NY Times: Airlines try to adjust?

David Leonhardt reports in the Sunday New York Times on how the airlines are changing as a result of their difficulties in earning a profit.

They will make travel less convenient for business fliers by cutting flights and lengthening connection times at some hubs. They also hope to exact more of a sacrifice from people flying on the most heavily discounted tickets, with ever more spartan cabin service.

Airline service is a total commodity…except for those few who will pay to get something better than a commodity. What’s that? Boarding before the masses, an aisle seat, a bigger/wider seat, a bit more legroom, etc. The airlines just don’t seem to “get that”…and they’re about to screw with those folks who have been willing to “pay” for something better.

A long time ago a very saavy financial investor told me that the airlines were hopeless. They had lost more money as an industry than almost any other you could point to. They briefly flickered into profitability during the 1999-2000 boom — but, truth is, nothing’s changed! Hopeless is the right word.

Except, of course, for Southwest and JetBlue — who know how to make a profit from the non-business traveler. As the major airlines irritate business travelers more and more, they’ll simply push more traffic to those low cost alternatives — as the reality sinks in on business travelers asking why they should spend more for the same commodity level of service.

Even if Southwest is wrong, its advantages will probably erode slowly. That means fares are unlikely to rise quickly.

But many travelers are likely to gain a keen, if unwelcome, understanding of the trade-offs that make those fares possible.

“While I adore Southwest, and think they’re half my justification before God,” said Mr. Kahn, one of the architects of deregulation, “I hate standing in those long lines.”

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