Plane Conversations

Ok, now this airline game is becoming serious business.  It is bad enough when small communities that never had air service options have given up trying to grow (where new opportunities fail to materialize and young knowledge workers move away).  It’s a whole different matter when companies pick up and leave a community because the airlines pull the plug on air service.

[via When Airlines Depart Cities, Businesses May Follow : NPR]

Last month when Chiquita announced it was moving its corporate headquarters from Ohio to North Carolina, it said it was lured there in part by the number of flights in and out of the Charlotte Douglas International Airport. Cincinnati came out on the losing end of the deal because like so many other cities, it faces a shrinking airline hub, which can affect the city’s business climate.

US Cities are vulnerable to decreased economic development due to Airline Service loss

Regressive Economics

When a company leaves town, it takes with it the self-identity of the people who worked their entire careers to make that company great.  When people are forced to migrate to find new work, they impose a cost on their families and futures.  While corporations maintain economic freedom to make decisions in their own best interest, the public does not have the economic freedom to respond in their own best interest.

Daily Departures

Cincinnati; At peak, 2005: 673 daily (5 international); Current: 200 daily (1 international)

Pittsburgh; At peak, 2001: 579 daily (3 international); Current: 145 daily, (1 international)

St. Louis; peak 2001: 595 daily; Current: 250 daily

And, this is ONLY THREE Cities. 

Looking at the above statistics; well over 1000 flights per day have been eliminated from these three not-so-small cities.  That is 365,000 flights denying economic equality to over 50 million travelers in a single year.  The scale of entrepreneur career-years alone squandered due to lack of air service is absolutely catastrophic for the American Economy. The irony is that people who move away need to travel more to stay connected to families. The economic friction imposed on communities is staggering.   

“I remember coming here a few years ago and it was a hub of activity, you know, with all three concourses,” he says. “Now there’s only … one concourse left, if that, and it’s just really amazing to see this huge infrastructure supporting very little flights.”

Van der Horst with the Cincinnati chamber says she doesn’t expect Delta to go back to 673 flights a day at CVG, but she knows that for Cincinnati to attract and retain more business, it will mean landing more flights.

Social Flights is working overtime to create a Community Air Service Program that allows communities to access modern jet aircraft to fulfill their own travel needs whether they need direct flights, hub flights, corporate shuttle flights, or charter jet operations.  Social Flights has the operational experience to teach communities how to manage their own air transportation operations through their own airports, FBOs, and responding to their own social priorities with modern aircraft.

Economic Freedom belongs to everyone. This is the cornerstone of the Social Flights business model –  Social Flights is the people’s airline.  Let us know where you want to go, before someone else does that for you….

During training at the American Airlines Learning Center in Dallas, new agents were given a specific protocol for checking passengers and their bags in at the ticket counter.  We were to greet the customer by name as it was printed on the ticket.  Ask them what their final destination was – just to make sure the ticket was right - and ask them how many bags they would be checking.  This was long before that silly question of “have your bags been out of your possession since you packed them,” like anyone would actually admit to that.

I once had a woman tell me that her final destination was her mother’s house.  While I agreed that a visit to her mother was surely a wonderful thing, I could not check her bags to her mother’s house.  She gave me her final airport, I checked her bags through and all was right with the world.

This woman’s trip raises a question in my mind.  I know the city-pair on her ticket; however, that citypair didn’t really  match her real travel intentions.  She might have departed from Columbus, Mississippi, but might actually have lived Macon, Mississippi.  She might have traveled to Charleston, West Virginia, but might actually have needed to go to Parkersburg, West Virginia.  Because of limited choices in scheduled airline service, she ended up with a drive on both ends of her trip.  Now, until we have personal jet packs, we’re not going to be able to leave our homes and fly to exactly where we want to go.  Can you imagine the air traffic nightmares that personal plane a la George Jetson would bring?  Yikes! 

