United still sucks, how can we get more choice in air travel?

[maxwere 82]

I gave up United 2 years ago, but the latest FUBAR has me wondering why a major service industry provider sucks so bad at service (and still has customers)?  Thanks Ryan McMaken for answering some of my questions.

Quote

How Governments Limit Airline Competition

But, government regulations do limit competition and market entry to an extent. They do this in several ways, including: 

• Air traffic control is a monopoly run by the FAA and services are limited by political considerations. 
• Airports are owned by local governments, and thus allocate airport amenities and services according to political needs and not market needs. 
• The FAA rations "slots" which give "an airline the right to either takeoff or land at the airport in a specified time period, and airlines [can] only access the airport with a slot. These slots are generally distributed to the largest and most powerful incumbent firms. 

Moreover, the generally-high level of bureaucratization in the airline business means that airlines spend a sizable amount of effort satisfying government bureaucracies rather than concentrating on their own customers. As Per Bylund has explained, regulated markets destroy consumer sovereignty. 

So, yes, there are multiple government-imposed constraints that indirectly limit competition in the airline industry — to the benefit of incumbent firms like United. 

The Ban on Domestic Routes for Foreign Carriers

But there is also one big government regulation that directly protects all domestic airlines from competition: the US ban on foreign carriers.

USAToday reports: 

International airlines do operate in this country, of course, but they're forbidden from flying point-to-point destinations domestically. These laws, which are meant to protect American consumers and jobs, are having the exact opposite effect. Eliminating — or at least partially lifting — outdated restrictions could significantly increase competition and improve customer service.

The author of the above is wrong about at least one thing. The protectionist laws eliminating foreign competition are not "outdated." They were never a good idea to begin with. Protectionist laws such as the ban on foreign carriers have always favored the owners of domestic firms at the expense of their customers. 

United Airlines is more easily able to weather PR disasters because US law prohibits foreign carriers from coming in and offering services that don't involve being smacked around by police when the airline can't count how many seats it has on the plane. 

Were free trade allowed in the airline business, customers could potentially elect to fly the Irish carrier Aer Lingus — for example — between Boston and New York rather than United. This would, of course, drive down prices and give more choices to consumers. 

https://mises.org/blog/end-airline-protectionism-allow-foreign-carriers-domestic-routes

[wdefromtx 3,159]

Just about all the domestic carriers are horrible. I find SWA to have the best customer service of the domestics, but even it is not what it once was.

 

I have flown internationally and every time the customer service was light years better than the domestics. Even some of the smaller ones in Europe are better than the service here.

 

[Brad_ATX 13,654]

Part of the problem is that we live in a very large country that relies on air travel for quick/easy travel.  That's not the case in most countries, especially in Europe, where you can get most anywhere in a country (or even other countries) via train or car quickly and cheaply.  Because of this, airlines are forced to have better experiences in order to compete with the variety of options that simply don't exist here.  Sure, you can take Amtrak, but unless you are sticking to the Northeast, a train trip takes days.  Compare that to a train trip from London to Amsterdam, which is literally a few hours.

Is it right that U.S airlines mostly suck at customer service?  No.  But until something comes along that can really challenge them and offer a viable alternative, it won't change.

[maxwere 82]

17 minutes ago, Brad_ATX said:

Part of the problem is that we live in a very large country that relies on air travel for quick/easy travel.  That's not the case in most countries, especially in Europe, where you can get most anywhere in a country (or even other countries) via train or car quickly and cheaply.  Because of this, airlines are forced to have better experiences in order to compete with the variety of options that simply don't exist here.  Sure, you can take Amtrak, but unless you are sticking to the Northeast, a train trip takes days.  Compare that to a train trip from London to Amsterdam, which is literally a few hours.

Is it right that U.S airlines mostly suck at customer service?  No.  But until something comes along that can really challenge them and offer a viable alternative, it won't change.

Right.  All travel services & telecommuting compete with all other travel services.  My spidey senses tell me there is a very high barrier to entry.  Also, Southwest regional hubs seem to be much better airports in general.  Supply of gates is fairly fixed and publicly managed.  SW got around this by getting into/remodeling other older airports.

[Brad_ATX 13,654]

19 minutes ago, maxwere said:

Right.  All travel services & telecommuting compete with all other travel services.  My spidey senses tell me there is a very high barrier to entry.  Also, Southwest regional hubs seem to be much better airports in general.  Supply of gates is fairly fixed and publicly managed.  SW got around this by getting into/remodeling other older airports.

Yep.  Dallas Love is a great little airport.  They do the same with older terminals too, using ones that were no longer in service and reworking them to their needs.  Minneapolis, Detroit, and Fort Lauderdale are really solid examples of this.

[icanthearyou 4,463]

The airlines learned the game a long time ago.  They have been playing congress since the days of TWA and Pan Am.  This isn't about ideology.  This is pure corruption. Congress is paid to limit competition and, be there to bail them out when the entire industry looks like it will go bankrupt.

[I_M4_AU 7,961]

39 minutes ago, icanthearyou said:

The airlines learned the game a long time ago.  They have been playing congress since the days of TWA and Pan Am.  This isn't about ideology.  This is pure corruption. Congress is paid to limit competition and, be there to bail them out when the entire industry looks like it will go bankrupt.

Here's some aviation history; remember the Airline Deregulation Act of 1978?  Before the deregulation of the airline industry, the fares were fixed by the government and certain routes were subsidized by tax dollars.  There were airlines like Continental, Southern, Eastern Airlines, TWA, Pan Am (our flagship carrier), Braniff, et al.  All living off of the government without the need to compete in a free market.  A person had to be upper middle class to fly.

Here's a good article on deregulation:  http://www.econlib.org/library/Enc1/AirlineDeregulation.html

After deregulation airlines could go where they wanted and charge what the market would bear.  I believe Braniff was the first fatality as they bought new aircraft and tried to enter the domestic market as they previously were heavy into international travel.  Airlines such as TWA and Pan Am had no doemestic route structure and eventually collapsed or was merged with other airlines.  I'm not sure, but if TWA and Pan Am were playing congress they did a very poor job of it.

Airlines like People's Express and Southwest flourished under deregulation and Southwest is one of the big four today. A lot of airlines have merged into the mega carriers as in the 2000's each airline was fighting to get "critical mass" to stay solvent.  In other words "too big to fail".

The limit to competition is more about the limitations on the Air Traffic Control system then anything congress would have control over.  There are just so many airplanes that can fit into airspace around airports safely.  That being said there was a reference in an earlier post about Cabotage or allowing foreign carriers in the US to fly point to point within the US.  What a mistake that would be, IMO.  The US by far has more revenue passengers that any country we would have a reciprocal agreement with (not counting Russia or China, really).  What benifit would the US gain?  More competition, not worth the relaxation of this time honored restriction.  This type of agreement hasn't been honored since the Berlin Wall was taken down except in a termporary agreement.

Lastly the bail out comment was interesting.  The aviation industry has had one bailout since deregulation and that was the Air Transportation Stabilization act of 2001.  This was enacted shortly after the attack on 9/11 of that year and provided up to $10 billion in guaranteed loans.  Interestingly enough that program gained a profit of between $141.7 to 327.0 million with one lose of $23.2 million.  https://www.propublica.org/special/bailout-aftermaths#airlines

The industry does have it's problems, but it is better run and safer than anytime in its past.  However, it will take industry watchdogs to make it better, such as the DOT's regulation on Tamac Delays.