MONEY Airlines

The Pathetic State of Airline Travel Today Was Predicted Long Ago

crowded airplane seats
Jason Hetherington—Getty Images

No one should be remotely surprised that flights today are more crowded and more expensive, with more fees and worse service. As many critics warned, this is exactly what would happen with widespread airline consolidation.

The airline business is complicated. To some extent, however, making a profit is as simple as getting as many passengers on board your company’s airplanes as possible, and charging each customer as much as possible for the services provided.

Lately, airlines have been extremely good at being profitable. Airline profits soared in 2014 amid plummeting fuel prices, and the trend has continued in 2015. The first quarter of the year is generally a slow, lackluster period in travel, yet most domestic airlines reported record-high profits for the first three months of 2015. American Airlines reportedly took in a profit of $1.2 billion in the first quarter, according to the Dallas Morning News; previously, the carrier’s best first quarter was a haul of a mere $480 million.

Historically, in a scenario like the one outlined above, airline executives could be relied upon to add flights and new routes, and/or cut airfares, with the goal of winning over new passengers and snagging market share. None of the above is happening, however. For an explanation of why this is so, look no further than the string of airline mergers that took place in recent years—and that effectively killed the robust competition that existed in the industry not long ago.

“The airline industry is increasingly looking like an uncompetitive oligopoly,” Andrew Ross Sorkin wrote in a recent New York Times analysis. Sorkin pointed to the insights of analyst Vinay Bhaskara, who in late 2014 wrote in Airway News, “We are unquestionably living in an air travel oligopoly,” in which virtually all power in the industry lies in the hands of very few players.

“I will go on record stating that I believe that 2015 will be yet another year of record profitability for US airlines,” Bhaskara wrote at the end of 2014. Based on the first quarter results, his predictions appear to be coming true. As for the idea that airlines would expand service to take advantage of low fuel prices and attempt to win over business from their competitors? Let’s just say no one should go holding their breath waiting for heated competition and price wars anytime soon. “The idea that US airlines would, once again, devolve into a war for market share is founded on a misunderstanding of the new structure of US airlines.”

This “new structure” is one in which airlines are rigorously maintaining “discipline,” as Bhaskara puts it. This highly profitable approach is one in which the airlines aren’t expanding service because they prefer to fly densely packed planes, and they aren’t cutting fares because, well, they just don’t have to as demand remains high.

The approach might come across as greedy and opportunistic. But it shouldn’t come as a surprise. After all, the marketplace we have today is one that was predicted years ago by airline merger critics. Back in 2010, when United Airlines was close to completing its acquisition of Continental, consumer advocate Bill McGee published a manifesto about the ramifications of such mergers. Among other things, his analysis showed:

When merger partners’ route maps overlap, certain cities will lose service, with fewer flight frequencies and loss of nonstops.

Airline mergers don’t improve customer service.

When one airline suddenly dominates a route where it previously competed with a merger partner, ticket prices are likely to rise—often considerably.

Likewise, over the years various consumer groups and business travel coalitions have urged regulators to stop mergers from taking place for largely the same reasons. And, based on the routinely oligopolistic tactics of airlines in the post-merger world, in which travelers based in cities like Cleveland, Pittsburgh, and St. Louis have seen dramatic reductions in flights, and in which average flights in the U.S. have pushed past $500 (not including fees), the critics sure do seem to have been on to something.

Most unfortunate of all, the average airline customer should only expect more of the same approach going forward. Instead of adding flights, “Almost all of our capacity growth domestically is about putting more seats on airplanes,” American Airlines president Scott Kirby explained in a recent investment conference. “We will absolutely not lose our capacity discipline,” or the practice of limiting expansion in order to keep airfares high, United CEO Jeff Sismek said earlier this year, while announcing the company had nearly doubled profits in 2014.

Thanks to seat design “innovations,” airlines are able to cram more and more tiny seats into economy sections. This obviously makes flying worse, but that’s not stopping airlines from going forward. “When it comes to passenger comfort, the airlines are saying that this isn’t something that’s very important to them,” Eric Gonzales, an engineering professor at UMass-Amherst specializing in transportation issues, said to the Los Angeles Times. “These changes are intended solely to improve the bottom line.”

