Whatever Happened to Common Sense?

Is it just me, or is the whole airline situation just plain crazy? For years, we have been hearing of airline losses in the millions (and sometimes billions) of dollars each time a financial report comes out. Southwest and JetBlue were the only airlines that had seemed to have the right solution, but even JetBlue is now in the red with an expected loss for the year. American Airlines reported Wednesday that it had a loss of $92 million in the first quarter. The positive spin the company put forth was that it was less than the $162 million loss posted a year ago. As part of cost-cutting efforts, it announced it would mothball 27 planes by July 1. Ironically in a P.R. move the same day, American announced that it was giving away 20,000 tickets to attendees of a Dallas Mavericks basketball game. If each ticket were valued at $200.00, that would equate to a $4 million P.R. move! What makes this move even more crazy in my mind is that these tickets are valid for any flight from Dallas Love Field, the airfield American has been operating at a loss (with self-admittedly little hope for profit) in order to compete with Southwest Airlines’ new routes. In a February 21 USA Today story, American's General Sales Manager C. David Cush said that the airline would have a difficult time making a profit at Love Field and that the airline was not necessarily there to make a profit. What is wrong with this picture? How did that decision come about? "We aren’t making any money at Love. Heck, I know -- let's give away 20,000 round trip tickets. That'll sure show Southwest!" Whatever the reason, it has to be difficult for American Airlines employees to see this kind of financial irresponsibility when they are being asked to sacrifice so much. How difficult would it be to recuperate that kind of loss? Well, according to the U.S. Department of Transportation's Bureau of Transportation Statistics (BTS), American flew 6.071 million passengers in the month of January alone. If it would have charged each one of those customers an additional $15.00, that would have just about made up for the loss for the whole quarter. Sounds simple, huh? Maybe I should be an airline executive? Not a chance! You see, consumers today are much more sensitive to price than they were just a few years ago. They make purchasing decisions based on a few dollars savings. Gone are the days of brand loyalty. Instead of a known customer base, the airlines are trying to attract a general pool of travelers who are hyper-sensitive to price. Because of this, the airlines are hesitant to make any large incremental fare increases because of feared market share loss. And so the insanity continues. By the way, the BTS reported on Tuesday April 18 that the U.S. scheduled passenger airlines employed 5.8 percent fewer workers in February 2006 than in February 2005, the 14th consecutive month that full-time equivalent employee (FTE) levels for the scheduled passenger carriers declined compared to the same month of the previous year. I guess we see where the airlines are targeting cost savings. Thanks for reading. As always, your feedback is appreciated. Joe Escobar