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Payback for Airlines
The Travel Critic · October 26, 1999

It's gonna be a scary Halloween for the airlines.

They have slashed service, pared back travel agency commissions, issued a string of empty promises to customers, raised fares and alienated their own employees. Now their misdeeds are coming back to haunt them: They are becoming less profitable.

In some cases, they aren't making money at all. U.S. Airways Group last week reported a net loss for its third quarter of $85 million, compared to a net profit of $142 million a year earlier. "These results are clearly unacceptable," said Rakesh Gangwal, the carrier's president and chief executive.

Gangwal's airline isn't the only one suffering a downturn. Trans World Airlines chalked up an operating loss of $25.4 million. American Airlines' parent company, AMR Corp., had its earnings halved to $279 million. United Airlines and Delta Air Lines are off from their year-ago numbers, too.

"There are lot of people who think the airlines deserve it," says Steven Loucks, a spokesman for Carlson Wagonlit Travel, a travel agency chain based in Minneapolis. "It's like this: You reap what you sow."

What's so interesting about the developments of the last few months isn't necessarily how the airline industry got here - although that's a fascinating story unto itself - but what this may mean for travelers. "We've seen a flurry of air-fare sales in the last three to four weeks. That tells you right away that advanced bookings are not doing well. They're desperately trying to sell seats," says travel watchdog Terry Trippler.

Most industry watchers think this is the start of a significant slump for the airline business as a whole. The industry tends to run in predictable cycles and we've just seen a long upswing with record earnings and soaring share prices.

No single group would be happier at the prospect of a weaker airline industry than travel agents, who recently got their commissions clipped to 5 percent.

"It's payback time," says Gordon Lagrow, owner of Dynasty Cruise and Travel in Braintree, Mass.

Paul Ruden, the American Society of Travel Agents' senior vice president for legal and industry affairs, says it's ironic that carriers now find themselves in a tailspin when their own battle cry has been, "We're going to bleed travel agents to death."

"This hasn't weakened the airlines' resolve to get us pesky intermediaries out of the way," he adds. "It just makes it more difficult."

Nor has the recent plight of their business distracted airlines from continuing to deprive passengers of their dignity. The industry's Customers First program, a pathetic attempt at self-regulation, should have been called Airlines First, because it just protects carriers from lawmakers. Seat sizes remain smaller than ever, the food is unpalatable and crew members are snooty and belligerent. To add insult to injury, many airlines hiked advance-purchase fares a few weeks ago.

Could the airline industry's nose dive of late eventually make for kinder, gentler carriers? Bigger seats, better meals, higher agency commissions or, God forbid, friendlier service? Don't hold your breath. Although there's some evidence that carriers are buckling - on some Atlantic routes, where load factors are abysmal, agency commissions have been upped to 10 percent - it's too soon to predict a fuzzier airline business.

Most of the attempts at increasing passenger comfort have been half-hearted, if not insulting. United Airlines' new Economy Plus, which offers 35 to 36 inches of legroom - a couple more than you usually get but what most economy class seats used to have - doesn't change the restrictive 16½-inch seat width.

It also creates another problem: Now, instead of one class of passengers with upgrade envy, there are two groups of jealous fliers - those who think they deserve first class and those who are miffed at not getting bumped to what I like to call Business Minus. Will this lead to more cases of air rage? We'll see.

I think it's going to take a long time to undo the horrors of the past few years in general and the past two months in particular. If the airline industry can pull it off, I'd be shocked.

Christopher Elliott is a travel commentator and author of A Bridge to Nowhere: A Year in the Florida Keys. All e-mailed questions may be edited, condensed or republished at the site's discretion.