If the airline space were more competitive, it would arguably be a lot more difficult for carriers to get away with this kind of stuff. Yet they get away with this and more, including all manner of fees for services that used to be covered in the price of a ticket, plus a range of cost-cutting steps that show through in the results of a new study indicating that customer complaints, lost bags, lateness, and overbooking were all up in 2014.

As if it isn’t already clear, Brent Bowen, dean of the College of Aviation at Embry-Riddle Aeronautical University and a co-author of the study, explained how we got to this point: “Airline mergers and consolidations are taking a systemic toll that is bad for consumers… Performance by the airlines is slipping while they claimed this would make them better.”

MONEY Airlines

Oh, Joy. Airline Seats Will Be Getting Smaller

Airbus is adding a seat to its A380 configuration. Guess what that means for you?

MONEY Airlines

JetBlue’s Surprising Upscale Gambit Is Working

JetBlue Mint suites
JetBlue

JetBlue's Mint premium seats are getting more expensive -- and they're still in high demand.

Last June, JetBlue JETBLUE AIRWAYS JBLU 0.71% began a new chapter of its history with the introduction of its Mint premium service. Instead of using its standard all-coach configuration, JetBlue added a 16-seat premium cabin with full flat-bed seats for some of its new A321s. (Four of the seats even come as private mini-suites!)

JetBlue opted to make this change in order to boost its profitability on the ultra-competitive New York-Los Angeles and New York-San Francisco routes. Less than a year in, it’s pretty clear that this move is paying off even more handsomely than originally expected.

Mint ramps up

The routes from New York’s JFK Airport to Los Angeles and San Francisco are highly contested — JetBlue competes with all three legacy carriers as well as Virgin America VIRGIN AMERICA INC VA 6.52% . Until last June, JetBlue had been the only one not offering a swanky premium section on these flights. Not surprisingly, this took it out of the running for attracting the most lucrative travelers.

JetBlue created Mint in order to narrow the revenue gap with its rivals. The idea was to offer a lie-flat seat at a much lower price than the prevailing fares in order to court the small/medium business and upscale leisure markets: i.e., people who were priced out of the premium cabin on other airlines.

JetBlue has been phasing in Mint flights since last June as the specially configured Airbus A321 planes have arrived. It is finally reaching a full schedule of eight daily round-trips to Los Angeles and five daily round-trips to San Francisco this spring.

Strong demand across the board

Ever since JetBlue launched its Mint service, company executives have noted that they were pleasantly surprised by the level of demand for its premium seats. As expected, Mint has been popular with small/medium businesses and well-to-do leisure travelers.

More surprisingly, Mint has also generated strong interest among large corporations. JetBlue had assumed that its rivals — mainly the legacy carriers, but also Virgin America to some extent — had that business locked up. Instead, JetBlue’s entry into the market has disrupted the status quo.

Virgin America CEO David Cush noted in February that JetBlue’s entry into the market had driven average premium fares down by 30%-40% on the Mint routes. This indicates competitors have had to at least meet JetBlue halfway in terms of pricing in order to prevent customers from bolting.

Fares strengthen

In the first few months of Mint’s existence, JetBlue was offering a starting non-refundable fare of $599 one-way. There were two higher fare “buckets”: $799 and $999. Depending on the level of demand for a particular flight, JetBlue’s revenue management system would determine how many seats to sell at each price point in order to maximize revenue.

Because of the strength of demand, JetBlue’s Mint cabin was frequently sold out last summer. As a result, in the fall, the company revised its Mint pricing tiers. In October, JetBlue’s then-president — and current CEO — Robin Hayes explained that JetBlue had moved the refundable fare up to $1,199 and then to $1,209. Meanwhile, it had made the $999 price point a third non-refundable fare.

More recently, JetBlue has apparently determined that the market can support even higher fares. There’s still an introductory fare of $599, but there seem to be fewer of these tickets available, especially on busy travel days.

