Are Attempts to Squeeze More Profits Backfiring on Airlines?

“T here’s been studies that show if you put enough rats into a cage they will fight. We are beginning to reach that level with humans.”

This comment by FlyerTalk member HDQDD — posted in a discussion pertaining to yet another flight which was diverted due to a disagreement over the recline of a seat — resonated with me; and it caused me to wonder: are the attempts to squeeze more profits backfiring on the airlines?

It would seem to me that there is a threshold of revenue versus passenger comfort; and that crossing that threshold excessively either way would not be beneficial. It would be unrealistic if airlines offered all of its passengers premium class seating and service at economy class prices — the airline would most likely not survive. If the seats are too uncomfortable for passengers — more of whom seem to be crammed onto each airplane for a flight — then there will naturally be more animosity amongst passengers…

…but when the animosity gets to the point of a flight being diverted, does that not cost the airline money? Does it not consume more fuel; create an experience less than desirable for passengers who might give a second thought as to purchasing a ticket for a flight in the future; waste the time of members of the flight crew and employees on the ground such as gate agents; affect other flights using the same airplane?

Of course, the media — myself included, admittedly — can be blamed for calling attention to the perception of the increase of “air rage” as a result of the debate pertaining to seat recline as there have been only several incidents out of thousands of flights reported in recent weeks. Surely those few diversions are merely an anomaly and not a growing trend — right?

Due to a shift in supply and demand, the airlines now have power which they have not had for many years where they can set whatever rules and policies they want — within parameters set by law, of course. The prevailing attitude seems to be that if you don’t like it, too bad — and, of course, that is their right to do so in operating their businesses…

…but if that is the overall attitude amongst the airlines of this new age of commercial aviation, they need to remember that it was not that long ago when they asked for your help. Do you remember this open letter sent to customers six years ago from the chief executive officers of what was then twelve airlines in the United States?

Our country is facing a possible sharp economic downturn because of skyrocketing oil and fuel prices, but by pulling together, we can all do something to help now.

For airlines, ultra-expensive fuel means thousands of lost jobs and severe reductions in air service to both large and small communities. To the broader economy, oil prices mean slower activity and widespread economic pain. This pain can be alleviated, and that is why we are taking the extraordinary step of writing this joint letter to our customers.

Since high oil prices are partly a response to normal market forces, the nation needs to focus on increased energy supplies and conservation. However, there is another side to this story because normal market forces are being dangerously amplified by poorly regulated market speculation.

Twenty years ago, 21 percent of oil contracts were purchased by speculators who trade oil on paper with no intention of ever taking delivery. Today, oil speculators purchase 66 percent of all oil futures contracts, and that reflects just the transactions that are known.

Speculators buy up large amounts of oil and then sell it to each other again and again. A barrel of oil may trade 20-plus times before it is delivered and used; the price goes up with each trade and consumers pick up the final tab. Some market experts estimate that current prices reflect as much as $30 to $60 per barrel in unnecessary speculative costs.

Over seventy years ago, Congress established regulations to control excessive, largely unchecked market speculation and manipulation. However, over the past two decades, these regulatory limits have been weakened or removed. We believe that restoring and enforcing these limits, along with several other modest measures, will provide more disclosure, transparency and sound market oversight. Together, these reforms will help cool the over-heated oil market and permit the economy to prosper.

The nation needs to pull together to reform the oil markets and solve this growing problem. We need your help. Get more information and contact Congress by visiting

www.StopOilSpeculationNow.com/sos

Did you help the airlines back then? Have you become irrelevant as a result?

I still believe that the attitudes amongst passengers need to be more civil towards each other and towards members of the flight crew aboard an airplane. That would go a long way towards preventing future incidents which could lead to diversions of flights — or even worse, violence aboard airplanes…

…but if the airlines continue to cut back on reasonable comfort for their passengers in order to squeeze extra profits, it could backfire on them in terms of lost revenue and added costs. Even Michael O’Leary — known for his outrageous comments and his quest to squeeze every last penny out of customers of Ryanair by any means possible — vowed earlier this year for the first time to transform the culture of Ryanair as one way to address customer service issues moving forward by eliminating things which irritate customers.

I am all for airlines doing whatever they can to profit as much as possible. However, when the airlines engage in practices that do little more than irritate their customers, they should expect more outrage — and perhaps more costly diversions of flights.

Also, things — such as the economy, for example — tend to happen in cycles. These are great times for the airlines, to be certain — but how long will they last? Even with fewer major airlines in the United States, will they be able to withstand a future downturn in the economy? Will passengers remember when the airlines seem to care more about profits than their comfort? Could a disruptive technology such as an evacuated tube transport system which would purportedly transport you from New York to Beijing in approximately two hours eventually compete with — and perhaps unseat — the airlines?

