Forget about the price of jet
fuel, the impact of terrorism and the state of the economy.
Likewise, management performance, labor relations and distribution.
The root of the airlines problems, a former travel industry exec
suggests, may be bigger and more fundamental than any of the
factors that analysts usually look at when they ponder why aviation
is so troubled.
The exec, who was
never employed in aviation, was reacting to a recent column I wrote
(Missing Link, June 6) that assessed what impact the
reduction and elimination of travel agent base commissions may have
had on the legacy airlines current problems. I concluded that any
number of factors may have had a bigger impact.
But the exec
suggests that Im still looking at trees when the problem may be
with the forest. His is a very troubled forest, and one in which
airplanes are only one type of tree.
I believe there are
other fundamental issues that are at work in the American passenger
transportation industry that extend beyond the airline industry, he
wrote in an e-mail. Consider the state of U.S. passenger railroads;
the fate of the private, intercity bus lines; and, of course, the
demise of the U.S.-flagged passenger ships, and you are prompted to
wonder why American business finds it difficult to make a business
from transporting people.
That is an acute
observation. Subsidies, whether direct or created by a favorable
regulatory environment, are not uncommon in passenger
transportation, from commuter buses to national
Even some airlines
receive subsidies. Developing nations argue, convincingly, that if
they didnt support national carriers, no airline would serve their
country. And theres an example closer to home: U.S. carriers
received a multibillion-dollar bailout after 9/11.
Though airlines can
be profitable without subsidies, its still true that from the time
of the Wright Brothers, the aviation sector is, cumulatively,
running in the red.
passengers for business or leisure isnt a viable business in the
long term, that has some sobering implications for the rest of the
travel industry. And although trains, buses and ferries have their
place, the industry is always going to be most concerned with air
One could argue
that as long as there is no legislation limiting the size of male
egos, new airlines will start as fast as they collapse, but there
may be lessons to be learned from other travel segments.
Cruise lines may
offer some guidance. Though cruise ships transport people, thats
not why people board them. Theyre entertainment vessels. People pay
a fair amount to travel on them, even though passengers often leave
the ship right where they boarded it.
This isnt lost on
the profitable (and entertaining) airlines, like Virgin Atlantic
New entrant Eos is
modeling itself after another profitable sector of the industry: It
claims its the airline equivalent of a boutique hotel. Thats an
interesting claim, because hotel rooms and air seats can both be
seen as commodities. Eos founders may have seen that and wondered,
if so, why have room rates risen significantly faster than air
fares over the past two decades?
figured out that, when their product is positioned correctly,
people will pay for style and amenities. I dont know whether this
holds true for air passengers, but in
the long run, airlines have little to lose by experimenting with
radically different models. Whether the problem is fundamentally
with forests or trees, they cant just continue to stay lost in the