Big Air's Solvency Plan: Gouge the Rubes!

BIZARRE PREFATORY POSTSCRIPT: We include no link to this story because, despite being the front page lead in the Trib's Sunday business section and also taking up the better part of an inside page, it seems nowhere to be found on the Trib website. (Is this normal? Has the Tribune already repudiated its own story?) Now, where was I ? Oh, yes -

In a hopeful sign that the Chicago Tribune newsroom hasn't yet been totally decimated by wholesale job cuts, Sunday's edition has a great story by Julie Johnnson on how big airlines like United are attempting to repair their shattered finances.

It's not, as you might expect, by cutting out more lightly covered routes to small cities, but by adding more just such routes while slashing capacity along highly-traveled but longer distance corridors. According to Johnnson, the explosion in gas prices has left Big Air taking big baths on the longer routes in markets where competition from lower cost carriers like Southwest (benefiting big-time from smart hedges it made on fuel prices a few years back) keeps them from raising fares to the level required to cover their often bloated costs. I've extrapolated the following tables from some of the figures in the article:

(click to see larger version)

Those flying the long Chicago to San Jose run are getting a bargain, paying less than a third of the actual cost of getting them to their destination. The poor schmoes in Grand Rapids and Gillette, on the other hand, pay up to close to three times the cost of their fare. The potential for this strategy to balance UAL's budget, however, is questionable. Can you really find enough profitable runs carrying thousands to balance out the red ink expresses carrying hundreds of thousands?

Airline deregulation has proven to be like the opening of the Ark at the climax of the first George Lucas Raiders. The unleashed spirits at first take a beautiful form, but soon grow so frightening that the only remedy is to look away.

Deregulation created the cheap air fares that made air travel accessible to everyone and then, in a common trajectory of unbridled capitalism, pushed everything to debilitating extremes. Even as their services reached incredible heights of popularity, Big Air's finances grew increasingly desperate. Now, no middle ground remains between luxury - for those for whom money is no object - and steerage - for everyone else.

At first, Big Air's campaign to make air travel as close to unendurable as possible - passengers packed in cabins like sardines, multiplying delays, no meals, no snacks, charges for bags, charges for pillows, flight attendants reduced to animal tamers - seemed to be just a matter of corporate leadership's gross incompetence. After reading Johnssons's analysis, however, it's beginning to look like it might also be a deliberate financial strategy.

On a brighter note: Tom Skilling reports that all that rain means there's an extra three trillion gallons of water in Lake Michigan. Add two minutes to tomorrow morning's shower in celebration. (Do not repeat, and by no means tell those people in the Western states with their beady, thirsty eyes gazing at our lakes as if they were heaven's forty virgins.)