A standard seat in the economy class cabin is not painfully uncomfortable for me — I have spent thirteen hours in one on a transpacific flight and I more than survived; and I am preparing for a similar experience on a slightly longer flight next month — but it certainly can be for someone who is excessively overweight or unusually tall.

There are people who may believe that the newer premium economy class cabins installed in recent years should be the standard economy class cabin. There are others who staunchly proclaim that if you want a better flight experience, pay more money and purchase a premium class ticket. I personally tend to believe that the answer may be a compromise somewhere in between. After all, the airlines are raking in billions of dollars not necessarily from the airline tickets they sell; but rather from ancillary fees. Would it not make sense to lose a few seats per airplane and modify the seats in the economy class cabin to be even slightly more comfortable so that happier passengers could possibly spend more on products and services which cost extra — while decreasing the possibility of costly diversions and other expenses due to incivility?

What are your thoughts?

8 thoughts on “Are Attempts to Squeeze More Profits Backfiring on Airlines?”

  1. Another problem is the airlines now block large numbers of economy seats for purchase. Excessive change fees, $200, are also a problem.

    I started flying in about 1989 and I feel now I pay just about the same price, and overall get less service namely in in flight food & beverage. The main good things that have come about are in flight Wi-Fi, online checkin, and mobile boarding passes.

    Southwest is probably the most reasonable airline for the masses without any sort of special status. They provide a number of consumer friendly policies like no bag fees for 2 bags, no change fees, and reasonably affordable premier seating options like you can pay under $20 for the early bird option. In contrast, it can cost nbearly $100 or more for UA Economy Plus coach seats, on top of heavy change & bag fees.

    It seems like the masses, the general public, is just too stupid and appathetic and sheep like, to do anything about the race to the bottom. The public has just sat back and accepted bag fees, and I think more importantly these outrageous change fees and use it or lose it ticketing policies.

    JetBlue has also declined a lot from an industry best standby policy to now something just as bad as any legacy, and I read an article that investors are trying to make JetBlue an even more customer unfriendly airline to boost profits. The one silver lining JetBlue does not get enough credit for is its no change or cancellation fee for Mosaic members, which is their elite level. Alaska Airlines also seems to have this benefit, and seems to be a more customer friendly airline.

    I’ve also been impressed with Cape Air customer service & experience which seems to have a lot of good qualities including no change fees.

    I am not sure that deregulation has helped the passenger experience?

    1. Brian Cohen says:

      You have raised some good points, Mika Pyyhkala. Thank you.

      While fuel prices in the United States are still inexpensive when compared to much of the rest of the world, $4.00 per gallon can still hurt many Americans economically; and I have often wondered what would happen to those prices if every American simply did not purchase fuel for an entire week — or even a day.

      I suppose a similar argument can apply to airline ticket prices or the seemingly worsening conditions aboard airplanes…?

  2. DaninMCI says:

    The average height for an American male is just over 5’10”. I’m 6’2″ and don’t consider myself “unusually tall” and I can just barely fit my knees into many new coach seats. So if the person in front of me is allowed to recline I can’t sit there. If you put 4 adults in a small car and 2 of them have to sit in the back where they can barely fit what do the front seat passengers do? They don’t put their seats back and recline them (even if they own the car or paid to ride in it ) unless they are a jerk.

    1. Brian Cohen says:

      When I sit in a small car in the front, I actually ask the passenger behind me if I need to move the seat up if he or she needs more leg room before the trip begins.

      If I am the person seated in the rear and I find that I am uncomfortable, I will politely ask the person seated in front of me if he or she can move the seat up a bit. My request has never been denied.

      Thank you, DaninMCI.

    2. Scott says:

      The people in the car are your freinds and you are inconveniencing them. They put up with you because they are your freinds. The stranger in front of you is far less likely to allow you to inconvenience them. Stop being so cheap and sit in e+.

  3. Kris says:

    If the planes that have to divert due to arguments flew at 100% load factors (which they usually don’t), it would take just a few days worth of flights for the extra revenue from the 6 new seats to cover the cost of a diversion. To frame this as an issue that costs airlines a lot of money is wrong. The only substantial outlays are for the seats and aircraft down time.

  4. Markj says:

    I think you make excellent points but there might also be some other factors. I, for one, believe we live in a less civil and gracious society. We communicate verbally less…how often do you see four people sitting at a table together and all of them are texting to someone else.

    I think we are more self directed and, maybe, a little more self entitled. When someone invades “our space” by reclining a seat it now causes planes to divert…I am not so sure it is all on the seat design.

    1. Brian Cohen says:

      I completely agree with you, Markj.

      I have discussed the seemingly less civil attitude of society in general in the past; but for this article, I wanted to concentrate more on the possible level of culpability on the part of the airlines with regard to the increase of incivility aboard their airplanes.

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