Thursday, June 19, 2008

The Airline Business

I wonder what it is like to run an airline. The industry is only a little less unpopular than George W. Bush, your friendly cable company and the IRS. Whatever you do, people complain.

They have one heck of a business model. They are selling all their seats (been on a flight with fewer than 99% of seats filled recently?) and they are still losing money. They have to do something. Well, here's what they are doing.

1. Sell fewer seats. This must be a good idea, I guess, since they're all doing it. At the logical extreme, they each sell no seats at all. Then, the seats can be priced infinitely high. The only minor snag is that there are no planes flying and no seats available to sell. They're obviously assuming that the public will quickly adjust to this minor inconvenience.

2. Unbundle service. Well, first of all, to call these unbundled items "service" is a slight stretch. The list of "services" they are now charging for includes checking a bag, getting a reservation for a seat, being served food or beverages, and, ...well, you get the idea. I suppose the airlines could charge extra if you want a guarantee that the plane will actually land in a specific city that you choose ahead of time. It would be a heck of a lot less bother for the airlines if they could just fill up their planes as passengers arrived at the airport and fly them to wherever was most convenient.

3. Complain to Congress. It used to be that the airlines were regulated. The most successful airlines employed hoards of lawyers with the proper political skills and made lots of money. The downside was that the government decided who could fly a specified route and what price they could charge. Maybe they should return to those days again. There must be hundreds of unemployed lobbyists available now that Obama and McCain have banned them from their campaigns.

I'm sure that there are many more creative ideas that the airline executives could use. Feel free to post any that I've missed. They may pay you if they adopt your idea (although you'll probably have to sue them first).

1 comment:

Anonymous said...

The issue with airlines is the unions and the cozy arrangements with the US Gov't. Until air travel is treated like any other business, these issues will persist. Same thing goes for the Big 3 automakers.