The third quarter results are rolling in from the major airlines. Your wallet already knew what they tell: They are doing just fine. For the past two years, the major carriers have foisted their extra fees on the public by trotting out a series of sob songs that cajoled the weaker among us into feeling a sense of compassion that would be better turned on our fellow man than a business.
Sob no more. The new way of doing business at the airlines -- charging you for every little thing, cutting air schedules to the point where fewer tickets are available at a discount -- have eked so much cash from your purse that the airlines are doing pretty well again. U.S. Airways: $420 million profit. United: $387 million profit. Continental: $354 million profit. Delta: $363 million profit. AirTran: $36 million profit. Alaska Air reported its "best quarter ever." And those are quarterly profits, so if they keep doing that well for a year, you'll see more than $1 billion in profit for the first four liners. U.S. Airways is even about to start hiring again, which is certainly cause for a bittersweet smile.
Don't think that the extra fees are purely to credit for this change. The few airlines that don't charge for the first checked bag also posted profit, although not as much of one. Southwest Airlines: $205 million. JetBlue: $59 million, and it's on track for its first year of $1 billion in revenue. Combined, the airlines made $1.2 billion in change and cancellation fees (which were increased) in the first half of 2010.
Granted, the airlines have been suffering for so long that a few quarters of profit aren't going to change the scene much, because they're in a deep hole and way behind. Most of the fleet in the United States is an embarrassment. For example, seat-back screens arrived in the 1990s, but only a fraction of national carriers, such as Virgin America and JetBlue, offer them as part of their standard service. Custodial services are also a wreck. Passengers on Delta know to sit well back from the smeary petri dish of the windows because they're seemingly never wiped down.
Quibbles? Not to me. Our airlines are America's cardiovascular system. In no small way, the major carriers are our national network. Other countries have train and bus networks to get their citizens around, but we're so large that we depend on air travel. Other countries know their transportation network is so crucial that the government often owns the biggest players or has a controlling interest in their operation. In our country, though, the market rules.
When we were growing up, we were told that the American market system was based on worth. Bad products die because customers walk away from them. But because the airlines copied each others extra fees en masse, there was no way that market system could play out. We were stuck with baggage fees.
Daniel Low, a Washington attorney, is hauling Delta Air Lines and AirTran into federal court over accusations that they colluded to implement baggage fees at the same time, so that consumers wouldn't get a choice of an airline with no baggage fees. The judge said the claims "support a plausible inference of a conspiracy to restrain trade," which is legalese for "it's very possible Delta and AirTran got together to screw customers, so we're looking into it."
Delta now charges $25 each way to check a bag at the airport. AirTran charges $20.
And thus, a decent product was degraded while Americans stood idly by, doing nothing. Some people actually defended the airlines, and professed sympathy for their plight, as they put their customers over a barrel. But there was also a time when we didn't have to sit through ads at the movie theater, either, and we all stood by when the movie-going experience was cheapened, so I guess that stuff about the best product always winning can finally be proclaimed a fairy tale told by politicians.
Now that the airlines are back on track, so to speak, it's time for consumers to assert themselves again. You're paying for their services. With cash in the till, we no longer have to justify shoddy or substandard services and products in the interest of a mythical fortitude against hard times.
The playing field is level again, so demand your money's worth and let the market do what it will. If Airline X can't hack it, it will fail, and Airline Y will rise up to fill the gap.
Forex for Beginners
Learn about trading currencies and foreign exchange transactionsView Course »