An open letter to airlines: “When is enough, enough?”
If you haven’t read the airline industry’s whiny open letter to customers yet this morning, you should. No one plays the blame game better than our coddled, oversubsidized domestic carriers, and this is a prime example.
No sooner had the letter and accompanying Web site posted than I received a response from an angry passenger. It’s comes from frequent flier Jeff Fusaro, a consultant for an international software company. (Incidentally, I posted a translation of the letter on our sister site, Tripso, this morning.)
“Something has finally snapped in me,” he wrote. “And I have to scream from atop my soapbox ‘When is enough, enough?’”
He continues ..
I can’t believe we, as consumers, have sat back and watched this happen (including myself).
I can’t believe that any of these many government agencies that are supposedly in place to protect the consumer and regulate the airlines have done nothing other than spout off a quote or two that the issues facing the airline industry should be studied and or looked at.
And where is our government, the representatives we elected and put into these positions to be our advocates and make our voices heard in the grand scheme of things?
I feel as if I am in the plot of a bad movie waiting for a hero to emerge out of the darkness and save us all just in the nick of time. Only in this storyline, the hero we are looking for never does make his appearance.
For any airline executives reading this, I should note that Fusaro’s sentiments are widespread. There is a growing sense of airline fatigue — a sense that the American taxpayer has given the airline industry a free ride during the last seven years, and that something needs to be done.
So I have to ask: Where do we go from here? What do we need to do?
Do we sit back like sheep, cowering in the shadows with blind faith and continue to wait for our hero to make an appearance and save us all?
Or — here’s a novel idea — do we finally turn from sheep to wolves? How about we become our own heroes? How about we band together and as one strong voice and power answer the question ourselves and state loud and clear so that all can hear — NOW, RIGHT NOW, ENOUGH IS ENOUGH!”
I agree with Fusaro. I find the airline industry’s flippant, customer-hostile attitude to be in serious need of a readjustment. Its open letter shows how out of touch the airlines are with reality.
The only change can come from a serious, deep grassroots movement among voters. I think we’re about to get one.
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Comments
26 Responses to “An open letter to airlines: “When is enough, enough?””
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Meow . . .
like the old cigarette commercial, I’d rather fight than switch. . .
Of course, I switched. . . the airlines rarely get my business for non-international, non-transcon flying any more . . . it was easier.
Guess what. Markets are efficient. The more apparent money there is to be made in a market, the more efficient it becomes. Maybe it is true that oil is overvalued, as dot-com stocks were. If so, the price will come back down.
I DON’T believe the airlines need to offer any apologies, but they also shouldn’t be whining.
It is perfectly reasonable for them to raise their prices. But if some airlines ran their businesses more efficiently in other areas, perhaps they’d be able to keep fares where they are, or increase them less, gaining a competitive advantage.
Someday, someone, somewhere is going to come up with a well-run airline. It may be out there already.
That “Open letter to consumers” from the airline executives really made my blood boil. It betrayed a colossal lack of understanding of (or willful disinformation about) how futures markets work.
1. Futures markets do not change the price of the commodity, the commodity prices changes the value of the futures contracts. The price of oil is set by two familiar market forces: supply and demand. That’s it.
2. Airlines depend on “speculators” to be the counterparties of their futures contracts. When an airline hedges against future fuel price increases (as Southwest so skillfully did) by entering into a futures contract, the airline transfers the pricing risk from them to the speculator. If we eliminated all the speculators from the futures markets, the airlines would cease to be able to hedge against future higher fuel costs. Talk about biting the hands that feed you!
3. Nothing is stopping the airlines from participating in the very same markets that the “speculators” do. If they are so upset that “speculators” are buying oil contracts to profit rather than to use the oil, then why don’t they just buy the very same contracts the “speculators” are and profit, themselves?
4. Introducing regulations to the US market couldn’t possibly change “speculation”. Oil is a worldwide commodity, and “speculators” can purchase commodity futures on any exchange, worldwide.
