Weekly Insight – July 5, 2022

Insight posted on Tuesday, July 5 in observance of USA Independence Day holiday.


The Airline Service Quagmire –
Cruisin’ For A Federal Bruisin’

The levels of consumer angst regarding flight delays and cancellations have likely been blown out of proportion in the media.

But not much.

The stories are real about consumers finding out at the airport, right before departure time that their flight has been cancelled. Then comes the near-immediate follow-up message telling them that the airline has already re-booked them.

For a flight two days later, in some cases.

Lots of fun for the family of four that’s on a connecting flight, or flying from and airport where they have no alternative friends or family.

Stuck two days at an airport where they’d need to pay for their own accommodations – if there are any available. The airline will claim they have no control in these cases, and the consumer will just have to understand.

Can you say, “total nonsense” boys and girls?

But the airline is usually quite gracious, sometimes offering a complimentary 5K miles to be added to the customer’s frequent flyer account – probably less than 10% of what’s needed for a RT coach trip to any point in the USA – assuming seats are allocated for that category of traveler.

Naturally this will get the cancelled consumer just rarin’ to book in the future, just as soon as they can find space to sleep in the terminal.

Or giving out a voucher for $15 to use at an airport restaurant, which might just be enough for coffee and stale donut. Oh, yeah, and the voucher expires after today. Use it or lose it on your two-day unplanned stay in a strange airport. Airlines don’t want to overdo it, don’t ya know.

These types of airlilargesse are not “re-accommodation” – they are flat out “thanks for the business, sucker” insults. Blaming it on a pilot shortage is a dodge. They are selling a product knowing full well – or should know – of any limitations they have that could inflict this stuff on consumers.

So that family of four, or that grandma on the way home, is stranded because the airline doesn’t have the ability to service the product they sell.

The Traditional PR Will Only Make It Worse. An open letter to the public from a CEO apologizing won’t cut it – especially when it’s the core system that is the culprit. The only thing that will rectify this is a complete re-thinking of airline service delivery system.

Technology’s Great. But That Check-in Kiosk Is Clueless. The current approach and foundation of major airline service is predicated on reliance on technology, which has naturally replaced human contact. Part of this has also been the cost-saving of shifting key service areas – customer service, underwing operations, and telephone access to the airline – over to low-paid contractors.

That’s great for the bottom line. At least until the bottom falls out of the operation due to the fragility of the service system to almost any disruptive events that may occur, and literally strands passengers with limited or no recourse, let alone information.

See, that “service agent” who finally answers the phone sometimes doesn’t work for the airline and may have zero leeway in regard to waiving rules. The team loading the luggage might be at $15 an hour, with low benefits and zero career path, and might not decide to show up for work because the local Burger World suddenly has an opening. The reality is that airlines in many ways have replaced customer service with hired-in, short-term and disinterested outside labor.

Junk The Obsolete System And Rebuild – The Federal Wolf Is At The Door. Fixing this – i.e., the ability to recover from off-sched events – should be the #1 priority and that may mean complete restructuring of the concept and delivery of customer service. It may mean having more staff to support the operation – staff empowered to assist the customer, instead of being the guardian of some sacred set of rebooking rules.

The alternative is having a poorly-qualified political appointee – the Secretary of Transportation – getting involved. Plan on grand statements and promises and inflicted regulations and lots more bad press for the airline industry.

With all of the adverse news coming out regarding the swamp this administration is stumbling into, the airline industry is delivering a prime opportunity to shift media focus from inflation, recession and spiraling crime rates to stories on how the DOT is marching in to save the consumer.

The point is simple. The current and traditional underpinnings of airline customer service are collapsing. It will require more that adding pilots or other staff.

It’s the system they work in that’s broken.


A380s At American? 

Our colleague Jamie Baker has reported that rates for A380s are included in the latest AA/APA negotiations. Other than setting loose a flood of panting fantasy postings from the Walter Mittys who hang out on airline chat boards, it’s pretty unlikely that this means much.

A380s simply don’t have the mission flexibility for American to spend the millions to put on their certificate any of the used ones sitting idle around the world. This entry on the TA was likely a position-holder for the distant possibility of a next-generation widebody. A very distant possibility.


SCASD Program In Need of Complete Overhaul.

BGI has been one of the most successful – possibly the most successful – consultant in crafting winning applications under the Small Community Air Service Development Grant program. About $24 million. We won the second largest SCASD grant in the program’s history. There are several airports that today have service as a result of our SCASD work.

But that was essentially long, long ago in an airline galaxy that no longer exists.

In the past four years, we have accepted very few SCASD projects – mainly because changes in the air transportation system and consumer patterns have made the program much less effective.

Actually, today it’s almost completely ineffective in assisting small airports in attracting viable air service.

Assuming Fleets & Airlines Not in Existence. United has announced they are dropping Texarkana-IAH at the end of the summer. The service was attracted on the basis of a Small Community Air Service Development Grant, even at a time when United was dropping other regional markets, including Killeen-IAH.

United gave it a shot, to their credit. But with the increasing costs of 50-seat jets, including the fact that current administration policies that guarantee continuing jumps in the price of jet-A, the potential for this program engendering truly small community service is up there with sky hooks and magic carpet travel.

Complete Ignorance of Today’s Airline and Consumer Economics. The entire premises on which the SCASD program is based are now essentially bogus. It misleads the public by the contention that small communities need scheduled flights at the local airport, with no understanding of the issue of consumer preferences and alternatives.

It assumes that there are lots of airlines that can be enticed into these small airports, thereby lowering fares and increasing local ridership.  That may be the case on other planets, but not here on Earth.

The program can “lower fares,” according to the DOT’s description of SCASD. That’s when a small airport is experiencing ticket prices higher than the “national average”. That is another concept that’s in complete ignorance of air transportation realities. There is no valid metric such as this. Air travel is not like a watermelon or a gallon of unleaded – it is different in product and scope and value at every airport. The DOT is clueless on this.

Yet year after year communities are hornswoggled into paying for SCASD applications that even if granted won’t do diddly. But it’s a huge market for Pied-Piper consultants that tend to forget advising airports of the low potential for this program to bring home anything other a nice-looking application.

The Future: Economic Development Instead of Air Service Pipe Dreams.  As we indicted in the Third Rail study on regional air service recently accomplished with Swelbar-Zhong Consulting, the DOT should make the goal focused on economic development and job creation at small airports, not pie-in-the-sky attempts to assume the airline system and the business base of 1980 is still in existence.

Look! Up In The Sky! It’s A Bird! It’s A Plane! But It Sure Isn’t A 50-Seat Jet. With 50-seat jets in now in the crosshairs of high fuel prices, increasing labor costs and expenses due to aging fleets, more than ever the SCASD program is evolving into a boondoggle eagerly inflicted on unsuspecting small communities.

Texarkana is just the latest – there will be more. There still are some uses of the SCASD program, but they are very few in regard to success potential, especially with fleet changes at network airline systems.

The future for small airports is in economic development, not trying to get service that won’t work in an airline environment that has completely changed in the last five years.