Tuesday, Aug. 22 at noon ET
State of the Airline Industry: Past, Present and Future
Tuesday, August 22, 2006; 1:00 PM
Washington Post staff writer and
Keith L. Alexander: Welcome aboard everyone. There are a number of questions and comments out there already so let's get to it.
Laurel, Md.: How solid is AirTran?
Their fares combined with convenience to my home has actually motivated me to take trips to Milwaukee, Rochester, Ft. Lauderdale and Boston that I wouldn't have otherwise. Are they an Independence candidate?
Keith L. Alexander: AirTran (the former ValuJet) is doing quite well actually financially. The airline has been around since the mid-90s, but again, at that time it was known as ValuJet and most of us remember what happened with that airline. Since then, the airline has brought in new management and changed its name and has grown and has given several airlines, including Delta, a run for their money.
Bethesda. Md.: Keith, sorry to see you go. My question is are the airlines or passenger advocates doing enough to ensure passenger rights during this time of increased security? It seems to me that undue burden is being placed on the 99.9 percent of innocent passengers who can no longer even take toothpaste aboard a plane. Do you think TSA will loosen these rules soon?
Keith L. Alexander: Hello Bethesda,
Yes, I do believe that the TSA will loosen some of the rules, but probably not until around Thanksgiving honestly, which is the biggest travel period of the fourth quarter. I think the biggest drive to change any rules would have to come from the airlines themselves. If airlines see that passengers are staying away because of the tighter restrictions, history has shown they have enough lobbying power to petition changes. They petition for such changes following 9/11. But if the airlines don't see a major drop in passenger traffic, things may remain the same for a while.
Washington, D.C.: Just a quick thank you for all the columns. I've enjoyed reading them.
And a question. What do you think the airline industry will look like in five years? Fewer airlines, more airlines, profitable perhaps?
Keith L. Alexander: Thank you Washington. I think it's safe to say there will be more consolidation. There is a lot of speculation out there that either Southwest or US Airways may be on the buying end soon. Southwest needs to continue growing and the only way they can truly expand and fend off JetBlue or AirTran these days is through acquisitions. And US Airways, having just merged with America West, says it's still in the market to purchase an airline. And Delta and Northwest, which are in bankruptcy, may also be viewed as a prime candidate for either a merger or to be acquired themselves.
Laurel, Md.: Is it true, as is sometimes attributed to Warren Buffett, that the U.S. airline industry, considered in its entirety, has not made one dollar since Kitty Hawk?
Keith L. Alexander: Warren Buffett has said investing in the airline industry was a big mistake. The industry has made money, actually prior to 2000. The industry is looking for a profitable year in 2007, while some carriers may actually report a year-end profit for 2006. But Buffett learned what many investors discovered and that is that the airline industry, unlike many industries, is affected by many outside factors: oil, terrorism, consumer confidence, aircraft safety and others. Any one of those issues could cause an airline's stock to tank.
Chantilly, Va.: You stated today that United Airlines had a reservations office in Washington for 20 years. It has been a whole lot longer than that. I worked overtime in it whan I was a CSR at Dulles airport in 1966. The office in Sterling, Va., hadn't been built in 1986.
Keith L. Alexander: Thank you Chantilly. That's what the folks at United told me. But it shows that even the employees there aren't aware of how long the DC area has had a reservation office. The United employees with that institutional knowledge are probably long gone.
Harrisburg, Pa.: I recall there was a sharp drop in people flying airplanes after September 11, 2001. Have people begun flying less frequently since the most recent terrorist scare?
Keith L. Alexander: Most people have already solidified their August vacation plans and weren't going to change them. I did hear from some travelers who said they were cancelling their trips, but that was only a handful. We'll see what happens Labor Day weekend and how it compares with last year. The biggest indicator, actually, is how the New York shuttles are doing. Delta and US Airways have said they haven't seen a major decline in passenger loads; at least not as of yet.
Minneapolis, Minn.: The "snakes" references in your farewell Business Class column probably is more apt than people might realize. Given the cutthroat and brutal nature of the airline industry, how difficult has it been to cover the business, to feel you are getting the real story?
Keith L. Alexander: Wow. That's an interesting question and comment. I have covered the airline industry actually off and on since 1991. Yes, it is a difficult one to cover because there are so many airlines with various personalities - good and bad- but that's with any industry that you cover. Just ask the folks who cover the White House, DC cops, Autos, etc. I had some great sources within the industry and some not-so-great. That's why it's necessary to have as many sources as possible; they end up balancing each other out.
