Less Wiggle Room if New Airline Web Sites Take Off
The average U.S. jetliner today flies about 70% full--a very crowded plane by historical standards--and the airline industry is being verbally whipped in public by consumers and Congress over lousy service, growing delays and too many lost bags.
So consider this irony: At the same time the airlines are busy defending their service, they’re also scrambling to fill the rest of those seats with the help of new Internet ventures.
At first glance that seems like great news for consumers--quicker, more convenient access to seats, often at discount prices--and for the airlines, because it cuts their cost of distributing tickets. It also helps fill many seats that otherwise would go unsold.
But remember those service problems? What happens to service if the Internet strategy works well and those airplanes, not to mention the busy hub airports where they land and take off, get even more crowded?
“Service is only going to get worse,” warned Kevin Mitchell, chairman of the Business Travel Coalition, an advocacy group for corporate fliers. “You’re going to have more outcries from the public from this point forward.”
Not everyone agrees, but the airlines don’t dismiss the risk.
“The bar is being raised and we’re trying to keep up with it,” said Matt Triaca, a spokesman for industry leader United Airlines, a unit of UAL Corp. “The pressure is on us to improve customer service.”
The incongruence of the service woes and the effort to put even more people on planes was clearly illustrated recently.
By coincidence, the airlines’ performance was again lambasted during a Senate Commerce Committee hearing the day before reports surfaced that six big carriers are banding together to form a Web site that will sell tickets for empty seats that the industry calls “distressed inventory.”
The site, called Hotwire.com, is expected to be launched this fall and will be controlled by the private investment firm Texas Pacific Group. It will compete head-on with such Web sites as Travelocity.com, controlled by Sabre Holdings Corp., and Expedia.com, run by Microsoft Corp. To a lesser degree, it also will vie with Priceline.com, a name-your-own-price site that in effect enables travelers to buy tickets through an auction system--tickets that come with several restrictions.
That’s not all. Several airlines, including United and Delta Air Lines, already had joined together to establish an Internet site to sell published-fare tickets. That site, called Orbitz, also is expected to open this fall, although it’s being investigated by the Justice Department for any anti-competitive features.
To be sure, that 70% figure for airplane occupancy--what the industry calls its “load factor”--is an average. Any traveler can tell you that at peak hours flights already are 100% filled. Flights on Saturday afternoons or late at night, when fewer people want to travel, are often only half full, which brings down the average.
So, if the Web sites fill some empty seats on those flights, is there really a risk that service will get worse?
“For most travelers who board a flight at 9 a.m., it won’t make any difference” because the plane already is packed, said Ron Kuhlmann, vice president at Roberts, Roach & Associates, an aviation consulting firm in Hayward, Calif.
But wait. If the Web sites “help keep the airlines full 24 hours a day, there will be repercussions,” Kuhlmann said. Why? Because delays or service problems that back up the peak-hour flights spill into the other hours of the day. That’s manageable when the off-peak flights aren’t full. But what if those off-peak flights get even more crowded, thanks to more ticket sales on the Web?
“One of the times that the airlines have to recoup from a chaotic afternoon is when things slow down in the evening,” Kuhlmann said. “Yet the increasing numbers [of off-peak] travelers will have an effect, because airline and airport staffing go down in the evening.”
The airlines contend that they are working on ways to uphold service even as the Internet helps them put more people in the air.
Northwest Airlines, for instance--which has been particularly criticized for poor service over the last two years--is testing a program whereby users of its Internet site can print boarding passes on their personal computers. That would help shorten lines at the airport check-in counter, Northwest spokesman Jon Austin said.
“We absolutely have to address this, because people aren’t going to stand for less service,” Austin said.
United, meanwhile, now offers free headsets on all domestic flights, and it’s testing self-service ticketing kiosks at airports to reduce congestion.
Tom Parsons, head of the travel Web site Bestfares.com, noted that many blame the Federal Aviation Administration, Congress and local governments for much of the airlines’ poor service. They say the delays stem mostly from antiquated air-traffic-control equipment and airports--such as those in San Francisco and Boston--that aren’t being expanded to handle the growing number of travelers.
Yet, Parsons said, even though airlines “know the system is broken,” they continue to try to sell more tickets, and they see the Internet as a way to help them do just that.
It’s also true that more people than ever are flying, which naturally would help swell the number of complaints. More than 635 million passengers boarded U.S. airlines last year, up from 489 million just six years earlier. And to the airlines’ credit, the number of complaints lodged with the Transportation Department last year--17,381--pales against the total number of passengers.
Even so, the passenger complaints last year were more than double the 7,980 filed the previous year. And with complaints up 74% in the first four months of this year, it’s a trend that “cannot be ignored,” DOT Inspector General Kenneth Mead said in a report last month.
There’s no question that the Web is becoming a growing part of air travel. Nine million U.S. households booked air travel online last year. That number will soar to 26 million by 2003, estimates Forrester Research Inc., an Internet research firm.
Yet not everyone sees the Internet’s increasing use as a major threat to the quality of airline service. “I’ve seen no empirical evidence that shows the Internet is driving load factors higher,” said Brian Harris, an analyst at Salomon Smith Barney Inc. in New York. “It’s simply a more cost-effective way [for the airlines] to distribute distressed inventory.”
Regardless, the airlines already are under severe pressure to burnish their service, and travelers could get even grumpier if Internet ticket sites--especially the new ones like Hotwire.com--make even a small contribution toward eliminating the remaining empty seats.
Matters already were so bad last year that, facing congressional ire and threats of a “passenger bill of rights,” the airlines launched their own much-touted campaigns to improve service. Yet critics such as Sen. John McCain (R-Ariz.), who chairs the Senate Commerce Committee, recently said that the carriers’ voluntary efforts “still have a long way to go.”
And perhaps the harshest criticism of airline service is coming from the group that would be hurt most by the Internet fare sites: the nation’s travel agents, who still book the majority of tickets. Their trade group, the American Society of Travel Agents, wants the passenger bill of rights passed on grounds that the airlines’ effort isn’t working.
“It comes as no surprise to travel agents that the voluntary plans put forth by the airlines have not yielded satisfactory results,” said ASTA President Joe Galloway, citing the surge in passenger complaints last year.
And in the meantime, it’s getting harder to find an empty airplane seat. Last week Northwest and Continental Airlines both reported stunning June load factors of 83% and 80%, respectively--the most crowded conditions ever for both carriers.
That demand for air travel will grow even stronger thanks to the Internet, yet “there’s nothing worse than creating demand and then not satisfying it” with poor service, Northwest’s Austin said. “If we’re going to fill the planes, then we have to meet our customers’ expectations.”
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Airing Complaints
Amid growing public outcry over poor service, U.S. airlines are trying to fill empty seats through new Internet sites, raising questions about whether service problems could increase. The growing number of consumer complaints filed with the Department of Transportation is one measure of the rise in travelers’ dissatisfaction with the carriers. Complaints from January through May of each year:
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1998: 3,079
1999: 5,441
2000: 8,419
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Source: Department of Transportation Air Travel Consumer Report
