a qualified expert on airline ops. 'Cause financial analysts know everything.....

I'd love to write an article on how I got bad financial advcie from his newsletter, and that's why my 401k is in the tank.

[flyover]

Excellent post.

The airline business is a service business. Nothing says bad service more than poor communications. And there is nothing that airlines do worse than communicate. I guarantee you that you can take the same set of circumstances and change only one component, the quality of communication, and make it two competely different experiences for the customers.

And it does not matter at all that it was Mesa. USAir markets it as theirs, it's theirs.

For many reasons, security hassles and service being two big ones, the public does not value flying very highly anymore. It's hard to raise your prices when the public doesn't value your product.

[Mr_Creepy]

[ QUOTE ]
And it does not matter at all that it was Mesa. USAir markets it as theirs, it's theirs.

[/ QUOTE ]

Where did you see Mesa? I don't think Mesa has ever served Portland from LGA, and certainly not in a prop (which would be a 1900.)

It is most likely Colgan. Could also be Piedmont-Allegheny.

I don't know who is doing the DCA flights now, but that used to be Midway. If it's a jet to Portland, then it could be Mesa, Chautauqua, or PSA.

[flyover]

[ QUOTE ]
Where did you see Mesa? I don't think Mesa has ever served Portland from LGA, and certainly not in a prop (which would be a 1900.)

It is most likely Colgan. Could also be Piedmont-Allegheny.

I don't know who is doing the DCA flights now, but that used to be Midway. If it's a jet to Portland, then it could be Mesa, Chautauqua, or PSA.

[/ QUOTE ]

Someone else mentioned it above. The original flight was out of DCA at 9:30 am. It really doesn't matter, my point remains the same. Code-share flights, especially when the airplanes bear the livery, are part of the mainline carrier's service.

[Cachon]

It doesn;t matter who it was, if I buy a airline tikect with USairways, I would expect a decent services no matter who they used to get me there. I still will blame USairways for any problems.

For example here at my job we used hundreds of supplyers to build a final product, if something goes wrong we can't just say to the customer sorry it was not our fault it was someone elses fault. Thats not how it work people we are responsable for the final product no matter what.

If I book a flight I'm expecting the airline to have a pilot to fly that plane even if I pay a dollar for that service. [img]/ubbthreads/images/graemlins/banghead.gif[/img]

[flyover]

[ QUOTE ]
Hahahaha. Yeah, try arriving that late at MCO for a 9:30 AM flight. Yes, an hour and fifteen is considered late by TSA here (er, there), especially for the covetted 9 am-3 pm time slots.

How about "we pay crap wages here at our airline, therefore we barely have enough staffing to cover your precious flight."

Wah! We're sorry not all planes are 757s. Get over yourself.

We'd be happy to arrange a flight to Puerto Rico for you on Castro Air. They might leave on time, since that seems to be your main complaint so far.



[/ QUOTE ]

Seriously, is it any wonder that airline customers don't feel very "special"? This guy got a bad experience and lost the first day of his vacation. And in the process got treated exactly like your post suggest he should expect, like it's just no big deal. Live with it.

I remember when I first got into the airline biz. My little airline parked next to TWA gates at MCI. I was constantly amazed at how these people treated their customers. I was trying to help one of my passengers with her connection and a TWA agent was treating her like s**t. I finally asked him how he thought TWA could stay in business when they treated their customers like this. His answer, a smile and "Frankly, I couldn't care less." There was a lot of that at TWA in those days. And that was pre-deregulation and this guy was very well paid.

I have no doubt that everyone on these threads avoids businesses that treat them poorly and act like their business is not appreciated. This guy's main complaint was that he was not cummunicated with in a customer-friendly manner. Does it not piss you guys off when you get treated like that? We need to all remember a passenger is someone riding in an airplane, a customer is someone that pays to ride in an airplane.

[tonyw]

Michelle, I used to be on the road at least a week a month. It is not like what Doug and the guys getting paid to fly did, but that certainly qualifies me as a frequent traveller.

You could always tell who the newbies and the two times a year people were. They were the ones who whined and complained.

You do it enough, and you realize, hey, weather happens. Mechanicals happen. Delays happen. You roll with it.

And when the newbies and the two time a year people start whining, you get more irritated at them than you do the flight delays. The conversation usually goes like this:

Newbie: I can't believe this flight is late. Oh, my God, I'm never flying this airline again. Can you believe them?

Me: It happens.

Newbie: What do you mean it happens? They're wrong, they're screwing us. How can you be so calm.

Me: It happens. Now if you don't mind, I'm reading the paper.

Newbie: Shocked look, then goes and looks for someone else to listen to his whine.