Furthermore, on the San Francisco route, the refundable fare has moved up to $1,249, while the intermediate non-refundable fares have risen to $809 and $1,049. Fares are even higher for New York-Los Angeles flights. The refundable fare there is now set at $1,299, with the intermediate non-refundable fares at $899 and $1,149.

A big profit tailwind

JetBlue has been posting by far the best unit revenue growth in the industry recently. It would be naive to attribute this performance to a single factor, but the strong reception of its Mint premium offering is clearly having a big impact. JetBlue is regularly pulling in one-way fares of more than $800 — and, increasingly, more than $1,000 — on routes where just two years ago, its average one-way fares were less than $250.

Late last year, JetBlue told investors that for the month of September, its profit margin on the Mint route to Los Angeles had risen by 17 percentage points year over year. Given that it has raised prices several times since then, its Mint routes are surely even more profitable now.

For competitors like Virgin America, this is mixed news. In the short run, it’s better if JetBlue is commanding higher prices, because it limits the need for other airlines to discount their fares to match JetBlue. But in the long run, JetBlue’s massive success on the New York-Los Angeles and New York-San Francisco routes could encourage it to add flights, putting even more pressure on the competition.

MONEY Airlines

This Airline Just Made Your Butt Happy

150415_EM_SouthwestSeats
Southwest Airlines—Wieck Soon, Southwest passengers will enjoy wider seats on the new Boeing 737 MAX aircraft.

Airline travelers are used to the economy section getting more and more cramped. So Southwest Airlines' move to make seats slightly wider is a blessing.

This week, Southwest Airlines announced that its new 737 airplanes will boast seats with a rare commodity: a little extra room for your butt. The bottom seat cushions will be 17.8 inches across, whereas the typical seat width on 737s is 17 to 17.3 inches.

“The new aircraft seats are the widest economy seats available in the single-aisle 737 market, and offer a unique design that gives our customers what they asked for: more space,” Bob Jordan, Southwest’s executive vice president and chief commercial officer, said in a press release announcing the new seats.

Passengers won’t get to enjoy the extra seat width until mid-2016 at the earliest. That’s when Southwest’s forthcoming 737-800s will first hit the runway and begin accepting passengers.

Will the new seats transform the flying experience of passengers? Honestly, probably not. An extra half-inch or so of space is nice, but for most travelers it won’t feel like a true game changer. Besides, the seats in some other airlines’ economy sections are already wider than Southwest’s new seats. According to SeatGuru, carriers that commonly use 737s, such as Alaska Airlines and Southwest, currently have seat widths of 17 to 17.1 inches. But on JetBlue, which prefers different aircraft (Airbus, Embraer E-190), the seat widths range from 17.8 to 18.25 inches.

Meanwhile, Airbus has argued that airline seats should be at least 18 inches wide, pointing to studies that show sleep quality is 53% better on 18-inch seats compared with 17-inchers. Airbus also pointed out that human beings today tend to simply be larger and heavier than prior generations, and that other industries are more accommodating. The typical modern American movie theater seat, for instance, is 22 inches wide, one inch more than the average of a decade ago.

Nonetheless, Southwest’s move is a welcome change, if for no other reason than that it goes against the trend of airlines cramming in more and more seats and scaling back passengers’ personal space in economy sections, with the hopes of boosting profits—which are already at record highs thanks to high airfares and low fuel prices. Southwest remains an anomaly in the industry for maintaining its free checked baggage policy. Slightly wider seats could prove to be another way the airline can differentiate itself from the pack in a passenger-friendly way.

Read next: These Are the Airlines With the Most Passenger Complaints

MONEY Airlines

Hate Flying? A New Study Explains the Reasons Why

Quality ratings for U.S. airlines are at their lowest since 2008.

TIME society

Alaska Airlines Kicked a Woman With Cancer Off a Flight

An employee said she didn't have a doctor's note

Elizabeth Sedway had to miss chemotherapy at home in California Tuesday because Alaska Airlines refused to let the multiple myeloma patient fly without a doctor’s note. The airline has since apologized for the incident.