What an obnoxious and disingenuous letter from these airline executives. Surely the problem must be anything other than their own mismanagement of their airlines. In their eyes, anyhow.
Bob - you said it much better than I could. What bothers me more is not the letter itself, but that they truly believe that their suggestions are a reasonable solution.
I will only believe that the airlines are “hurting” when they cease paying millions in bonus money to CEO’s who haven’t managed to make their company profitable in decades. The fact that they have the “income” to spend millions on naming rights for stadiums is absolutely absurd when they ask their employees to take pay cuts and make concessions on a regular basis. The for top executives to recieve rewards for their mis-management is literally a slap in the face. Now they want to put the squeeze on their customers with baggage fees and reduced service - yet another step in the wrong direction.
This open letter to customers is a pathetic attempt to blame others for their lack of management and weak customer service. When the airline industry starts running their business like a business, then and only then will consumers have respect for them. I’ve owned and operated business for years, and when all is said and done, I am the only one responsible for keeping my customers and my employees happy. I can’t blame higher cost or the economy - I have to make sure my customers come back because they want to, and that is the way the airlines need to look at it. When customers become a commodity, businesses go under. You have to give the customers credit for having intelligence and most importantly, freedom of choice.
I eagerly await the day when natural selection thins the herd of mismanaged and inefficient airlines.
Whenever any of the majors complain, I feel the proper response should always be, ‘Um, what about Southwest? How are they making money?’
Such a radical change is needed in some/all of these airlines that I don’t think they’re willing to actually do what it takes to maintain a profitable enterprise. I may not have an MBA or even work in the industry, but when I see an example (Southwest) that profitability is possible, yet none of the majors can stop burning through cash, well, clearly there are solvable problems out there that are beyond the mental capacity/intestinal fortitude for the executives at the likes of AA, USAir, etc, to fix.
If I did my job with such wanton incompetence, I’m going to wager a large sum I’d be fired.
If airlines *want* regulation, they can *get* regulation.
This letter is interesting. An industry that has fought hard against any regulation whatsoever, now is asking the government to regulate another industry.
I hope someone in the government makes it clear to them, they can’t have it both ways. Either, you have a “free” economy with no government intervention, or you have a less “free” economy with some level of government intervention.
And that would mean some regulations for them too.
Two things, I’d like to see:
1) One simple price on the ticket, including all services.
2) One simple price for the ticket, that does *not* change in time.
The second one would kill travelocity and the like, but it would put all ticket purchases through the respective airlines’ website. That’s good for the airlines. Also, as Christopher argued, it would end the speculation of airlines on their own ticket pricing.
I’ve effectively tuned out the legacy carriers at this point. I don’t fly any of them, ever, any more; I call that voting with my dollars. It’s JetBlue and Southwest for me if I’m required to fly from here on out, thanks.
I’m with Lisa on the fact that it’s amazing to me that the fat cats at the top - some of whom are writing this ‘open letter’ are upset about their loss in profits while pocketing millions in bonuses. Some of us get by on a fraction of what you make, friend. Try it from our side of the coin, and then we’ll talk.
This letter REALLY pissed me off. As stated very well earlier in the comments, futures markets make pricing more efficient, not less.
But what is truly amazing is that Southwest signed the letter. They are enjoying $50 pricing because of the futures market, and some poor “speculator” somewhere else is paying for it. So Southwest was smart, used the markets, and signed the letter? What with that?!
First…we won’t see oil prices change anytime soon…at least before January 2009 when a new President steps into office. Our current administration is going to guarantee the oil industry sees as many profits as it can get before it gets booted out on its behind.
Second…the airlines are going to keep begging for our indulgence and help until we say No. My little answer: we’re not flying to Hawaii this year…it was just too expensive. We’re driving to the Grand Canyon instead.
We’re voting for a change in administration. We’re sending emails to our senators and representatives both state and federal. We’re “mad as hell and not going to take it anymore!” and ready to scream it from the newsroom window!
