The major airlines represent a relic of the past that have been artificially sustained by the government for far too long. There have been two such bailouts since 9/11, and I think I recall another in the 80s, too (though I can't be certain). The problems are myriad, but I wanted to rant about something that has irked me very recently...
Frequent flier programs... I hate them (as they are)! Case in point, due to my international gallivanting this past year, I've accrued over 50k miles on my United Mileage Plus account. Wishing to use them for a short holiday over Presidents' Day weekend, I attempted to find a use. Unfortunately, they're not interested in letting me use my miles - at least not for 25k miles per ticket. When a flight is available, it's only available for 50k miles ("standard" vs "saver" award), which would require me to purchase the second ticket, at a cost of more than $600. Seriously?!?
The problem is this: if I've flown so much as to accrue enough miles for a free ticket, then give me the stupid ticket. What's with limiting the number of award seats per flight? The limitation only serves to piss me off, and generates ill will against the airline. And it's not like the majors have much good will these days going for them that they can afford to blatantly piss off their customers. It's just patently ridiculous and, worse, it demonstrates an arrogant short-sightedness. They'd rather pass up filling 2 seats than to keep a customer happy, build loyalty, and take slightly lower realization off that flight.
Of course, herein lies the problem. The airlines are commercial, and often publicly traded. They're trying to maximize their realization based on old principles. There could be better ways to generate revenue (as other startups have demonstrated), but because of the prop-ups by the government, they're disincentivized to use them.
For example, my thought has been that of mutual benefit. The airline sets the minimum number of seats that must be sold on a segment. The cost of the segment is calculated, with a reasonable profit added on, and then that cost is divided by the minimum number of seats. This would establish the base price per seat for each segment. But fear not, here's where it gets interesting.
For every seat that's sold beyond the minimum, the cost is reduced accordingly. Thus, when you buy a seat, you know the maximum that you'll pay, but you know that the more popular the segment (or the airline), then the lower your costs. Likewise, the airline could also look at the maximum number of seats on the flight and show the minimum cost. Thus, when I shop for a seat, I could be given a price range that demonstrates the max and min cost for that seat.
In terms of frequent flier award seats, you would not count those against the minimum or the cost-reduction calculation. Thus, the airline still gets to maintain its profit margin, while allowing far more award tickets per flight.
Now, this solution represents one major challenge for the major airlines, and why they could never undertake it in their present condition. Namely, they have too much legacy overhead dragging them down to make the cost per seat reasonable. I directly attribute this to the life support provided by the feds. It seems based on an irrational fear (and a fundamental distrust of market forces) that, should the majors die, nobody will fill the void. Of course, nothing could be further from the truth.
In fact, other airlines have been trying to fill the void for some time now, but they keep getting undercut and forced out by these federally funded airlines. Moreover, because the majors don't have to compete fairly, they are also disincentivized to provide top-tier service. It's no wonder people get so irritated with them.
Kind of reminds me of the sub-prime mortgage debacle... although it sounds like there may be a significant incident of fraud involved with that...