“I’m being removed as if I’m a criminal or contagious,” she said in a emotional video posted on Facebook Monday night showing Sedway, her husband and two sons being escorted off the flight. They had been on vacation in Hawaii. “My family is being forcibly removed from a plane because I have cancer.”

“God bless you,” other passengers told the 51-year-old, who can be heard crying as she exists.

An Alaska Airlines employee noticed Sedway was wearing a surgical mask to avoid germs in the airport.

“She asked me if I needed anything,” Sedway wrote in a Facebook video post that has been viewed more than 20,000 times in two days. “The first time. I said no. The second time, [I] said, well I might need a bit of extra time to board, sometimes I feel weak. Because I said the word weak, the Alaska Airlines employee called a doctor, she claimed was associated with the airlines. After we board the plane. An Alaska representative boarded the plane, and told us I could not fly without a note from a doctor stating that I was cleared to fly.”

Sedway, who says she has had no trouble flying in the five years since her diagnosis, had to miss her chemotherapy scheduled for the next day as a result. Her husband missed work and her sons missed a day of school.

Alaska Airlines apologized for the incident Tuesday.

“We regret the inconvenience Ms. Sedway experienced yesterday and are very sorry for how the situation was handled,” spokesperson Halley Knigge told a local CBS affiliate. “Her family’s tickets have been refunded and we will cover the cost of her family’s overnight accommodations in Lihue. While our employee had the customer’s well-being in mind, the situation could have been handled differently.”

TIME France

40% of Flights in France Canceled Amid Strike

Travellers check a flight information board with various of them listed as 'cancelled' due to a strike of air traffic controllers at the Charles de Gaulle internation airport's terminal 2, in Roissy, near Paris, April 8, 2015.
Ian Langsdon—EPA Travellers check a flight information board with various of them listed as 'cancelled' due to a strike of air traffic controllers at the Charles de Gaulle internation airport's terminal 2, in Roissy, near Paris, April 8, 2015.

Air traffic controllers began a two-day strike Wednesday

Roughly 40 percent of flights in France have been canceled as the country’s air traffic controllers began a two-day strike Wednesday.

The SNCTA union, which is France’s largest, is clashing with airlines over raising the retirement age and working conditions, the AP reports.

Air France, the country’s biggest airline, said long flights would not be affected and that 60 percent of its medium-haul flights in and out of Charles de Gaulle airport would continue. However, two out of three flights to and from France’s Orly airport, the country’s second largest, have been canceled.

“It’s grossly unfair that thousands of European travelers will once again have their travel plans disrupted by the selfish actions of a tiny number of French ATC workers,” Ryanair said in a statement. The airline has so far canceled more than 250 flights.

[AP]

TIME Aviation

Here’s How Much Spare Change the TSA Collected Last Year

People are leaving more and more coins behind at screening points

Harried travelers are increasingly leaving their nickels and dimes in the bins used during airport security screenings, which has led to a growing source of revenue for the Transportation Security Administration.

In the fiscal year 2014, the TSA collected almost $675,000 in loose change, according to the agency’s internal data, up from $638,000 in fiscal year 2013. The amount of money collected has been steadily increasing since 2010, even though Americans are increasingly reliant on digital payment methods rather than cash. Overall, the agency has collected about $3.5 million in loose change since 2008. The cash is used to fund TSA security operations.

Fliers at New York’s John F. Kennedy International Airport left the most change behind, $43,000. Los Angeles International Airport ranked second at $42,000 and San Francisco International Airport ranked third at $35,000.

TIME

How the Germanwings Co-Pilot Was Able to Lock Himself In

Safety measures brought in after 9/11 may have helped the co-pilot barricade himself in the cockpit

The fatal crash of a German airliner in the French Alps, apparently a deliberate act by the plane’s co-pilot, seems to have been made possible by security measures brought in following the Sept. 11 terrorist attacks intended to make air travel safer.

