Logical Disconnect: Industry, Profits and Safety

Sep 22 2017 Published by under Uncategorized

An article in the Daily Beast about the lack of safety in coach class was both interesting and scary. The article was titled: Flying Coach Is So Cramped It Could Be a Death Trap with running header of:

A judge calls it a ‘life-and-death safety concern.’ A government document shows there may not be enough room to brace for impact. Inside the potential dangers.

This investigative story is based on an US Appeals Court case brought by an activist group called "Flyers Rights", which has an interesting website worth at least a peruse if you fly regularly, or even not so regularly.

The gist of the DB story is that coach class is probably no longer safe, the US Dept of Transportation standards are not being followed, and the FAA (let alone Boeing) is not releasing all of their current data on evacuation tests.  They also discuss the biomechanics of the closeness of the seats and the fact that passengers cannot properly brace themselves for an emergency landing.

All of this is no surprise to anyone who flies. The DB article calls it "densification". And it is all chalked up to "greed" on the part of airlines.

Please don't get me wrong. Flying is awful. It used to be glamorous and something for which one dressed up. The getting there and back used to be part of the adventure. It's not. It's horrible and discomforting and something to be endured. But I fly, and I imagine that many of you do, when there is a meeting or a vacation or a family thing to do that is more than 500 miles away.

But what I found most entertaining about this story was the inevitable outpouring of ire on twitter including things like:

The airlines might as well load us in like cattle because that's what they think we are. - PMK@veve4heart 

I don't think the airlines see passengers as "cattle", as they don't want to eat us. They want to make money. We are customers. But what any business or even industry sees as "customer service: is dictated by a number of factors. There are K-selectors, which go for higher quality, more effort and fewer offspring, er, customers. Think about chartering your own plane to go to SfN. I, by and large, do not qualify for such companies. Or rather, do not choose to use such companies. They charge a premium for service. There are also r-selectors, who make money by charging less to more people. This would include nearly every big box store.

If you look at the airline industry, they have a couple of sets of costs no matter how many people they fly. Fuel, which is cheaper today. Staff. Lots of people think pilots are paid too much and work too little. Others don't. And yes, many of us think that top executives make obscene amounts of money.

This brings me to one of my favorite sayings (not mine, but whose? I know not): What is a general definition of rich, or too rich, or who should be taxed more? Anyone who makes more money than me.

That the airlines want to make money is part of why they are in business. Keep in mind that if a company, a publically traded company, doesn't make money, it doesn't stay in business. This is one of the reasons why there are far fewer airlines today than there were even 10 years ago, let alone 30 years ago. How much money they should (and should is a very dangerous word here) and at what cost to passengers is a legitimate debate.

But that is not (entirely) why the FAA and the NSTB exist. They exist because we, the people (who allegedly are represented by the government), think that safety in transportation is important. [also because we can't integrate, in the mathematical sense of area under the curve, about every day things. A flight crash that kills 20 or 100 is a horrible massive problem. Deaths due to car accidents are about 1.3 million people/ year, which is more than 3000 people per day. That's a 9/11 every single day. Have we turned this country upside down about that? No, we have small efforts (seatbelt laws and campaigns). One third of those deaths are likely related to alcohol or substance abuse whilst driving, and we still do not regulate drunk driving the way we regulate flying. But that's another rant for another day.

Why do I care about this? One of the most dangerous things going on today is the unilateral business-friendly climate (i.e., the current government) and the loosening of the safety-based laws. And this is getting mixed up with issues about profits that companies make, which is how I interpret the "we-are-cattle" remarks.

We want airlines to make less money, but we have the choice to fly or not. What do you think drives low prices on airlines or at WalMart? People who are willing to pay that amount of money to fly. Airlines could make planes less dense, but it would likely result in higher prices. In fact, you can already do that. If you don't like coach, pay for business class. But, you and I and most people flying don't think business or first is worth it. And worth it means we have made a decision about the value of the bigger seat and more room and we don't want to pay the money for that. We want first class seats at economy prices.

I would separate out two arguments here: one about obscene profits and high executive salaries from the other about safety issues in the things we do. They are tied, I do not deny that. When airlines want to make money they will cut safety corners. Appropriate regulation is necessary for safety aspects of things we chose to do. The problem is not regulating the profits of the airline industry. I personally do not believe a communist government (which almost always leads to a totalitarian system, with an elite at the top, not much different from the stratification we've got right now in the US) will serve the needs of the citizens. One  of the (pretty much undisputed facts, at least in my reading) is that post-price regulation, airfares went down. And the airlines, if they stay in business will make money. What we need to think about is the safety. Public pressure on companies works. Sometimes. But what works best is getting the government to enact the safety laws we want to see. And that's only one of the things wrong with a "pro-business" administration.





3 responses so far

  • Anon says:

    "One of the most dangerous things going on today is the unilateral business-friendly climate (i.e., the current government) and the loosening of the safety-based laws."

    This!! I would add that it is a global trend, and it is not *just* the current US government. We may not like to admit it, but we all saw who got punished and who got bailed-out in the aftermath of the financial crisis, both in the US and abroad.

  • qaz says:

    "Keep in mind that if a company, a publicly traded company, doesn't make money, it doesn't stay in business. "

    This is not exactly true. Many companies (including all airlines) have received "bailouts" from government sources. (Essentially, the government says that having airlines is worth more to the country than not.) My understanding (I am not an expert in the airline industry) is that over the course of their corporate lives, no airline has ever made a profit and that all airlines have received subsidies from the government that are more than the profit they have made.

    This is true of lots of businesses. Some businesses get tax breaks. Others get direct subsidies. For example, look at the recent subsidies being given by Wisconsin to Foxconn. It is not clear whether this is a good investment or not, but it is important to recognize that the market dogma that markets actually drive capitalism in the US is mostly wrong. As a clear example, Equifax is still in business.... Many of these companies pay "negative taxes" (meaning exactly what you think it does).

    "This is one of the reasons why there are far fewer airlines today than there were even 10 years ago, let alone 30 years ago. " Again, I don't think this is the correct reason. The real reason (as I understand it) is that companies have been eaten by others. Often this is because the merge is more valuable to someone with the power to make that happen. (Monopolies drive profits through what is technically called "rent-taking.") For example, my understanding is that the CEO of Northwest realized that NW and Delta would be a good fit, then went to Delta to buy out Northwest. NW was not in any financial trouble, and was actually a much better airline than Delta, but Delta bought NW because the CEO liked Delta's structure better (for example [again, I am not an expert, but my understanding is] NW had stronger unions).

    Finally, it is extremely important to take options into account. There are many companies and situations where not flying is not an option and business class is prohibitively expensive. If an airline offered something in between, people might take that option. (I pay more so I don't end up in this "basic economy" nightmare, for example.) As an example, one of the reasons many people shop at Walmart is because there is literally no other option within a large distance. This was one issue with monopolies. Standard Oil very famously would sell gas at a large loss to outcompete an alternate local gas station. Once that other station was dead, they could jack up their prices to cover the losses at the next gas station.

  • I'm inclined to agree w/qaz. While monopolization isn't the whole story, having so few airlines (and in many places, one direct flight option, if that) means the airlines, not we consumers, have too much power.

Leave a Reply