Let the Airlines Fail

The American air transport industry -- or certain members of it, anyway -- are being bailed out by the U.S. government to the tune of about $15 billion. This is a horrendous mistake. It's both an irresponsible and immoral use of taxpayers' money, and it's ultimately harmful to the airline industry, too.

As customer service and on-time performance in air travel have gone down the tubes in the last few years, we've been told by the airlines that the problem was lack of capacity. The American airline system was operating at 100% capacity, leaving no cushion for problems. Airplane break down? It means a delay, because there are no spare aircraft available. Miss a connection? You've got a problem, because all the later flights to your destination are sold out. Ticket agents, gate agents, and on-board staff are incredibly rude? Well, they're working extra-hard these days because all the planes are full, all the time. Want an upgrade to business class or first class? Sorry, all those tickets have been sold for cash to dot-com executives.

And now, after a slight awakening on the part of business to the incredible cost of constant travel, and after a slight slowdown -- which is all it was and is -- in travel after September 11, the airline industry is near collapse, they say.

James Goodwin, the CEO of United, said on 17 September that the airline "will perish" in the next year unless costs were contained.

I just want to make that entirely clear: The airline industry is saying that they put nothing away the entire time they were operating at 100% capacity. We're not exactly experiencing an economic bust here. The airlines are saying, in effect, that their companies cannot survive anything but an extreme boom economy. Either their margins are so slim that they couldn't afford to, or their management was too stupid to understand that the economy works in cycles. In either case, their business judgment is highly suspect.

And these companies should be bailed out by the taxpayer? It would make as much sense to bail out high-burn-rate dot-coms. After all, their only fault was an inability to survive in anything but an overheated, frenzied economy.

If it were truly a matter of the airlines being victims of terrorist attacks, I might be able to stomach some sort FAA-arranged loan scheme. But that's not the case. The problem is not that people are now afraid to fly, it's that the airlines have dug their own grave and now expect us to lift them out of it.

For while the major airlines in the U.S. are now forecasting their own demise, little Southwest Airlines actually made a profit in the third quarter of this year, will probably make a profit in the fourth quarter, and has laid off none of its employees.

Southwest is based in Dallas but unable, generally, to fly you there because it's hamstrung by bureaucratic red tape as a result of anti-competitive tactics on the part of American Airlines and DFW airport. When you fly on Southwest, you've got to find your own seat, but you generally pay much less -- $1500 less on a recent flight I took -- for your trouble. And, most importantly of all, Southwest employees do not seem to hate their customers.

If you want to eat anything other than peanuts on a Southwest flight, you bring it yourself. This is both cost-effective (you can buy a lot of snacks for the $1500 you're saving by flying Southwest) and possible, since Southwest flights tend to leave on time. If you want to fly between two minor cities, you're going to be making a connection. And if you want to fly first class, you will be disappointed.

Southwest does not offer a number of things, then, that the major airlines do. It has cut them from its offering because it cannot make money on them. The major airlines, on the other hand, will assign your seat number and serve you food. And in an attempt to make up for the costs of that, they will cut their employees' pay (thus making them bitter), or they will neglect to maintain their aircraft properly (thus contributing to failures and delays). Southwest concentrates on respecting the customer and moving him from point A to point B. The major airlines focus on image and prestige and control, and see the customer and his transportation needs as ancillary.

And, amazingly enough, the company that contains its costs, concentrates on its core business, treats its employees and customers well, and offers good value for the money, is making a profit while the giants falter.

And this is why the major airlines should be allowed to fail, if that's truly where they're headed. The current airline companies have shown that they are unable to actually provide the service they purport to and make a profit. With them gone or humbled, Southwest might find it in its interest to buy a few foreclosed 777s, paint them orange, and start flying to London and Paris at cut rates and with friendly staff.