On Thursday, French officials said it appeared as if co-pilot Andreas Lubitz had deliberately downed Germanwings Flight 9525 by locking the cockpit door and refusing to allow the captain back inside. The crash killed all 150 on board.

If that is what happened, it would be an indirect result of tightened security measures implemented by airlines in the U.S. and around the world in the aftermath of 9/11, when 19 hijackers overcame crew and passengers and flew the planes into buildings in New York and Washington D.C.

In 2002, the FAA announced higher standards to protect pilots. Cockpit doors in airliners were made stronger while remaining locked throughout the flight. The FAA also mandated internal locking devices inside the cockpit to preventing someone from entering. But those restrictions, meant to prevent similar hijackings, may also have allowed Lubitz to prevent someone else from entering the flight deck as he piloted the jet into a mountainside.

“The procedures put in place to prevent one bad thing from happening facilitated another bad thing happening,” says Jeff Price, an aviation management professor at Metropolitan State University of Denver.

On an Airbus A320, a locked cockpit door can be opened through a nearby keypad—as shown in this Airbus video—but that can be overridden by an individual still inside the cockpit via a switch that can keep the cockpit door locked. “That act of fully locking the system down has made this event possible,” says aviation expert Chris Yates. “Pilots use that access keypad to wander into the cockpit anytime they choose, but it can be overridden from inside, and that seems to be the problem.”

Yates says one way to potentially avoid a similar situation would be to take out the locking mechanism altogether. But a simpler fix might be for all airlines to do as the U.S. has done since 9/11 and require a flight attendant to be inside the cockpit if one of the pilots is away. While some carriers have already begun doing this since the crash, many in Europe and across the world still don’t mandate it.

“U.S. airlines have been doing this since 9/11,” Price says. “And if the pilot decides to commit mass murder, there’s somebody else up there to open a door or notify somebody or take some sort of action.”

MORE How Pilots Are Screened for Depression and Suicide

Thomas Anthony, the director of the University of Southern California Aviation Safety and Security program, says there’s no one fix that would help prevent a similar incident. For any aviation mishap, he says, there are always four or five contributing factors, citing the Airbus’s strengthened cockpit doors as well as less interchange between the cabin crew and the flight crew, which he says has created a more isolated environment inside the cockpit. And he thinks any investigation into the downing of the German airliner will attempt to address this sort of insider threat.

“Every security measure that is taken has a price and often an unintended consequence,” Anthony says. “But I expect this will be a watershed event.”

Read next: Germanwings Plane Crash: We Could Be Doing Much More To Prevent Pilot Suicide

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MONEY Airlines

$15 Flights to Europe—and 7 More Ways the Least Trustworthy Airline Has Misled Travelers

Ryanair plane taking off
Ryanair

Ryanair's turnabout this week on cheap transatlantic flights is hardly the only reason travelers might not trust Europe's most infamous high-fee, low-cost airline.

Airlines aren’t exactly renowned as the most honest, upfront, and trustworthy of businesses. Years ago, the industry told travelers that fees for checked baggage were necessary to cover the cost of higher fuel prices. Fuel surcharges were added as well, supposedly for the same reason. Yet even as fuel prices have plummeted, fuel surcharges remain commonplace and baggage fees are pricier and more widespread than ever.

For that matter, travelers have constantly been told that the “debundling” of the airline ticket, in which passengers pay fees a la carte for only the services they want, results in lower prices for strictly the flights themselves. How that concept jibes with the fact that average airfares have soared to all-time highs (over $500) for domestic round trips is rather puzzling.

Among this untrustworthy bunch, European low-fare carrier Ryanair is routinely considered the worst of the pack. Led by brash, headline-grabbing CEO Michael O’Leary—known for calling customers “idiots” for thinking they won’t be hit with fees at the airport, among other things—Ryanair has a long, storied history of bad, misleading behavior.

In the latest incident that turned out to be completely untrue, it was widely reported this week that Ryanair’s board had approved the launch of a series of transatlantic flight routes, with promotional fares from Europe to the U.S. starting for as little as £10 ($15) one way. Within days of the report, however, Ryanair released a statement that completely negated the earlier stories, clarifying that the board “has not considered or approved any transatlantic project and does not intend to do so.”

