Something I Have No Right Whatsoever to Complain About
Okay, there’s one tiny part of it I may have a right to complain about, but it doesn’t come until the end.
My dad was a pilot at a regional airline, feeder to a major airline, which was eventually bought by the major airline. He’s retired now, but he and his immediate family retain flight privileges. He and my mother fly free; my sisters and I fly for a certain amount per mile (I don’t know what it is; their computers just calculate what it costs us to fly from point A to point B and it’s always the same for any given points A and B). In addition, we can buy a limited number of “Buddy Passes” at similar prices, though slightly higher, for anyone we like to travel with us.
Two catches: The travel is standby, and priority (the part where we sit at the gate with pale faces and shallow breathing while the agents calculate how many standbys they can put on board and which ones it will be) is determined by hiring date of the employee or former employee (my dad). So somebody whose dad or husband was hired before my dad gets to get on the plane before me, and if there’s any seat left after that I’ll get my chance. But–wrinkle!–Buddy Passes are always of lower priority than the family of the employee. So if I travel with my son, he’s on a Buddy Pass, and he comes after everybody else who is family of an employee, no matter whether they were hired before my father or not. And because he can’t travel without me, I’m bumped down to his priority level. Translation: We are always last or close to it.
Since 9/11, as you can imagine, with drastically reduced routes and correspondingly more packed airplanes, standby travel has been such a nightmare that I’ve largely forgone it altogether, especially with the Bean in tow. Traveling back to the Midwest for this death in Daddyman’s family, we bought one-way tickets, not knowing when the service would be, etc. Mistake. At the very least, son and I should have bought round trips. I decided I could “just fly standby” to get back out, even though I haven’t done this with son for years. Mistake. I’ve been watching the seat numbers get lower … lower … and lower until they’re finally overbooked, while son sits at the bottom of the priority list with Buddy Pass beside his name. Once they’re overbooked, it’s no use to go to the airport, so we stay another day and start the process over again. It’s painful, to say the least.
As I said, I have no right to complain. It’s a privilege to fly cheap, or would be if we could ever do it at all, one that the airline has no obligation to offer us (and a lot of the gate agents for some reason never want to let us forget that, even though their own friends and family travel the same way and presumably are subjected to degrading treatment from their fellow agents). It’s just painful, upsetting, and leaves us with an unpalatable choice of paying hundreds of dollars for a one-way flight or sitting on our butts for a few more days until we can snag a flight that isn’t overbooked and has few enough standbys that my son’s priority will see us through.
But here’s the thing, the one thing I do have some right to complain about. Airlines are running as lean as they can in routes and equipment use because of all the factors you and I both know all about–9/11, heightened security, rising gas prices. So the flights are always full. But worse: I know you know the phrase code share. This is when airlines say it’s their flight but it’s actually on an entirely different airline altogether. So they find it very easy to judge how many flights they should put on a certain route–how many passengers are they having to pawn off on their bretheren airlines? And if it’s not enough to fill a second airplane, why would they put a second flight on the route? Makes perfect economic sense.
But I don’t understand how this is not an illegal monopoly. They are colluding with their fellow airlines to determine capacity, and therefore supply, and therefore price. If the major airline in question only has to pawn off ten revenue passengers per route to their code share partners (oh, how I hate the very phrase), they don’t have to bother trying to market extra flights with attractive prices. And therefore they cram every flight to bursting (literally; overbooking is another practice I despise) and our privileges completely evaporate.
And they are privileges; if they’re gone, well, too bad. But it angers me that they’re gone through what appears from the outside to be a monopolistic business practice that should be illegal under antitrust laws. If anybody can explain that to me, let me hear from you.
14 comments »
Copy link for RSS feed for comments on this post or for TrackBack URI
Leave a comment
Line and paragraph breaks automatic, e-mail address never displayed, HTML allowed: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>
Funny thing is, they’re still losing money. As our little man would say, “Collusion, yer doin’ it wrong!”