It may seem like a small step and literally like one fish swimming upstream against all the others but if everyone took that one little step…
Isn’t Southwest enjoying profits because of the same “speculation” they played right few years back? Isn’t that the reason it is darling of everyone right now (including me)? Then why is Gery Kelly signing that letter and crying along with others?
I got so sick by reading this letter that I promptly redeemed my miles with a nice Amazon gift certificate. I am at peace now. NO more AAs, Uniteds, and Deltas for me from now onwards!
BTW, I am just curious - Exactly how much worth of fuel is required to play one inflight movie? Will USAirways pass on that profit to its customers?
[...] Elliott had some interesting insights…”No one plays the blame game better than our coddled, oversubsidized domestic carriers, [...]
Not completely sure about the 50% figure, or the year of the airline bailout, but I think the rest is an adequate response (set to the tone of the open letter to consumers)…
Hello Airline Management,
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 consumers, ultra-expensive fuel means thousands of dollars lost just commuting to their jobs, and severe reductions in discretionary spending. This includes your own employees who are continuously asked to take pay cuts while management continues to collect undeserved ‘performance’ bonuses. 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 or writing this letter to our nation’s airline industry.
Since high oil prices are partly a response to normal market forces, the airline industry needs to focus on increased flight efficiency and conservation. However, there is another side to this story because normal market forces are being dangerously amplified by poor management and ridiculously unearned bonuses.
Twenty years ago, airlines actually cared about their customers as people. Today, the customer is looked at as nothing more than self loading cargo, and that reflects the continued mismanagement of the majority of the US air carriers, even with taxpayer assistance. Airlines continually work to squeeze more and more money using unadvertised ‘fees’ and ‘surcharges’. These may tack on 50% or more to the actual cost of travel; the price goes up with each creative ‘unbundling’ yet with the never decreasing base fare the non-using consumer is still picking up the tab. You have even had the gall to blame rising fuel prices for many of the charges, yet when the fuel prices finally fall the charges will remain. Some airline travelers have found that rather than experience the pain of air travel, they would rather travel 18 hours or more by road or rail.
Back in the 1980’s, Congress bailed out the airline industry by removing regulations deemed excessive, opening up the industry to unchecked market speculation and manipulation. However, over the past two decades, the regulatory limits have come to be missed by the air traveling population. We believe that restoring and enforcing these limits, along with several other modest measures (such as a strong federal passenger’s bill of rights), will provide greater customer service, industry efficiency, and sound market oversight. Together, these reforms will help weed out the managers that have brought this once thriving industry to its knees, and once again allow market forces to dictate which companies survive, and which management teams receive well earned compensation.
The nation needs to pull together to reform the airline industry and solve this already overgrown problem.
We need your help. Contact Congress by visiting http://www.house.gov
The leaders of the “major” airlines simply have had no idea how to ever make money in a deregulated environment. Finger pointing is the last defense of the incompetent. We can only expect things to worsen for all of us dependent upon air carriers. read more at http://www.ThePHoenixPrinciple.com
The airline letter is fascinating, but it obviates three facts (also noted above):
1. Southwest Airlines is the only airline stock with a positive return this year, up 8% so far - all others have dived up to 85% year to date.
2. Southwest Airilnes (surprise!) hedges their fuel cost - any airline that does not hedge its full fuel costs (and a NYTimes article pointed out last Thanksgiving, http://www.nytimes.com/2007/11/29/business/29hedge.html ) should fire its Board, CEO, CFO and head of procurement.
3. The coming carbon cap-and-trade system and resulting price-per-ton of greenhouse gases (GHG) is only going to exacerbate the pricing of oil and its users. If you think $150/bbl is high for oil, wait til you calculate $150/ton of GHG.
My father used to say that the airline business was the worst you could invest in because of the long list of risk factors: safety/crashes, maintenance/frequency, fuel/oil prices, consumers hooked on $300 airfares, capital/leases at risk of under-utilization, partial regulation (and more in overseas markets), underpaid staff, and more.
