While no one was forcibly dragged out of room 2167 of the Rayburn Office Building during this morning’s Congressional hearing on the airline industry, lawmakers from both sides of the aisle appeared to be united (but not United) in their distaste for byzantine booking systems, lack of options, and the billions of dollars in add-on fees collected by carriers.
This morning, appearing with other airline execs before the House Committee on Transportation and Infrastructure United CEO Oscar Munoz continued his campaign of public self-flagellation for the April 9 incident, in which Chicago airport police were called to remove Dr. David Dao from a United flight after he refused to give up his seat to an airline crew member.
He described the event as a “serious breach of public trust,” and acknowledged that his immediate response — which involved blaming the passenger for being “disruptive and belligerent” — as “inadequate.”
“We created a situation at our doing that we should not have done,” said Munoz, who had no previous experience running an airline before becoming United CEO in 2015. “Our employees did not have the authority to do what was right or use their common sense… If we break it, it’s incumbent on us to fix it.”
Rep. Peter DeFazio (OR), the Ranking Member on the Committee, attempted to draw first blood, pressing the airlines on a number of their least-loved practices.
“How must does it cost you to change someone’s booking?” asked the congressman, referring to the often pricey change fees assessed by most airlines. “You’re charging someone 200, 300 bucks to change a ticket; what’s your real cost? It seems really inefficient if it costs that much.”
United President Scott Kirby, who was on hand because he actually has a career as an airline executive, responded that, “The cost is not about the actual changing of the ticket. I don’t know what the actual changing of the ticket costs.”
“Then it’s about being very profitable,” interrupted DeFazio. “I would observe that United got $800 million in change fees last year… that is a lot of money.”
DeFazio also brought up the issue of overbooking, which most airlines have defended as a necessity for keeping their businesses operational.
Southwest Airlines recently declared it will soon stop overbooking flights, so Rep. DeFazio asked Bob Jordan, Southwest’s Chief Commercial Officer, “Are you going to go broke?”
“We are not going to go broke, I can tell you that,” replied Jordan.
Our colleague from Consumers Union, aviation consultant William McGee was on hand as the sole consumer advocate on the panel.
He pointed out that overbooking and cancellation/change fees may have once been needed in the early days of business travel, when frequent fliers would book seats on multiple flights and then just pick the most convenient one, but that just doesn’t happen anymore.
The real fireworks started with Rep. Duncan Hunter, from San Diego, who lamented that United was his only option for flying directly to the D.C. area.
“The first question I was going to ask, only slightly in jest is ‘Why do you hate the American people?’ but I’m not going to ask that. I was going to ask how much you hate the American people; I’m not gonna ask that either,” began Hunter. “What I have heard a lot is ‘competition’ — explain that to me. I think it’s an absolute joke that there’s competition within the airline industry.”
(SIDE NOTE: It’s worth mentioning that Rep. Hunter cited the rental car industry — specifically Hertz, Budget, and Avis — as an example of competition, even though Budget and Avis are owned by the same parent company.)
Southwest’s Jordan countered that airfares — rather than options — may be the better metric for competition in the industry, claiming that airfares have dropped in spite of consolidation in the industry.
He did acknowledge that, “of course you’re going to have routes where there are very few options and you’re going to have routes where there are many, many, many options. It differs route to route.”
In defending the lack of options in some markets, United Munoz who previously worked at both Coca-Cola and Pepsi, pointed to these two cola titans and their market dominance, saying “that seems to work okay.”
“This is different because we don’t have a choice,” countered Rep. Hunter. “I have to fly; the American people have to fly… You have a choice to not buy a Pepsi… There’s no option to not fly.”
Rep. Blake Farenthold (TX) was one of several lawmakers to raise concerns that Americans are just exasperated by the whole flying experience.
“We’ve had to deal with the TSA; we have to go buy some liquid because you can’t take that through security. You want to get some food or you’re stuck having to pay $12 for a TV dinner or $7 for a Lunchable on the airplane,” said Farenthold. “Passengers are frustrated.”
He raised the issue of checked bag fees, which cause additional frustration and can delay flights as more passengers try to avoid this add-on charge by carrying their bags onto the plane.
“Seven years ago the airlines all said fuel costs are up so we’re gonna start charging for checked bags to make up that revenue. Well, now the fuel costs are there any plans to remove the checked baggage fees?” asked the congressman.
United’s Kirby tried to explain that these fees help to keep fares low, but Farenthold interrupted to point out that Southwest doesn’t charge for checked bags, but “I can’t remember the last time a United fare was lower than a Southwest fare.”
Jordan explained Southwest’s reasoning for why it doesn’t have the bag fees, and why the airline isn’t worried about missing out on the billions of potential revenue from them.
“We feel like if you’re going to travel, it just makes sense that you can bring your clothes along,” said the Southwest exec. “We believe that we get more business overall because we do not charge fees.”
Rep. Michael Capuano (MA) didn’t ask any questions during his five minutes of time with the panel. Instead, he used that window to give his take on America’s acceptance of substandard service.
“My flying experience is reasonable 90% of the time, but I think a lot of it has to do with lowered expectations,” said Capuano. “The problem with the flying experience is across the board — we all know it’s a terrible experience, starting from the minute I go on the computer to try to figure out which flight I want to take.”
The congressman also ripped the airlines for complaining about the conditions at airports around the country while simultaneously taking in $3.8 billion a year in fees that don’t contribute to the tax that would pay for the needed upgrades.
“We’re kinda sick of it… We’ve gotta fly, you’ve got us,” Capuano sighed. “And if you wanna keep treating us this way, fine. I guess we can only do so much, but there will come a day when Congress won’t accept it anymore on behalf of the American people… We have a problem that shouldn’t be as bad and unpleasant as it is, and you’re the only people that can fix it.”
Another matter that repeatedly came up during this morning’s hearing was the length of the airlines’ contracts of carriage — the agreements that cover every traveler’s flight. These contracts are sometimes longer than 35,000 words and would require more than 65 pages to print out, but if you want to fly you have to agree to them.
CU’s McGee noted that these contracts are remarkably one-sided.
“There’s no provision in the contract of carriage that accommodates for your circumstances,” like unpreventable delays in getting to the airport, “but yet there’s a long list of accommodations for circumstances for the airlines.”
Congresswoman Eleanor Holmes Norton asked each of the airlines present if they would commit to creating a one-page, easy-to-understand summary for passengers of what’s in their contracts. While they all agreed the contracts could be simpler, none would commit to a single-page version for their passengers, even though, as McGee pointed out, carriers in Europe have been doing this for more than a decade.
An executive with Alaska Airlines did tell the committee that his company is looking to shorten its massive contract down after comparing it to the one used by Virgin America, an airline that Alaska recently acquired.
by Chris Morran via Consumerist
No comments:
Post a Comment