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08/12/2007

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Thomas

Well, if we keep opting to fly, what do the airlines care if we receive shoddy service?

GSB'er

A bit oversimplified, professor. Graph the number of hulls put into service over the last 20 years and graph the increase in supporting infrastructure (ATC, airports, terminals) and you'll see where the delays come from.

It's not from cheap airlines overcrowding (network carriers have higher load factors than low cost carriers and have had these for more than five years). It's the same problem that we see on I94. Too many vehicles attempting to use the same piece of concrete.

Taxes collected through landing fees are spent on huge, marginally useful edifaces (see the SEA terminal, or PDX terminal, soaring glass atriums and stunning architecture) instead of meat-and-potato infrastructure upgrades.

ATC is stuck in the 50s, leading to the majority of delays. The throughput of airports are constrained only by the rate at which ATC allows aircraft to depart and land.

jimbinio

I'm one of those guys who has a lot more time than money, and I’ve worked as a contract engineer and programmer for 40 years, taking an average of 33 weeks (unpaid) leave per year. Now I’m semi-retired and have even more time, so I am in no hurry to get anywhere and gladly take the money for getting bumped. Airlines have put me up for two days in the Bahamas and, just this year, for two days at the Sheraton on the beach in Rio. No problem!

I have spent the night on airport floors more than once. No problem!

What I want are cheap flights and some things that are currently not offered, like free or cheap booze or the right to bring my own, which would cost an airline next to nothing. And, speaking of obesity, I would prefer that the airlines charged passengers by their weight and size in addition to weight and size of their baggage. I see no reason why a 300-lb person should pay the same for a seat, all the time crowding me out, while the airline continues to charge me some $100 extra for each slightly oversized or overweight bag.

P

Unfortunately, this analysis ignores some facts. The legacy carriers are among the worst when it comes to being on-time; service and low price is not an "either or" proposition. The discount carriers have better service measured by this metric -- which is the subject of the blog post.

http://www.bts.gov/press_releases/2007/dot077_07/html/dot077_07.html

According to this, the best and worst are:


Highest On-Time Arrival Rates

1. Hawaiian Airlines – 92.9 percent

2. Aloha Airlines – 86.8 percent

3. SkyWest Airlines – 77.9 percent

Lowest On-Time Arrival Rates

1. Atlantic Southeast Airlines – 56.0 percent

2. American Airlines – 57.9 percent

3. American Eagle Airlines – 60.5 percent


Additionally:

Highest Rates of Canceled Flights

1. Mesa Airlines – 6.4 percent

2. American Eagle Airlines – 5.9 percent

3. Northwest Airlines – 5.3 percent

Lowest Rates of Canceled Flights

1. Hawaiian Airlines – 0.2 percent

2. Frontier Airlines – 0.4 percent

3. Southwest Airlines – 0.4 percent


Figuring out why cheaper carriers have better service is an interesting problem for economists, and one that does not easily fit our analytic framework (it runs counter to the notion that people face tradeoffs). I challenge Becker and Posner to take up the question of superior management -- and in an industry dominated by only aboud a dozen players, this is almost certainly the answer.

Oliver F. Lehmann, PMP

An aspect missed is that of complexity. It is far more difficult to master processes in a complex environment than in a simple one.

Cheap airlines are forced to keep their processes simple. Complex processes need more qualified people, custom software and other tools, which are expensive. Ask McDonalds: The simpler the process the cheaper the operations. And the more reliable (or better: replaceable) the resources. In addition, complexity makes it more diffcult to handle uncertainties and quality problems.

Legacy companies have legacy processes: Complexity has grown over time. Managers are often not measured for business success but for some other metrics, which top-management believed to be more important. The integrity of the entire organization and all its systems struggles.

It is very difficult to reduce complexity in a running operation. A nice idea would be to stop operations for some time, re-arrange everything and then start again. But this is obviously not possible.

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