Comment by Daddyman — April 3, 2008 @ 4:29 pm
I don’t understand why you think code sharing is illegal. They’re not colluding on the price or agreeing to run fewer flights so they can jack up prices. They’re making more efficient use of the flights that they have. Without code sharing, you wouldn’t see more flights; you’d just see one airline bow out because it couldn’t sell enough tickets to make it worth flying that route at all. And then you would see the other airline jack up its prices, because it could.
Comment by Xrlq — April 3, 2008 @ 7:44 pm
It’s not a monopoly. A monopoly is one single company (or industry) with a unique product and no competitors or substitutions. Delta (along with their codeshare partners) has competition in the form of other airlines customers can choose to fly with (which may or may not be doing the same thing Delta does within themselves and their respective networks) and substitutions in the form of cars, buses, whatever. The airline industry as a whole is an oligopoly rather than a monopoly. They all market a (relatively) homogeneous product, there are few sellers and major entry barriers in the industry (cost, FAA guidelines, etc.) and prices are sticky around a kink in an individual firm’s demand curve because sellers watch each other, like gas stations, and adjust their prices accordingly. If the whole airline industry were coming together and agreeing to jack up prices across the board, I think that would be illegal, but one company (or network of companies) within the industry determining their prices and routes within themselves isn’t illegal. It’s just a business trying to operate as efficiently and profitably as they can. Does it suck for us? Yes. Very much so. Illegal? Not so much.
Comment by Bumble — April 4, 2008 @ 7:54 am
Thanks, business major. I know the definition of a monopoly. That’s why I said “monopolistic business practices.”
Comment by Anwyn — April 4, 2008 @ 7:57 am
Xrlq:
But if Delta can sell the same flight at the same price on Northwest, whereas ordinarily Northwest would have to attractively lower its price to get that customer away from Delta, how is that not colluding on the price AND offering fewer flights? If there were a separate Delta and a separate Northwest on the same route, they would have to compete. Whereas now they can “share.” You are right that any company that could not lower its price enough to attract the customers would go out and then the remaining companies could raise the price a bit …… and then maybe the airlines would be solvent, not subject to government bailouts and chapter 11 reorg, etc. etc. etc.
Comment by Anwyn — April 4, 2008 @ 7:59 am
Oh my gosh, Anwyn, I sooo sooo do NOT miss flying on passes and standby. My husband was a commercial pilot for many years and I flew on a pass if we wanted to go somewhere – he could usually get a seat easily, being a pilot he could “jump seat,” but I couldn’t. I swear Northwest treated us worse than baggage – more than once! [And there were rules associated with flying on a pass – no jeans for example and I was actually asked to change clothes once for wearing a long denim skirt!] So thankful those days are over for us and we don’t fly that way anymore. It was just more trouble than it was worth.
Comment by BT in SA — April 6, 2008 @ 1:20 am
Oh man, I remember those rules well. Back before the regional was bought, we had those too. My mother had to buy a pair of hose in an airport shop one time. Nowadays there are no clothing rules unless you list to go in first class, thank goodness.
I just read a few things on your blog … what an experience you’re having. Is this a limited-time stay over there or indefinite?
Comment by Anwyn — April 6, 2008 @ 7:37 am
And Bumble–you’re right I said I thought it was a monopoly … sorry for being short. :)
Comment by Anwyn — April 6, 2008 @ 7:39 am
We’ve been here five years, Anwyn. Will be here a minimum of another five. But if you can do ten years, may as well do fifteen. We may be here a while. I leave two or three times a year and return to normalcy in the States. If I didn’t I would go crazy! [And when I fly now, I book seats in business class – and have enough miles so that I automatically get upgraded on domestic flights to first class on a couple of airlines. Sure beats flying on a pass!!! It’s amazing how differently you get treated when you are a paying passenger, although I will say that domestic flying just sucks compared to international. I’m amazed that some airlines are still in business in the States – although three have gone under in the past week – Aloha, Skybus and – I’ll think of the third – one that’d been around for about ten years…]
Comment by BT in SA — April 6, 2008 @ 7:36 pm
. . . ATA.
Comment by Chris — April 6, 2008 @ 10:21 pm
Bumble, I’m not sure why you think anything turns on the airlines not being a monopoly. As their name implies, antitrust laws primarily target not monopolies per se but “trusts,” a.k.a., cartels. The very concept of collusion implies the absence of a monopoly, as if a company is a monopoly, there’s no one left to collude with. Nor does it matter that the practice in question is limited to a few participating airlines rather than the entire industry. It only takes two to collude.
