Wednesday, June 18, 2008

WSJ on Aviation (part 2)

Space Race: A Battle Looms For the Overhead Bins

As American, United and US Airways prepare to start collecting fees on every piece of checked luggage, including $30 round trip to check one bag and an additional $50 round trip to check a second, they are also getting ready to strictly enforce limits on carry-on baggage -- which are commonly flouted -- in hopes of minimizing delays and disruption as flights board. Battles with customers likely will ensue, and fliers will be peppered with baggage-rule announcements, adding more aggravation to the already trying travel experience.

...American's Mr. Dupont [American's senior vice president of airport services planning] says much of the response his airline has received from customers after first announcing the fee has centered on concerns about the airport and boarding experience. American says it is prepared to deal with the changes and hopes bottlenecks won't be created.

...The airline's baggage operation has struggled for many months. Through the first four months of this year, American has been worst among major airlines in baggage reliability, mishandling at least one bag for every 141 passengers, and worst among all U.S. airlines in on-time dependability. In 2007, only US Airways was worse than American among major carriers in the on-time category.

...The rules are complicated -- even Mr. Dupont had to check when asked on how the fee applied to so-called code-share arrangements, when one airline sells another's seats as its own. (The rules of the first airline you fly apply, regardless of which airline sold you the ticket.)
Summary of Key Issues:

1) American is worst in the country at handling bags
2) American is worst in the country for getting people there on time
3) American is going to start charging for every checked bag
4) The rules apply to some passengers but not to others, according non-obvious criteria
5) If you get on board with your bag and it has to be checked, you don't have to pay
6) American's plan for dealing with bottlenecks is to hope that they don't occur
7) American's project lead doesn't know all the rules of enforcement

Recommendation (in the spirit of Long or Short Capital): It's too easy to short any company that underperforms competitors but strives for differentiation through a new, complex, inefficient, and aggravating surcharge structure.

I'll short this whole charging idea, and put the over/under on the date of it's elimination as July 15th.


1 comment:

Banker Ninja said...

aaah, the joys of vacation and digging through your entire blog. bored or finally getting to all those things I probably should do but am "too busy".. you decide?

well July 15 came and past. and they are still the worst. and more airlines adopted this nonsense. Next thing you know credit card companies are going to start charging annual fees and the MTA is going to charge more than $1.00 to ride the subway.

where is this world going?

Wednesday, June 18, 2008