The Squeeze is on
With fuel costs soaring to record levels, financially strapped airlines are going to extremes to nickel and dime passengers
The airlines are running out of ways to squeeze money out of passengers, now that they have jacked up fares all year and slapped extra charges on checked bags.
What next? Pay toilets? Or how about this: Oxygen masks that drop down to offer passengers better air in those cramped, smelly cabins. The oxygen masks are already bundled overhead for emergencies. So just hook them to seatback credit card scanners. One swipe of the American Express card and bingo, you're in a meadow in springtime rather than in some foul 737 circling Dallas.
Seriously folks, we're in a fix, us and the airlines. Passengers can grouse about airline management all we want, but the jig really is up. With oil at $130 a barrel, airline losses mounting, and most of the realistic revenue-raising ideas exhausted, all the airlines can do is to shrink the system and hope for the best.
Thus airlines are now steadily reducing domestic seating capacity. Industry analysts say that the domestic system needs to shrink by about 20 percent this year compared with last year -- at a time when most flights are already taking off full.
"I see spreading panic in the front offices of airlines. But this is not a time to panic, it is a time to think," said Michael Boyd, president of the Boyd Group aviation consultancy.
There's a lot to ponder. How much more can fares be raised before demand drops even below the capacity of a shrunken system? How many annoying new fees can be added before customers push back harder than the market can bear?
After all the major airlines, and a few low-cost carriers, announced a $25 charge for the second checked bag for most coach passengers, American Airlines raised the stakes and said it would begin charging $15 for the first checked bag.
The extra bag charges are starting to appear at airports as summer peak season bears down. That is incremental revenue, certainly. But what about the added commotion? After all, curbside skycaps and terminal ticket clerks have to collect that money and make change. Lines inevitably grow.
And more passengers certainly will try to cram even more into carry-on bags -- adding one more brick to the load for flight attendants who already struggle mightily to fit everything into overhead bins. So the cumbersome task of getting everyone seated for takeoff now becomes more challenging.
"Airlines need to realize that they have to get the customer on their side, and you don't do that by making them line up longer at the counter checking bags," said Boyd.
Every business traveler I know understands that the airlines are not intended to operate profitably at oil prices anywhere near $130 a barrel, incidentally. Fares undoubtedly will rise.
But "nickel and diming" customers is counterproductive, argued Boyd. Like many other industry analysts, he thinks airlines need to come to terms better with the huge costs of a delay-riddled system, and to plan more intelligently to dig themselves out of it.
Last month, the majority staff of the Joint Economic Committee in Congress issued a report that underscored the second biggest problem in air travel, after oil prices. That is the extra costs on airlines imposed by an air transportation system that has not been able to cope with demand for years.
Last year, "air traffic delays raised airlines' operating costs by $19 billion," counting fuel, crew, maintenance and other costs incurred by planes circling and waiting to land or sitting at gates or on tarmacs beyond departure times, the report said.
Officially, about a quarter of all flights arrived late last year. But airlines routinely build extra time into the schedule for many flights, which "significantly underestimates the problem," the report said.
There are no easy answers. Boyd says airlines need to fix inefficient internal flight operations systems, while passengers need to insist politically that the national air traffic control system gets fixed.
Imposing annoying extra fees for marginal revenue "just makes it harder for the rest of us to do business," he said, adding: "I understand it's crisis time for the airlines, but when you panic in a crisis, you're doomed."