The Brancatelli File
BY JOE BRANCATELLI
March 14, 2002 -- It's "March Madness" time again, so riddle me this, frequent flyers:
Why is watching the NCAA college-basketball tournament very much like watching the mainline airlines run their business?
The answer: In both cases we're watching children and amateurs making believe they know how to play the game.
Tune in to the college-basketball tournament--the first games have just tipped off as I write this on Thursday afternoon--and you will see teenagers being teenagers: panicking when things get tough; squandering opportunities; making mental and physical mistakes; overestimating their skills and underestimating the talents of their opponents; and generally acting like amateurs posing as professional ballplayers.
Watch what the mainline carriers are doing, especially this week, and you'll see the same kind of childish follies: fare increases in a business-travel market that has clearly decided prices are already too high; flight and capacity increases in a marketplace that does not need either and doesn't have the infrastructure to support them; and an overweening arrogance that is meant to hide the fact that most of the executives of the mainline carriers are nothing more than incompetent amateurs who act as if they are professional businesspeople.
As you can probably tell, I am not a huge fan of big-time college athletics. I'd rather watch the pros. Which is why I have come to despise watching the mainline carriers operate. I hate watching amateurs. They are children playing at business.
Before we talk about this week's airline developments, consider some recent follies. Since Iraq invaded Kuwait in the summer of 1990, four mainline carriers--Pan Am, Eastern, TWA and Canadian--have disappeared. The original Midway Airlines, the first post-deregulation start-up to become a "major" airline by government definitions, disappeared. Two current mainline survivors, Continental and America West, have made multiple trips into bankruptcy. Many mainline carriers lost money in 2000. All of them were in the red in 2001, racking up about $9 billion in losses, the equivalent of $24 million a day. None, by their own admission, will turn a profit in 2002. And, just for good measure, the American people now believe they get better service from the Internal Revenue Service than the average mainline airline.
Now, on to this week's news. The Federal Aviation Administration said air traffic won't return to pre-September 11 levels any time this year. At best, the FAA says, passenger loads won't match pre-September 11 levels until sometime in 2003. Separately, the FAA said there is a chance that the clogged airports, crowded skies and massive flight delays of the summer of 2000 may return this summer. And several independent surveys reported that corporations are searching for alternatives to mainline flying because they feel airfares are too high and the pricing structure is fundamentally unfair.
So how have the children and amateurs who run the mainline carriers responded to this week's news that fares are too high, flight delays may return and passenger traffic will continue to lag?
They have raised fares, added flights and increased seat capacity.
That, fellow travelers, is the textbook definition of March Madness. That, my friends, is the childish and amateurish way to run your business. That, frequent flyers, is how these mental teenagers manage to burn through $24 million a day.
This week's fare increases comes to us primarily from American Airlines, which managed to rack up losses of $1.8 billion last year. Over the weekend, the American pricing wizards kicked up fares by tightening advance-purchase rules: Fares that last week required a 3-day advance purchase now require a 7-day advance buy. Prices that once required a 10-day advance purchase now must be purchased 14 days in advance.
The flight and capacity increases come to us largely compliments of United, which accrued losses of nearly $2.5 billion during the last six fiscal quarters. Already reeling from a remarkable series of managerial, operational and financial blunders, United chose this week to announce a massive increase in service at its O'Hare hub. By the middle of June, United says it will offer 614 daily departures from Chicago, just five shy of the 619 daily flights it operated on September 10.
But don't think this week's childish idiocy is limited just to the nation's two largest carriers.
Delta, the number-three carrier, today applied for antitrust immunity with Korean Air, an airline with an alarmingly bad safety record. But, of course, Delta thinks so little of its brand that it happily code-shares with mechanically suspect carriers such as Korean and China Air Lines.
And let's not forget Northwest, which opened a $1.2 billion terminal at Detroit, its largest hub, a few weeks ago. The place is already overflowing with trash and coated with grime. Why? Because Northwest looked the other way when its maintenance sub-contractor tried to pressure $11-an-hour janitors into accepting 30 percent pay cuts on opening night.
Yes, my friends, it's March Madness, so pick your poison. Flip on the tube and watch teenagers make all sorts of childish and amateurish mistakes on the basketball court. Or live your life on the road and watch the mainline carriers act like teenagers.
This column originally appeared at JoeSentMe.com
Copyright © 1993-2004 by Joe Brancatelli. All rights reserved.