Still, we know that general aviation can reduce our drives simply by virtue of the fact that there are more general aviation airports.  Put new and better technology with new and better aircraft and you have a few people with similar intentions sharing flights.  Vancouver has over 60,000 fans on two Facebook pages and a population of over a half million people in the city, not taking suburbs into account.  Surely a few of those people could agree on a time to go from the Abbortsford airport to the Blatchford Field in a Cessna Mustang.  Wouldn’t you think?

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Photograph by: Chris Ware, Getty

Bloomberg and Associated Press report that June 2010 airline traffic rose 2.3% over June last year with US airlines carrying 65 million passengers. Annualized that comes to 780 million passengers. DOT projections say we will hit the 1 billion annual passenger level in the US in about 10 years.   

In spite of low customer satisfaction with airline service, people keep coming back for more. If you listen to all the grumbling you would think that, surely, travelers have had enough.  

The need or desire to travel must outweigh the pain of going to the airport and flying by airline.

People don’t like to fly the airlines but they keep doing it and the numbers are growing.

People love to fly in their own aircraft, ride in the back of a business jet or even a prop aircraft on their own schedule, and without the hassle of airline system,  but our industry languishes in this economy.

What is wrong with this picture?

It seems that price outweighs most considerations for the masses when it comes to travel.

Wouldn’t we all rather ride in a private jet if we could do so for the price of a Southwest Airline ticket?

How do we move a very small percentage of the market of travelers over to our side of the game?

It would only take a very small percentage of those 780 million annual passengers to radically change the fortunes of business and private aviation from manufacturers to service providers to the operators of the aircraft.

Move a few percent of the market share of travel to business and general aviation and, suddenly, the world looks a lot brighter for those of us in this industry.

I see a lot of effort being put forth; but, mostly, the efforts are in their own silos. I don’t see a lot of effort as an industry working together to solve the problem. There seems to be a general acceptance that it is what it is and that the situation on a macro level is not going to change quickly anytime soon.

It is worth thinking about to see if we can come up with solutions, isn’t it?

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After the justice department approved the merger of Continental Airlines and United Airlines last Friday, Congressman James Oberstar (D-Minn) voiced his displeasure again  with the merger and suggested that Congress might just need to reconsider the deregulation of airlines that happened in 1978.

The airlines have been stuck between a rock and a hard place for years. Combined profits of the industry are non-existent and customer satisfaction with airline service is somewhere down there in the range of our approval ratings of congress’s performance.

What we have received from deregulation are cheap air fares. Most people don’t remember what it cost to fly on the airlines prior to 1978 because they were either not old enough or did not fly on the airlines back then due to the costs. Real costs for flying via commercial airlines have come down over the past 30 years but the by-product of lower fares has been a reduction in what we consider to be service and the amenities of air travel. In some ways, airline travel has become just another form of mass transit much like rail service.

What we want we can’t have, and the government stepping in will not solve the problem.

We want our cheap $99 return fares, anywhere, anytime, and we want great service and convenient on-time departure schedules to go with the low price.

Deregulation brought on the competition with low cost carriers, which brought down the fares that we all enjoy.

Low fares combined with volatile fuel prices, worldwide competition with lower labor costs and airlines irrationally putting too much inventory of seats in the market took the profits out of the airline industry.

So now we have to adjust to some new fare structure and service level that the free market should work out. Mergers of air carriers are a part of this evolutionary process.

The airlines and their shareholders deserve to make a profit, or at least attempt to do so, while providing air transportation to the consumer. Unlike a utility where we have no choice, we don’t have to fly if we don’t like the combination of price, service and time efficiency of air travel.

As my Southwest flight pulled into the gate Sunday afternoon at Nashville, the flight attendant reminded us that we have many choices about who we fly with and he thanked us for choosing Southwest Airlines. In reality, we have choices beyond whom we fly with because we can drive and, in some cases, take the train. We can also choose not to go at all.  

Regulation of air travel from the federal government should be limited to matters of safety. Congress should not venture anymore than they already have into the regulation of customer service, pricing and competition. 

Government intervention has not brought much value to anything lately and I can’t imagine a scenario where reregulation of the airline industry will ultimately benefit the US economy and the consumer of air travel.

