Let the Airlines Die (please, I beg you)

This is mildly a rant, but it's more about economics and politics and the negative effect meddling can have on the market and the citizenry. If you haven't heard, American Airlines has decided to charge $15 for your first bag checked. Combine this with the current TSA restrictions (aka "security theater" and "sheer insanity") and you're essentially going to get a new tariff on air travel. All the major airlines are already charging for the second checked bag, as of a couple months ago.

The underlying issue is allegedly fuel costs. Checked bags add weight, and thus increase the fuel required to travel a given leg. What's really at play, however, is that the old major airlines (Delta, Northwest, United, and American) are dragging massive boat anchors financially and simply are not overly competitive. United seems to have mostly figured out there problems, but it's patently obvious that American has not. What's interesting to note is that the relative new players in the market (Southwest, JetBlue, Virginia America) are not playing these games of extra charges.

The fact of the matter is that these old relics have been artificially sustained by the federal government well past their expiration date. Politicians have meddled with market operations, failing to have faith in the ability of the market to find new solutions to achieve a new, and better, equilibrium. As a result, we have a very bad equilibrium that has been falsely arranged, and which benefits no one.

Case-in-point, the cost of air travel continues to escalate while the quality of service drops significantly. A recent survey went so far as to say that Americans prefer the IRS (tax institution) to the airlines. And let's not forget those wonderfully cramped seats, the lingering oder, and all those generally unpleasant major airline flight attendants.

Even worse, it seems that the bad collusion between the TSA and the airlines has turned into an effective kickback scheme where the TSA bounces passengers if the name on the ticket is not an exact match to ID, and then the airlines play hardball and charge customers for the name change (even if the name mismatch was caused by the airline!).

What I think is particularly sad is that, if airlines like Southwest and JetBlue can succeed as new airlines, then it proves that the market is capable of evolving for the better. What's also sad is the poor state of Amtrak, leaving one to wonder if our national passenger rail service and infrastructure wouldn't be vastly improved if the government had not been subsidizing failed businesses (aka the major airlines). The major airlines are notorious for their anti-competitive practices and poor business management skills, and yet they get propped up as if the country needs another drain on the economy.

Back to American and the baggage charge... this, I believe, is just a last gasp. I hope that the airline dies, and I hope that the government allows this to happen (despite their being based in Texas). The loss of American, Northwest, or Delta would not be a tragedy, and I can assure you that the short-term pain would be more than compensated for by the long-term gains. However, the market must be allowed to evolve and reach a new point of equilibrium. Meddling in the markets like this will only create an artificial environment that boxes out better competition, sustaining - if not encouraging - poor behavior and business management.

BTW, there is a definite security / risk management angle to this whole mess. Put simply, most businesses allow bad managers, poor performers, and bad practices to linger on, even though they know that to do so may have harm to the business. Living with bad decisions is, in and of itself, a bad decision. We should be beholden to decisions from the past that no longer make sense. Unfortunately, change can be scary, and thus is oftentimes avoided, particularly by well-established companies. Failing to attempt means being in a position to get passed by when the competition evolves. From a security perspective, this means not adapting and evolving security practices to consider the changing threat landscape or, for example, failing to recognize that information, in the form of data on systems, is now oftentimes the most valuable resource and organization will have.

As such, we must brazenly cut out the bad practices and instill new, better, more evolved practices. Culture should be constantly evolving to self-improve, even if it requires an occasional nudge in the right direction. Fads, however, should be avoided, as should buzzword bingo. Case in point, just because "GRC" (Governance, Risk, and Compliance) sounds all flash does not mean that it is anything different or better. Peel back the layers and demand real, effective, and measurable improvements!

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This page contains a single entry by Ben Tomhave published on May 22, 2008 9:40 PM.

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