It’s hardly the first time that Ryanair appears to have blatantly misled travelers around the world, likely for purposes including but not limited to generating huge amounts of cheap publicity. Here’s a look at some other sketchy or downright untrue things that Ryanair has claimed over the years.

It’ll sell standing-room-only tickets. In 2012, O’Leary claimed that the airline was close to introducing a standing-room-only section on short-haul flights within Europe. Fares would supposedly start as cheap as £1 ($1.50) for passengers who would stand up rather than require a seat during their travels. The airline later stated that it had no plans for an SRO section on planes.

Seatbelts don’t matter. To make the argument that passengers can fly safely while standing, O’Leary was widely quoted saying, “Seatbelts don’t matter,” and compared the issue to other forms of travel: “You don’t need a seatbelt on the London Underground. You don’t need a seatbelt on trains which are travelling at 120 mph and if they crash you’re all dead.” Also, he noted, “If there ever was a crash on an aircraft, God forbid, a seatbelt won’t save you.” If nothing else, however, pilots and air safety regulators point out that in the event of turbulence passengers are more likely to be injured when not wearing a seatbelt.

It actually flies to Paris. More than a decade ago, a German court ruled that Ryanair must stop claiming that it flies to Dusseldorf when, in fact, the true airport destination is an old military airfield in Weeze, 42 miles away from Dusseldorf. It’s common for low-cost carriers to use secondary airports rather than those nearest to city centers in order to keep costs down, but Ryanair has been dubbed the “ultimate bait-and-switch airline” because its gateway listings are so often misleading. A SkyScanner report about the world’s Most Misleadingly Named Airports focused in particular on popular gateways used by Ryanair including Paris-Vatry (Disney) and Paris (Beauvais), which are, respectively, 93 miles and 55 miles outside of Paris. Despite its billing, the former is also 70 miles from Disneyland Paris.

It’ll charge for in-flight bathrooms. With the hopes of encouraging passengers to use the restroom before boarding planes, Ryanair previously announced plans to charge fees for bathroom breaks on its aircraft, and has also floated the possibility of removing toilets in order to make room for more revenue-generating seats. Understandably, such measures drew an outcry among travelers and regulators, and in retrospect seem like ploys to generate attention.

And in-flight porn. Talk about a marketing stunt to generate attention! Yes, a few years ago O’Leary made headlines by announcing that his latest moneymaking idea would be an app that would charge passengers to watch erotic movies on tablets and smartphones. Gambling and games would be available too, for a charge. “I’m not talking about having it on screens on the back of seats for everyone to see. It would be on handheld devices,” O’Leary said. “Hotels around the world have it, so why wouldn’t we?”

It considered a “fat tax” too. In 2009, Ryanair surveyed 100,000 passengers on the topic of how to save the airline money, and the top vote getter, receiving the support of 30% of those polled, was an extra fee for overweight passengers. Granted, this wasn’t the most serious or scientific survey: Participants weighed in because by doing so they had a chance to win free flights, and the second most popular money-saving scheme among voters was charging money for toilet paper with Michael O’Leary’s face on it. Remarkably, the South Pacific’s Samoa Air beat Ryanair to the punch by becoming the first airline to charge passengers by the pound in 2013.

It actually changed the way it does business. A year ago, not long after the airline was named as the worst customer service brand in all of Europe and described in the report as “aggressive and hostile towards customers,” Ryanair declared that it was instituting a wide range of service improvements and more customer-friendly policies to overhaul its image.

How is that working out? A (UK) Telegraph report in the fall noted that Ryanair has indeed followed through on several customer-friendly changes, including “a new allowance for a second, small carry-on bag, a reduction of the number of clicks required to book on its new website, allocated seating, several family-friendly innovations and more discreet selling of its food and other ancillary services on board.” Still, Ryanair continues to receive around 80,000 complaints per year, and as one Telegraph reporter put it, even after the “changes” have been made, “The in-flight experience was the same and the inflight food is still a rip off.”

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