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Robert Cook in his July 8 Wheels Up post  writes about the challenges and opportunities of regional airports as they look to their future in the nations transportation system.

I would posit that the best and maybe only hope for these airports’ future viability is general aviation and business aviation.

Over the next five years airlines are not going to step in and save the day for these airports. The reality is that the number of airports being served by the airlines will most likely dwindle.

It would require a major strategy shift and change in the economic models of the airlines in this country to prove me wrong.   

In the absence of the DOT’s  Essential Air Service Program, most of the 100 plus airports receiving the subsidy, by way of the airlines serving them,  would lose their commercial air service. That’s roughly 20% of the airports in the US that have airline service due to government subsidy.   

As I hear from representatives of airports about what they believe they need to serve their constituents, they all seem desperate for scheduled airline service.

I sometimes wonder if we forget the true purpose of traveling by airline – to save time!

Business travelers have not forgotten the purpose of air travel. If it doesn’t save them time they don’t buy it, they drive, or just don’t travel at all.  

If marginalized air service to a regional airport doesn’t meet the market that demands time saving and convenient travel then why waste valuable resources to develop it, only to end up with a losing proposition?

Just like the airlines, business and general aviation do not meet the needs of every traveler. Business aviation cannot provide the same low cost service that Southwest can provide. What it can provide is efficient travel solutions to the small, medium and large businesses that will create the jobs in communities served by regional airports.

The prosperity of the communities and the small or regional airports that serve them depends on job creation and being connected to the market, both domestically and internationally.

A regional or small airport’s success should not be measured so much on having cheap airline seats to tourist destinations, or inconvenient scheduled service. Success should be measured  by having  viable and efficient ways for the community’s businesses to connect to their vendors and customers.

Maybe the small and regional airports should consider ways to develop alternative air travel by promoting and investing in the development of general and business aviation solutions.

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In our business, every day we have to sell the value of what we do.

If you base that value on our rates compared with coach class airline fares, we can’t compete on the seat price alone. In some cases, with four or more travelers going on the aircraft, we can get close; but, most of the time, you can buy a seat on airlines a lot cheaper than you can charter a business class aircraft.

So, when a business person makes the decision to spend more money on a chartered flight than they would on airline seat(s), how do they make the rational decision to do so?

This week, I was talking with a client of ours who runs a successful advertising agency in Nashville. He is a true entrepreneur who built his business from the ground up. When he decides to spend a dollar on something, it is his dollar; so, he thinks in terms of ROI on every decision.

Over the past few months, he has taken six trips in our aircraft, all of them for business and all to places that did not have non-stop airline service. In a few cases, his destinations had no airline service at all. By chartering an aircraft, he was able to take his staff with him to meet the client and he was able to complete the trip in a single day - no wasted time or overnight expenses that would have been required had he traveled any other way.  

What’s it worth to him? Here is what he had to say:

“I have spent years working all the hours necessary to build my business.  Now it is about relationships.  Relationships with my clients all over the country AND relationships with my family at the dinner table and at bedtime.  While there is rarely economic justification for the additional expense of skipping security lines, connecting flight issues, and playing hotel roulette… there is certainly reward in the immeasurable joy of lunch with your client in Terre Haute and being home for dinner with your family in Nashville.  Both rewards produce profit that propel my business and my life.”

Arnie Malham, President – CEO, Malham Leverage Group

The productivity gains of flying business aircraft buy back the most precious commodity we possess – time! Time with our clients on one end of the day and time with our family on the other end.

It would be great if we could figure out how to place a true monetary value on our time.  It would be even better if we could monetize the gains we get in productivity and creativity when we experience a different form of travel that does not add stress to our already busy lives and that gets us home to family more often.

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Anybody interested in providing the solution?

 The DOT’s Future of Aviation Advisory Committee recently met and comments  made in the meeting  indicate that small market airports are not in the airlines’ future plans – at least not the large carriers.  In fact, if not for the DOT’s Essential Air Service program, many cities currently receiving airline service would be in the no- airline zone. You can’t blame the airlines for not wanting to lose money; and, the current airline business model doesn’t work to serve smaller cities without government subsidies.