Here’s to the resurgence of customer satisfaction, eco-jet fuel (thanks Richard Branson of Virgin, and soon Continental Air), and employee-respecting airlines (oh how I miss you People Express and Don Burr!)
R. Paul Herman, HIP Investor Inc.
Well said Bob. Could not believe my eyes whan I saw that letter.
Shri - you asked how much fuel would be saved by not showing a movie…You seem to have misread the statement…By removing several hundred pounds of video equipment from each plane, the plane is lighter and uses less fuel for takeoff and cruising (or can haul a couple more paying passengers.) Charging more for luggage does the same thing - fewer people bring a bag, then the plane is lighter (less fuel) or they can haul frieght (US Mail for example) which they can charge for. All of these changes are methods of reducing the amount of fuel used, or bringing in more income to pay for the fuel.
And I second the motion to eliminate bonuses for any industry leader who is whining about loosing money and blaming the other guy. I live on 1/10 of your salary and I get by, so can you.
Yes Craig, I know the savings in weight. I am also aware that they wud save money in royalty to be paid to movie production houses.
My real question is how far will airlines go? Will we have to read the pre-flight instructions printed on ultra-thin plastic sheet because they want to remove the speakers and audio equipment also? Is it going to become mandatory to visit restrooms before boarding? Do we have to bring our own styrofoam cups to drink $2 water they serve on the plane?(Oh, it’s going to cost you $0.75 extra if you want it cold) And why do you need that cushion on the armrest?
That’s my real question. How low cud they go to save money so that their managements’ payment kitty is not affected?
As angry as I was about the letter, I was impressed that the airlines coordinated enough to somehow stop me from getting the letter 7 times. It proves that they are capable of better customer service, even if they only use it to suit their needs.
Maybe instead of asking consumers to stop oil speculation, they should ask when we’ll be ready to acknowledge that fares need to actually go up rather than nickel-and-diming us on the small stuff.
Sometimes I wish nickel and diming was the extent of their shenanigans. I just had to pay a ‘fee’ of $150 to cancel a $167 ticket. The nice person on the other end of the line was delighted that I had $17 to use on my next reservation!
So I went back to United’s web site to see where I had missed that little fact. It was very easy to find the price of a ticket but the only mention of a penalty for canceling was one buried deep within their web site that said cancellation would mean a small charge.
I went online to find any mention of that steep fee. Sorry, without being a member of their frequent flier club, it’s not available.
Misleading? Intentional obfuscation? You be the judge.
PS: I own my company. United can keep my $167. I get to prevent any of my partners and employees from flying United. Last year’s flights were just over $250,000.
I don’t pretend to understand the futures market, but I do know long before the open letter from the airlines, I was hearing about speculators being responsible for as much as 20cents a gallon. At least when I went to the site suggested (and I did email my congresscritters) there were concrete ideas for change — something I had yet to see.
I loathe the arilines like everyone else — flying is just a pain in the rear end these days, and with increasing prices, I am sure I will hate it even more — but with that said, anything that helps them, helps me, so I did not take the suggestion to write Congress as them whining.
Wachovia sent out an interesting graph the other day showing demand has been all but steady for over 20 years, but not the price. I have heard all types of oil execs saying it is not the fundamantals, ie supply and demand, driving this price increase.
As I have stated in response to other blogs no one can blame the airlines for raising their fares. A large percentage of an airlines expenses is directly related to their fuel costs and this price has gone up exponentially over the course of the last five years.
HOWEVER, I do not wish to see a raise in fares through ‘nickeling and diming’ the customers. There are plenty of airlines out there who are not raising their fees and are still earning a profit.
The reason a customer used to fly an airline such as American or United was for a certain guarantee about the level of service. You assume that if you fly a name brand airline then you will be treated like a value customer. However with the new added fees we are receiving a discount airlines level of service for a premium price. If thats the level of service I want, I will pay for it, but I will pay the budget airline fare which is often a fraction of the cost of the big airlines.