St. Petersburg, Fla.: Could you comment on the statement: "Friends don't let friends buy airline stock"?
Keith L. Alexander: I don't know, the folks at Southwest Airlines might disagree with that. But actually the fact Southwest is one of the only airlines that comes to mind at this time as a consistantly strong performer may strengthen that quote.
Burtonsville, Md.: Do you think Airtran, Southwest or any of the other low fare airlines will ever start flying internationally (aside from the Caribbean).
Keith L. Alexander: I think we may see JetBlue or Airtran eventually make the move. They will have to if they want to remain competitive. Southwest is also testing its reservation system to handle international fare bookings as well.
Cary, N.C.: Keith, I will miss your column. I'm one of the frequent fliers who stopped using the blankets after I read your column. My question is about lost baggage. Is it true that more bags are being lost now than previously before?
Keith L. Alexander: Thank you Cary. Yeah I must admit, I still cringe when I see other passengers asking for a blanket or pillow. If the flight attendant doesn't remove it from a plastic bag in front of you... well, never mind. Actually the number of lost or misplaced bags have increased. At one point recently, they were up 23 percent from last year. One of the biggest reasons, which I will explore in a story tomorrow, is that airlines are having trouble finding and retaining baggage handlers.
Arlington, Va.: Keith, Thanks for your reporting on a such a financially volatile but important industry ...
U.S. airlines have had pretty much a spotless record in terms aircraft "incidents" (fatal crashes, etc), for the past five years. Do you think the airlines can keep up such to such safety records given that many maintenance functions have been outsourced to third- party vendors, the FAA doesn't perform oversight on these vendors to the level of in-house, and that the airlines themselves are running at full capacity with about 1/3 less employees who've taken salary/benefit reductions?
Keith L. Alexander: Thank you Arlington. It's been fun. The airlines realize that the more they outsource maintenance, the more unions, government agencies and passengers are going to be looking for signs of inferior work. I think the airlines are going to be pretty aggressive in trying to ensure that the work that is performed by outside firms meets their internal standards. The first time something emerges that suggests otherwise (crash, major mishap, etc) passengers and union officials will have cause to call for the airlines to resume maintenance inhouse, which the carriers say is more costly.
Washington, D.C.: Keith, I've been looking for airfares around Thanksgiving from D.C. to Fort Lauderdale, and they are what I would think of as on the high side ... 500 plus, even with Air Tran and Spirit. Do you think these will come down any, or should I go ahead and buy?
Keith L. Alexander: Great question. Thanksgiving is a peak period. Don't expect any cheaper fare for that period, honestly, unless a major accident or incident occurs between now and then and the industry is forced to slash fares. Also, the airlines are trying to raise fares in recent weeks. United this past weekend tried and failed. So you can expect more fare attempted fare increases between now and the end of the year. $500 might be the best you will find. I'd grab it.
Denver, Colo.: I'm not surprised United Airlines knows nothing about its reservations center in Chantilly, Va. They also don't know much about the departure times of their delayed flights. I'm here in DEN and trying to get to Dallas -- if you know anything about United Flight 1184 can you let me know?
Keith L. Alexander: Thanks for logging in from the airport Denver. Sorry, don't know much about Flight 1184. But you might want to try something: call the reservation number and speak to an agent and see what they tell you, then go the website. With that information in hand, then go up to a United agent and let them know what you have found. The big problem is that weather and other problems could cause a flight's ETD to change before the folks at the airport even find out themselves. Safe travels.
McLean, Va.: Keith, thanks for all the great writing, good luck in your upcoming endeavors.
Say I am booked on a 7 p.m. shuttle flight, and I want to stand-by for a 5 p.m. shuttle flight of the same airline to the same destination: am I subject to a change fee and higher fare?
Keith L. Alexander: Thank you so much McLean. Because I don't know which airline you're flying or when you purchased your ticket, I don't want to give bad information because Delta and US Airways have different rules these days. If you purchased your ticket at the last minute (less than 7 days) probably not. But if you have an advanced purchase ticket, you might be subject to a fee. But here's some advice: if they try to charge you a fee, let them know that you are a frequent traveler with the airline and you don't want to start flying their competition. Sometimes that answer works and sometimes the person will just smile and say "our rules are our rules." good luck and thanks again.