So, if the airlines cannot provide the solution, who can?

With fewer service options and more time spent processing through the system, the time to travel between small cities by airline often exceeds the time it takes to drive. Why fly when the drive costs less and doesn’t take much, if any, more time? Because flying often doesn’t make sense with the current options available, more people are opting for other means of transportation, drawing resources away from small airports.

What those airports and their communities don’t know today, but could know, are the true travel intentions of the people they are trying to serve. The airports must find out who, when and where.  In other words, they must identify the demand. 

Identifying the demand could be as simple as finding physicians in a community who are all attending an AMA convention.  This is just an example of the concept of group-buying, using an eight-passenger jet or a 30-seat regional airliner for the day to meet the specific demand to connect a group directly to another city.  Other examples could be alumni traveling to sporting events, golfers going to a new course or hunters traveling to a new lodge, etc.  If there is known demand, then supply will surely meet it. So, how do we find the demand?

Can Social Networking be a tool small communities can use to solve their air transportation problems through aggregating demand for travel?

Yes, it can.   Business Aviation, including small and large air charter operators, and small regional airlines, are in the perfect position to solve those air transportation problems.  We are sitting on a highly flexible (mobile), underutilized and diverse fleet of aircraft. Travel needs could be met on demand and by the seat with the right knowledge.  This may not provide a low fare airline solution that everyone thinks they want in their hometown; but, it could provide time-efficient and point-to-point travel at a reasonable price.

Isn’t that what we really want anyway? 

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Delta’s new way of booking airline and charter flights together through Delta Air Elite.

There is not much in the way of innovation in business aviation to report or discuss in the past 30 days. Innovation in our industry seems to be coming in increments measured in inches not miles.

Apple is on a constant innovation track with a new I-Phone this week and the I-Pad has sold over 2 million in a couple months. It seems that every few weeks new functionality comes into the mobile computing market to enhance productivity.  Innovation in the technology sector continues to happen at an ever increasing rate, and meanwhile our industry of private aviation creeps along. Isn’t aviation supposed to be about productivity much like computing technology?

Delta and its subsidiary Delta AirElite are making a valiant attempt at innovation with the announcement  that their customers can book segments on the airline and the private jet in a seamless transaction.

What Delta doesn’t say is that private jet travel is still expensive. More expensive than the majority of their customers can afford, so the announcement is really geared towards the users of private jet service to let them know they can also book their first class tickets to Europe at the same time they book the private jet to get them to the gateway airport. And at the end of the day airline service is still airline service working within a broken system – not the sole fault of the airlines in my opinion, but broken nonetheless.

If ever an industry was begging for innovation it is the aviation industry. Aviation is especially in need of innovation at the point of service delivery – that point where passengers get on the aircraft to travel.

On one side people are fed up with the increasing hassle of flying via the airlines and on the other side, where the experience of flying in a private jet is great, for most the cost is prohibitive.

It is really a shame that we can’t figure out how to bring the price gap closer.  Innovation on the private aviation side might even pull the airlines up a notch.  Especially if the airlines wake up and find the business traveler defecting to a different mode of air travel.

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Over the years of growing our business I have had the opportunity to meet many airport directors in communities looking for ways to improve air service to their airports. My brother runs an airline in the western US that provides service to many communities through the Essential Air Service (EAS) program funded by the DOT. He has probably been through 100’s of presentations from airports and their support organizations – chambers of commerce, economic development boards and city governments.

All of these airports and the communities they serve want good air service. Why?

They consider air service as a necessary ingredient for business and economic development. When you can connect to the rest of the world by air you can bring business in to your community and create jobs and prosperity. When you are disconnected from the rest of the world you lose out and no one wants to lose out. 

Over the past two years the situation has not gotten better for small airports.

In fact it has gotten worse because airlines have pulled out of many small markets either entirely or they have reduced service to the point that it no longer offers any convenience to the business traveler. Because of the geographic and demographic rules of EAS subsidies, many small airports don’t qualify for the subsidy. They are just a little too close to another airport with airline service but too far away to be convenient. Or they are not quite large enough as a market.  

