It is by now clear that the airline chaos of the past week, which started during the punishing winter storm shortly before Christmas, is largely the fault of one airline. Southwest has been the source of most of the flight-cancellation chaos, while other airlines recovered quickly from the disruption of a freak weather event. Anecdotal evidence abounds from crew and others affected by the chaos that Southwest’s antiquated crew-scheduling system collapsed, leaving the airline with no idea where its crews were and forcing agents to try to schedule crews manually.
Yet many on the political left are using this one-company event to call for tighter regulation of the industry as a whole. The American Prospect wants the secretary of Transportation to impose stricter rules on what happens when a flight gets canceled. The hilariously misnamed American Economic Liberties Project wants the airlines to be subject to many different regulators, each of which will be able to punish the industry. Even the New York Times wants the industry to be more tightly regulated.
Yet that Times story contains a nugget of uncomfortable truth. The airline industry as it currently operates is the result of trade-offs. Before airlines were deregulated, the “golden age” of air travel was comfortable, convenient, and reliable — for those who could afford it. After deregulation, prices plummeted and the growth of low-cost carriers such as Southwest made flying viable for just about anyone. As the Times admits, “Democratizing travel via competitive pricing has been great for nearly everyone.” The trade-off comes in just about everything else: “comfort, seating, punctuality, baggage, amenities and customer service.”
So, what would be the result of insisting that airlines compensate passengers in cash promptly for cancellations (assuming that it was made more explicit that airlines cannot blame the weather for such cancellations)? Certainly not any improvements to comfort, seating, punctuality, baggage, or amenities.
Instead, we’d be likely to see fewer, more crowded, and more expensive flights as the airlines priced the risk of cancellation into their tickets and scheduling. Prices might get closer to the days of the golden age, but nothing else would. Perhaps there is a market for an upscale, high-cost airline that offers better comfort, seating, amenities, and baggage handling — but most airlines already offer all that in the form of business/first-class seating.
For the rest of the flying public, cost is the prime determinant. It will likely remain so. And that means having to put up with the trade-offs. A more regulated industry would mean we pay more for the current displeasures of air travel with some built-in government-mandated insurance in the event of a delay. But there already exists a private market for trip-delay insurance, which provides many other more flexible benefits in the event of a delay.
It should at this point be apparent that none of the proposals mentioned would provide what the Times and the aggrieved passengers really want: “a better chance of getting home for the holidays.” Only more flights at affordable prices would do that, and more regulation is likely to produce the opposite.
Yet all of this misses the forest for the trees. The real issue has been Southwest’s catastrophic performance. A combination of the aforementioned collapse of its software and its use of a point-to-point rather than a hub system led to its appalling holiday meltdown. That ought to cost it dearly — I imagine many of those who booked a Southwest flight over the holidays will be loath to book another one with the carrier again.
Yet as the Times points out,
The airline and the culture that Mr. Kelleher built still have lots of loyal customers who will forgive Southwest for one week of madness, assuming the company brings operations up to industry standard before long. Customers forgave JetBlue, after all, for many of the same reasons.
Why does Southwest have so many loyal customers? Price, primarily.
As the project managers’ saying goes, “Good, fast, cheap: Choose any two.” No amount of regulation will change that.