Takoma Park, Md.: Sad news that United is closing the local call center instead of the bombay one. I've talked with Bombay staff three times with various complex problems, and gotten wrong information every time.
These days I just call back until I hear a chicago or local accent.
Keith L. Alexander: This seems to be a major complaint among airline passengers, not just United's passengers. The trend seems to be closing various U.S. reservation centers and push more callers to the Web.
Silver Spring, Md.: Okay, tell the rest of the class: why shouldn't I use pillows and blankets? (I can guess, but I'm guessing there's a longer version of "because other people are dirty.")
Keith L. Alexander: As I recalled in today's column, a few years ago I wrote a column about how US Airways was no longer cleaned its blankets on a regular basis and instead instructed employees to do "visual inspections" to determine if the blanket needed cleaning as part of a cost-savings measure. Many things can be missed by just doing a "visual inspection." the airline now says it also removes and cleans blankets between one and seven days, depending on the type of flight.
Richmond, Va.: Thanks for taking questions and best of luck in your new assignment.
Since 1978 when they were called "Darlings of Deregulation" a ton of new "start-up" carriers have come and gone like
Air Florida, People Express, Independence Air, Jet Express, Midway Airlines, ValuJet, Tower Air, Air Tran . . . the list goes on and on. Some newer start-ups like Jet Blue are still around, for the time being atleast.
Airline analysts have often attributed the early successes of many of these now defunct carriers to any number of things such as fleet standardization, flying to secondary airports, low facility costs, and so on--but isn't the single greatest reason for the early success of these start-ups the low employee wages they pay their people?
Keith L. Alexander: The pay scales is one reason. But the biggest reason is that the newer airlines don't have the legacy costs that the bigger carriers have. But give them another 5 to 10 years and the JetBlues, Southwest and AirTran will have much higher than they are now once their aircraft leases and employee salaries increase. Southwest is already starting to see its costs increase because of employee seniority lists.
Oakton, Va.: Keith,
No wonder Denver is having trouble getting to DFW. 1184 goes from Omaha to O'Hare.
Keith L. Alexander: There you have it. See, as I said in my column, I had some of the most savvy readers anywhere!!! Thanks Oakton. Denver, you ok out there?
Wheaton, Md.: How long is the ban on drinks expected to last? Every time there is a security incident, airline security re-invents itself. This time, hasn't it really gone beyond all practical, common-sense levels?
Keith L. Alexander: That's a great question Wheaton. Homeland Security officials aren't saying how long the ban will last, maybe as long as the security threat remains high. Again, it will be interesting to see what happens around Thanksgiving. If the ban remains in place by that time, it will likely remain in place through next summer.
Laurel, Md.: Does Southwest have pensions and similar legacy costs that have burdened the bigger airlines? Or have they had 401(k) type retirement plans for their employees?
Keith L. Alexander: Hello Laurel, Southwest and many low-cost carriers have a 401k type retirement plan.
Reston, Va.: I heard you on the radio this morning -- kudos on your new position!
re: paying extra for carryon ... would that extend to gate checking? I usually gate check now. I don't mind my luggage going in the belly, I just want to see it at the other end. Gate checking is the best of both worlds. Until the terrorists made it tougher.
A rant -- why can't United get its act together on really basic, no-brainer customer service? In late June I flew to LGA on a Saturday morning -- I had nothing to check.
When I got to Dulles, however, not only was the AC in the terminal broken -- United apparently had canned all of its westbound morning flights and the hundreds of people who were bumped that morning had to go back in line. With predictable results ... the eastbound folks with valid flights had to go through the same bloody line. And many missed their flights? Why do I know? Because I was a check-in line jumper, barely made it on board -- and there were 30 people on what should have been a full, 100-person shuttle to LGA.
This would have been so simple to fix -- two lines, one for canned flights, one for non-canned flights.
Keith L. Alexander: Thank you Reston. The problem the airlines are going to have to fix before they start charging for carry-ons is indeed their lost baggage issues. Until they are able to reduce the number of lost bags, by hiring and retaining dedicated workers with strong salaries and benefits, forcing travelers to check their carry-ons will be like throwing gasoline on a wildfire.
Keith L. Alexander: Ok folks, I'm sorry I was unable to get to everyone's questions. Thank you again for being such great readers and keeping me on my toes. See you all over in Metro. And remember, Business Class will continue in the coming weeks with Washington Post writer Del Wilber.
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