So far no one has come up with a real solution that fixes the problem of the demand for convenient air travel at a reasonable price in small markets.

Small airlines like Cape Air are doing a good job of filling some of the holes but there are still a lot of airports looking for solutions. Charter companies like my company are glad to pick you up at a small airport and take you anywhere. Our problem is price. We are still too expensive for the average traveler.

As I have sat in on meetings over the years I usually hear the field of dreams story. “Build it and they will come” or in this case “show up and fly and we will fill up your aircraft with happy paying passengers”. If that was the case then why aren’t the airlines showing up and fighting for those passengers?

One of the major issues I see is that no one can really tell you or I today where people really want to go. At best, over the years, consultants to the airline and airports put together a marketing study based on DOT statistics showing Origin and Destination (O&D) traffic flow between cities based on airlines published data. With some statistical tweaking the consultant shows that a quantity of people in a community are flying to or from some close by hub airport and they would all rather leave from the home field if they just could. Those stats rarely translate into a reality for the airline or the home airport because the stats don’t correctly indentify the traveler’s true intentions.

So the question to ask is how we identify the true intentions of travelers, to really know when and where they want to go, and what it is worth to them for someone to meet their intentions.

If, in a perfect world with perfect knowledge at our fingertips, we could reach that point of knowledge could we then meet those intentions with the fleet of aircraft available in this country?

Change gears with me now and think about what is happening in the world of social media: 400 million and counting on Facebook, people tweeting every minute of the day, geo-location technology that knows where I tweet or text from, linked in profiles, and applications like TripIt that tell everyone where I am going and how I am getting there. In the past few weeks Facebook has gotten slapped for their use of the information they have been collecting on all of us, but at the end of the day I predict that we will not slow down telling everyone else everything about us. Privacy or no privacy we seem more than willing to let the world know just about anything.  

How could communities and small airports use the power of this information from Social Media to match traveler’s intentions to the supply of travel services? Could they build their very own communities online with the purposes of sharing travel intentions between travelers?  If so they could have the real knowledge of who, where, when and how much as opposed to the statistics that don’t seem to mesh with reality?

Something to think about isn’t it!

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We have been poking at the airlines in our posts, sometimes in jest and with humor, and sometimes in a serious way when we defend our end of the air travel business from the attacks of the airlines’ management and their press machines.

As I sit in the terminal in Miami waiting on a three-hour layover for the next flight to get me home to Nashville, I am thinking about the flight I just got off  of from San Juan. The flight was smooth, the crew was professional and the service we got in the back of the cabin was as good as first class. The flight attendants who served us were friendly and made the flight go by quicker with genuine smiles and good attitudes. We arrived on time and safely and, as I walked off the aircraft into the jetbridge, one of the crewmembers thanked me for being on the flight.

It reminds me that even in a system of transportation that doesn’t always work too well, there are a lot of hard-working, dedicated people who show up every day and make things happen to the best of their ability. And many of them do it with a smile.

I never want to diminish the value of what the employees of the airlines do every day for this country. They work hard and they take their jobs seriously. They have been unfairly maligned by the traveling public - especially when things go wrong.

Usually you only hear about airline employees when something really bad goes wrong like flying 120 miles past your destination because of playing on the laptop. These situations happen rarely in a system that puts up thousands of flights every day without incident, many times in difficult circumstances including weather and busy airports.

Everytime I fly on the airlines I make an effort to smile and be courteous to every airline employee I meet. At the end of the flight I always compliment the crew if I have the chance. They work long and odd hours and many times the only feedback they get is rude behavior from disgruntled passengers. 

I was raised to believe that you get from people what you give. If you treat people with respect and dignity, you will get the same in return. No one deserves rude treatment.  Ever.

The next time you fly on the airlines smile and be nice, no matter how late the flight is or how rough the ride is. Those airline employees you come in contact with didn’t cause the delay or the bad weather or the maintenance problem. They are working hard to fix it and deserve the utmost respect.

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