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WASHINGTON - Once again, it's open season on airlines.
Athough the industry appears to be mounting a fragile recovery after losing $58 billion since 2000 -- on-time performance is at its highest level since 2003, and U.S. airlines collected about $8 billion in fees in 2009, enabling a narrow profit of about $1.2 billion -- the attacks just keep coming.
Last week, Time ran an article, "Twenty Reasons to Hate Airlines: A brief history of the industry's 30-year campaign to nickel-and-dime us nearly to death." To summarize the article in five words: Air travel should be free! No one should pay to have their bags transported, to sit in preferred seats, to be served meals, to transport their pets, or to change tickets that have already been purchased.
Lastly, no air traveler should have to face delays, even though the air traffic control system uses 50-year-old technology and Congress cannot agree to allocate funds to upgrade it.
Attack No. 2 comes later today, when the House Transportation Committee's aviation subcommittee plans to sit down for a 2 p.m. hearing on airline fees. The session is expected to focus largely on requiring more disclosure of what airlines expect consumers to pay for.
According to a report prepared by the subcommittee's staff, "the proliferation of ancillary fees over a relatively short period of time has raised concerns over the costs and transparency of such fees. Often, consumers are not entirely aware of the range of fees that they may encounter in the ticket booking process, at check-in, and at the gate."
This sentiment is further illustrated by a recent poll from Consumer Reports, which concluded that passengers are annoyed by luggage charges and average fees.
Then there's the merger ire. Rep. James Oberstar (D-Minn.) , chairman of the House Transportation Committee, is unhappy that United is seeking to merge with Continental.
If the merger occurs, Oberstar has said that he will introduce regulation to re-regulate the industry, although before deregulation, inflation-adjusted fares were far higher, airlines -- rather than the marketplace -- were generally able to set fares, and the number of passengers was less than half what it is today.
Last month, at an aviation subcommittee hearing, Oberstar called the merger "a terrible, awful no-good thing." He declared that airlines "work night and day trying to figure out how to squeeze more money out of this turnip they've got in their hand, and I'm determined that won't happen."
While fares are indeed rising, it's important to note that with inflation factored in, fares are below 1990 levels. And clearly, any effort to restrict fees would endanger the industry's recovery, which will become clear next week when every major airline (except for American) is expected to report a second-quarter profit. It must be said that if airlines are indeed trying to squeeze money out of a turnip, they need to squeeze harder. As US Airways CEO Doug Parker has said, the United States is not well served when an industry that is so crucial is so fragile economically.
Additionally, airline investors -- and ultimately, airline passengers -- are not well served by attempts to futher minimize industry profits.
At a May hearing on proposed merger, United CEO Glenn Tilton told the Senate Judiciary Committee's antitrust subcommittee that the industry has had "the worst financial performance of any industry in the U.S. over the last 30 years" and "has been systematically incapable of earning even a modest profit."Source: thestreet.com