Oil prices are just an excuse to gouge airline passengers
The turmoil that the airline industry is going through has raised many questions as to how the airlines of the future will operate and what might be in store for the traveling public.
Let me say up front that I spent my entire career in the airline industry and although it has been overall a very successful one, I have had my share of failures, from which I have learned a great deal. But I always held the belief that the customer is king. Robert F. Six, the chairman of Continental Airlines from 1936-'81, once told me, "Always remember, it is the consumer that pays our salaries; the company merely handles the money"
I have to confess, though, that I never thought the industry would turn against and alienate the only asset they have, their passengers.
It is a fact that the price of oil has doubled during the past 12 months and fares needed to be raised. But are the airlines now taking advantage of the oil crisis, and are they trying to make up for all their past and current losses that have nothing to do with today's oil price? Are the amounts of these fare increases justified?
The recent oil crisis has provided airlines with the perfect excuse to blame decades of chronic losses and attribute them to the oil price increase that has occurred in the past 12 months. We all know that airlines were losing money even when oil was a dime a gallon!
I know most of the reasons for these colossal losses but it would take the space of the entire newspaper to explain it. I will sum it up in four words: lack of cost control. Airlines are addicted to spending and it doesn't matter how much money they will squeeze out of the passenger, they will spend it all, and then some.
Considering that fares have been substantially increased already, is the way that the airlines are going about trying to raise additional revenue the right way? I have my doubts. It seems to me that this "nickel and dime" strategy that these top-notch managers have come up with (by some strange coincidence, they all came up with it simultaneously) will not only alienate passengers and discourage them to travel, but it probably will cost the airline more to administer and account for these extra charges than the benefits they will gain from them. Before you know it, more personnel will be needed to deal with the extra work and this will add costs.
The simplest way to increase revenue would be to raise the fares in line with the fuel price, which represents around 35-40 percent of the seat-per-mile cost. The passengers would understand that. It also would avoid the inevitable delays, disputes, arguments and stress that occur when passengers check in for their flights.
These extra charges for luggage, water, food, pillows, blankets and so on are not only unnecessary - they are unfair. Consider this: passengers are locked inside a metal tube for a number of hours. They have no access to water or food and are dependent and at the mercy of the airline for these things. For security reasons, they are not allowed to take any liquid on board of the aircraft. At 35,000 feet, the dehydration level is pretty high and the need for a drink of water or a soda is strong. But passengers who want to quench their thirst have to pay for it. Are we serious?
I recently saw on CNN an interview with the CEO of JetBlue. He was explaining how they came to charge passengers for pillows and blankets. He said that he made that decision after carefully listening to the consumers needs and wants. Did he really? And he said it with a straight face! Considering that the cabin temperature is controlled from the flight deck, if you turn blue (no pun intended) with cold, you can always purchase a blanket and as a special treat you can take it home with you. A home decorator's dream!
How about this: You buy a ticket and the airline will take you on your journey. You might be going for a few days or a few weeks but hey, do you want to take a change of clothes? Well, then you need to take a suitcase with you and yes, you will have to pay an additional charge for it. And please make sure that the suitcase weight is exactly as specified by the airline; otherwise, there will be another charge.
And what about these "no change, no refund" rules? You book your flight, say, a couple of months in advance. Then you might need to coordinate hotel reservations, connecting flights and car rental. But if, God forbid, you should need to change your travel plans, well, that is a no-no with the airlines unless you pay a hefty (and unjustifiable) penalty. Furthermore, if circumstances force you to cancel your trip, even a month prior to departure, guess what? You lose your money. That's right, the airline will not refund you a cent and it will end up with the seat and your money. This has happened to me many times.
Is this an illegal practice? If not, it ought to be. I don't know of any industry where the consumer could end up losing the product and his money.
I have no doubt that the world will see a tremendous increase in demand for air transportation, which is the fastest, safest, most reliable and most economical way of traveling medium to long distances.
And despite all the cries to the contrary, deregulation has been one of the best things to happen to the industry. Deregulation is designed to stimulate competition, encourage new entrants and sharpen the quality of management. Deregulation is also designed to provide the consumer with alternatives, choices, and yet, after an initial prolification of start-up airlines that really shaped and changed the market, the industry seems to be going the other way. The only strategy that seems to be working now is for the small, low-cost airlines to be absorbed and become part of the majors, therefore making the word "competition" meaningless.
In today's competitive environment, cost-efficient airlines that can offer low fares are the answer to making affordable air travel available to almost anyone. But the airlines must be careful to create a product that maintains the standards and the efficiency that the passenger expects. This can be achieved only through the airlines themselves becoming more cost effective and by more intelligently managing their costs.
Affordable air fares have changed the travel behavior of millions of people. It has provided them with the opportunity to travel more often and for less money, therefore having more disposable income once they reach their destination. I hope that this trend will continue for years to come.
I believe airlines will meet a real need by listening to the passengers. In doing so, they will stimulate demand at a time when the industry is coming to grips with rising fuel costs and new challenges.
What should the airlines' philosophy be? Think of the passenger. Keep it simple, keep it affordable, keep it safe and keep it reliable. By providing good and friendly service, the passenger will realize that cheap doesn't mean shoddy. If they can achieve these objectives, airlines will win the loyalty of passengers, they will satisfy a demand that will grow in the years to come ... and who knows, they might even be profitable.
Franco Mancassola was the founder of Discovery Airways. He lives in Hawaii Kai.