Making Airlines Fly Right

0 Comments | Insight on the News, April 5, 1999 | by Timothy Burn

Higher fares are just the latest in a growing list of complaints from consumers and watchdog groups who claim the major carriers are exploiting a lack of competition in their industry.

Mysteriously delayed flights, lost bags, lame food, surly staff, eye-popping airfare costs: Many passengers have come to expect such treatment as airlines continue to cut costs and reap profits. But that could change.

Two senators, fueled by an increasing wave of complaints from air travelers, have proposed an "Air Traveler's Bill of Rights" that would force airlines to clean up their act. The bill would give passengers 48 hours to cancel currently nonrefundable tickets. It also would require airlines to explain why flights are delayed and tell frequent fliers how many seats are available if they want to cash in their miles, among other things.

"The real point is to make sure that the airlines bring some of their creativity and extraordinary entrepreneurial skill into making sure that the passengers who use their service get through it without feeling like a dishrag," says Sen. Ron Wyden, Oregon Democrat and cosponsor of the bill along with Sen. John McCain, Arizona Republican.

While U.S. airlines made a little less money last year than in 1997, the industry still is enjoying a golden era for profits. Major carriers posted net profits of $5.1 billion last year, slightly below the record of $5.2 billion in 1997. (United Airlines, the nation's largest carrier, had net earnings of $1.34 billion.) Airlines in the past two years have ratcheted up typical business-class airfares more than 40 percent as the strong U.S. economy has increased consumers' thirst for air travel.

Even as airlines continue to enjoy stellar profits, however, they keep looking for ways to cut costs. Delta Air Lines has announced it is taking sandwiches out of its SkyDeli meal bags on 140 flights, replacing them with crackers and cheese or carrots and dip.

Many fliers believe it's high time for airlines to think more about the customer and less about profits. "Air travel has become really difficult in recent years," says Joe Ragonese, a management consultant waiting at Ronald Reagan Washington National Airport for a US Airways flight back to New York. "The way they pack us in I feel like I am on a cattle train or on a Greyhound bus. I've been stranded at the airport too often, and my strong suspicion is that some of those flights were canceled simply for economic reasons."

Collectively, U.S. airlines carried an estimated 615 million passengers in 1998, with planes filled to near capacity. With more planes filling up, there is less room for standby fliers and little margin for rescheduling those stranded from canceled or delayed flights.

The increased business on airlines appears to be taking a toll, with passenger complaints up 25 percent from last year. At the same time, airlines are losing more bags, with 5.16 complaints per 1,000 fliers, compared with 4.96 in 1997.

It seems just about everybody has an air-travel horror story. "I spent Christmas Eve and Christmas Day stuck at this airport waiting for a flight home," says Marlene Ellul, an Army officer who often flies to Huntsville, Ala. Ellul has learned always to carry an airline flight schedule, even though there's very little information available about flight pricing.

According to Wyden, airlines are exploiting some of the freedom they have enjoyed since the industry was deregulated in 1978. "It seems to me you have a situation where airline profits are going through the roof and passenger service is being left at the gate," he says.

But industry groups and even some passengers think it would be a mistake for Congress to step in. "We as airline passengers keep telling airlines what we want is low fares, low fares, low fares" says David Stempler, president of the Air Travelers Association, a group that serves passengers and tries to expand air service. "If you start mucking around with that system that has a very delicate balance, it's possible fares will go up for everybody."

RELATED ARTICLE: Fares Soar Despite Cheap Fuel

Jet-fuel prices have fallen to their lowest levels in years, but several consumer groups complain that airlines aren't passing that savings on to travelers.

"The airline industry has often cited rising fuel costs as a reason to raise airfares, but we have never, ever enjoyed a decrease in fares as a result of lowered fuel costs," says Terry Tripler, editor of the Airfare Report in Minneapolis. "We have seen airlines in the past two years cut costs on everything from meals to travel-agent commissions. It just doesn't make sense that fares should be going up right now."

Earlier this month several major airlines, including US Airways and United Airlines, increased fares by 4 percent for unrestricted, refundable tickets and 2 percent for restricted, unrefundable tickets most often used by business travelers. The average cost of a one-way business-class airfare ticket in the United States was $454 last year, compared with $366 in 1996 and $289 in 1992, according to the American Express Domestic Airfare Index.