[kellwolf]

[ QUOTE ]
Seriously, is it any wonder that airline customers don't feel very "special"? This guy got a bad experience and lost the first day of his vacation. And in the process got treated exactly like your post suggest he should expect, like it's just no big deal. Live with it.

[/ QUOTE ]

While I agree that every airline customer should be treated special, not all the problems are on the airline. Prime example is the guy Tony was talking about and the flight being late. I've seen people come up to the ticket counter 15 minutes before departure, and they were amazed that they might not make their flight. Guess who's fault it was? The airline's. "I'll never fly this airline again." "I can't believe you people won't hold the flight for me."

There are a lot of passengers out there that no matter what you do, they're gonna be pissed. I saw it EVERY DAY for two years, and this guy came off as one of those passengers. I've seen CSAs bend over backwards trying to re-route a passenger that came running through the terminal 5 minutes after his flight pushed. Was it her fault that this guy decided to spend another 2 hours in the theme park, even AFTER being told that he would probably miss the flight? No, but she was trying every thing she could to get him to his destination as soon as she could. He complained about all the connections he would have to make (he HAD a direct flight), that he should get a free ticket b/c they didn't hold the flight for him, and the standard "I'll never fly this airline again. You people are unbelievable!" Sometimes you do all you can, and the passengers still treat you like s*it. The best thing you can do is not take it personal, smile, and tell them to have a nice day. Trust me, I've wanted to tell them "Good! Don't fly my airline again, since personally I wouldn't mind never seeing your angry face more than I have to." Nope, we have to go with the "I'm sorry to hear that, sir. Is there anything else I can do to change your mind?"

While I agree that the airlines are hideous as far as communication goes, sometimes it's NOT the airlines' fault. A lot of this guy's comments sound EXACTLY like a passenger who is blowing it out of proportion.

[flyover]

[ QUOTE ]

While I agree that the airlines are hideous as far as communication goes, sometimes it's NOT the airlines' fault. A lot of this guy's comments sound EXACTLY like a passenger who is blowing it out of proportion.

[/ QUOTE ]

It is totally the airline's fault. The failure to train customer contact people in how to effectively deal with unhappy customers is a major failing of the industry. The first airline that does it will get the best customer satisfaction ratings in the industry. And it will make all the employee's lives easier. Still waiting for it to happen.

[FlyingFish]

I fly almost every week and I you certainly can tell those who fly regularly and those who don't. We've all got horror stories, and some shining moments, but the point is that in a company that has thousands of employees your bound to run across a couple of jerks, and on the flip side your going to see customers that acts that way as well. I would contend that those who do fly regularly understand that things happen and that they will get resolved without getting all worked up. There are exceptions in both cases but by in large I think that most (frequent and non-frequent) paxs respond to:

1.) Being treated with respect.
2.) Having the airline folks be able to empathize with them when things do go wrong.
3.) Not having an attitude.

We've all seen the people trying to get something for nothing and it won't stop, but I think that most reasonable people will come away with a positive response in dealing with a person who exihibits those three traits.

Just my delusional opinion...

[kellwolf]

My point was sometimes you DO everything you can, and the customer is still not satisfied. I agree that there needs to be a serious shake up in training as far as customer contact goes. However, you do have passengers that will be unhappy and complain NO MATTER WHAT. Some people have in there mind what they want, and they will settle for nothing less. If they don't get it, suddently other things pop up that may or may not have happened. I don't doubt that this guy's flight was cancelled nor that his baggage was mishandled. The airline dropped the ball on that one. What I DO doubt is that they did nothing to rectify the situation or offer something in the way of compensation. None of that is mentioned in the guy's article. Were ALL of the airline's employees "barely audible" or was this guy distracted because he was going on vacation and maybe not listening as well as he could've been?

[PhilosopherPilot]

[ QUOTE ]
He's a consultant!

Those than can, do. Those that can't, consult! [img]/ubbthreads/images/graemlins/smile.gif[/img]

(mad props to the consultants that aren't part of the evil empire)

I oughta write him, include some snack mix and a USAir travel voucher for $500 then wait for the glowing press release about the re-emergence of USAir.

[/ QUOTE ]

Ack! I am a consultant. I'm not part of the evil empire though, so I guess I'm ok. [img]/ubbthreads/images/graemlins/smile.gif[/img] Actually I just told my current client that I am getting out of the consulting business for the wildly lucrative flight instruction business!

G

[tonyw]

Problem is, most of the complainers come up there with an attitude -- your airline screwed me and I'm going to rant at you so fix things for me.

Go up to ANYONE like that and you will get the absolute minimum that they can give you without getting in trouble.

Want someone to hook you up? Treat them politely, don't scream and shout at them, and see what happens.