I continue my point by showing that many budget airline who charge under $75 for round trip flights with all added fees and taxes are still turning larger profits than the major carriers. The only answer to this can be mismanagement by the airlines and not as a direct relation to oil speculation.
A summary of the airlines’ open letter to customers:
Bill the Cat: Aaack!
Mrs. Fletcher from the “life alert” commercial: Help! I”ve fallen and I can’t get up.
My bathroom: (the sound of flushing)
My 6 year old: How do planes fly? My answer: Customers, dude. Customers.
Cheers, -Big Daddy Alan
I’m lucky enough to live in Los Angeles where there are many things one can do without taking a flight. After reading that whiney, error-filled letter from the airlines, my wife and I decided NO MORE FLIGHTS. So now we’re taking a wonderful cruise that departs from San Pedro. Next vacation, we’ll drive 3-4 hrs each way to Las Vegas. We can visit Disneyland, the San Diego Zoo and Wild Animal Park, SeaWorld, the Santa Monica Pier, etc. If there’s a way to do what we want to do without flying, we’re gonna do it!
What about people who live in places where the attractions aren’t as numerous or convenient? I have no answer other than we got along quite nicely for many years without cell phones in movie theatres. Non sequitor? Sorry :) It’s a way of saying sarcastically, “how did we ever survive without airplanes!?!” I think we did just fine, and if we all choose not to fly, we’ll still be fine.
My company does not fly our people anywhere anymore. We’ve got ooVoo for video conferencing, Skype for teleconferencing, and Outlook for written communication and scheduling. It’s really too bad that I may not see some of my clients face-to-face for many years, but they don’t want to fly either, and they really appreciate how well we communicate in lieu of in-person contact.
My complaint is not that travel costs more. I don’t especially like seeing airfares rise, but I understand the necessity. What I fail to understand is the seeming inability to provide friendly and involved service, irrespective of the cost. What I most dislike about the current situation is paying more for continued rude and indifferent treatment. As Tony Tyler said at a recent industry gathering, “What is the cost of a smile?”
The boarding announcements often begin with the reminder that “we are primarily here for your safety”–an oblique way of saying that unless we’re in flames, I’d really like to be undisturbed as I chat with my colleagues or read my magazine. This is certainly a blanket statement–and often untrue–but that it should be true so often is a clear indication of just how far service standards have fallen.
Some staff also seem to have decided that they are also arbiters of behavior as well. We all know that children can be unpredictable, even in cases where the parents are doing their best. We also know that some parents don’t try very hard to limit their kids. Nonetheless, how many restaurants or hotels throw people out based on a young child’s demeanor? Very often, the norm in other venues is to ask how one might be of service to help, but that apparently is no longer the case for many airline staff since threats take so much less personal involvement.
On some American carriers, the use of the toilet by the cockpit crew is preceded by the erection of a barricade of food trolleys and a flight attendant on guard. Given the fact that one of the things we learned on September 11 was that once passengers perceive a threat, they will be a first line of defense, this seems to be a poor course of action. Nonetheless, carriers often treat their passengers as threats rather than allies, building additional roadblocks in the client relationships.
In short, I will not be driven from flying by higher prices but rather by rudeness, intolerance and poor attitudes. And those things, Mr. CEOs, you can fix.
I don’t know what’s worse…the airlines’ letter to consumers and rant against speculation (never mind all of them have some kind of fuel hedge in place) or Bob’s letter “I’m REAL mad but I have no idea what I’m talking about, what exactly I’m mad about, or what the solution is, but we gotta do SOMETHING”. Both of these are exactly what gets us into hasty, incompetent government regulation (We’re mad; we gotta do something! We’ll work out the details later.) Of course the government profits handsomely from every gallon of gasoline sold but that’s a whole ‘nother ball of wax.