Then again, it only takes two to establish a legitimate joint venture, either, which is why I don’t think the issue is anywhere near as simple as our hostess suggests. Is it possible that two or more airlines may conspire to code-share a single flight on a large plane rather than operating two smaller, competing ones, and further agree among themselves to charge consumers exactly $X for that shared flight, leaving no room for competition along a route where competition might otherwise have existed? Sure. It’s equally easy to envision a (much more typical, I think) scenario in which there wasn’t enough of a market to support both airlines running their own planes along the same route at about the same time, and a code share allows them to kinda-sorta compete where no competition would otherwise exist at all (and which one of the two airlines would then be unable to use even for connecting flights to other cities). Thus, depending on the implementation, a code share can either be pro- or anti-competitive. Not being in the industry, I have no idea what the process is for sorting out the two, e.g., whether code shares must be approved by the FAA, or whether such approval precludes anyone else from challenging a practice as a anti-competitive.
Comment by Xrlq — April 7, 2008 @ 4:21 am
Dammit, I just erased two paragraphs’ worth of comment through two keystrokes on an unfamiliar keyboard.
Unfortunately I don’t know enough about the inner workings of it myself to say what the FAA says about it, but I’d like to be able to follow the money. How is this different from Wal-Mart saying, “I’m sorry, Mrs. Jones, we’re out of product XYZ at the moment, but if you go next door to Target they’ll sell it to you at Wal-Mart’s advertised price” and then … splitting the money with Target? If the airlines split revenue from codeshare, how is that profitable? And if it isn’t profitable, why do they do it? And if it is profitable, why are so many of them bankrupt? Although I note that the ones that went out this week were small and unlikely to be in on the codesharing. But Delta filed bankruptcy last year after codesharing for years.
It seems fishy to me. It’s something I’d like to know more about.
Comment by Anwyn — April 7, 2008 @ 6:11 am
It’s been a while since my anti-trust class, but here’s why it’s probably legal:
1 – “And if it is profitable, why are so many of them bankrupt?” This is not a valid assumption. They are going bankrupt because the industry as a whole is struggling. It’s very likely that code sharing is helping them not to lose even more money.
2 – These practices don’t constitute a “monopoly” and they are not “monopolistic.” They aren’t done in order to win a larger share of the market or otherwise discourage competitors. If they are illegal, it is because they are contracts in restraint of trade.
3 – the airline industry is heavily regulated by Congress. It’s easier to do things that would otherwise violate AT law if the courts can see that there’s already government oversight.
4 – When they overbook, airlines have to put bumped passengers on another flight. This requires airlines to know about what the other airlines are up to. If they don’t code share, then every time they overbooked, they would have to call up the other airlines, one by one, and ask them what seats were available.
5 – Code sharing makes economic sense for the individual airlines. It can’t be said that any airline would stand to benefit from reneging on their agreements. It’s also probably a custom and practice of the industry.
6 – When airlines buy tickets from other airlines, they are acting like any other customer. Refusing to do business with competitors can be an antitrust violation. (Aspen Skiing). If a big airline like Delta refused to code share with smaller airlines, forcing those smaller airlines to increase their number of flights, that could be seen as monopolization conduct designed to drive those small competitors out of business.
Comment by Daryl Herbert — April 7, 2008 @ 10:45 am
Anwyn: Why do you assume it’s either bad or illegal for stores do the same? I’m pretty sure that Target and Amazon did precisely that a couple years back at Christmas, when it became a big joke that you could buy Marijuana at Target.com. [Marijuana is a book, of course, and one Target is unlikely to stock on its own, compounded by the fact that the Target.com version of the entry only said Marijuana and specified a price, while the Amazon entry listed author, publisher, etc.] It almost sounds like you have something against joint ventures in general.
Daryl: I can’t see any airline getting busted for individually refusing to code-share. Concerted boycotts are a different matter, of course.
Comment by Xrlq — April 7, 2008 @ 1:50 pm