D.F.

Krause

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April 24, 2009

Delta Airlines and the Latest Flying Annoyance

Delta Airlines lost $794 million in the first quarter of 2009. This is chump change compared to what General Motors loses just by turning on the lights every morning, but it appears there are still major U.S. companies for which misplacing $794 million is considered a rather sizeable problem.

The first reaction to this news may be to ask, hey, so what? Doesn’t every airline always lose money by the bundle? (Except Southwest.) Since the airline industry as a whole hasn’t made a dime of profit in its entire history, I’ve always just figured there’s a big secret pile of money somewhere, and they all show up every few months or so with a big steam shovel to get what they need.

“Delta, how much did you lose this quarter?”

“About $800 billion.”

“Holy crap, better dig deep this time.”

“Tell me about it!”

“Leave some for Northwest, huh?”

“I know, I know!”

Much of the loss came from a bad guess about what would happen with the price of jet fuel. When oil soared to $147 a barrel, and the airwaves were filled with people assuring us that it would only go higher, Delta hedged a percentage of its future fuel purchases. In other words, it locked in prices at a certain level just in case the scary predictions came true and oil rose to, oh, say, $500 a barrel.

Of course, oil dropped below $40 a barrel, which meant they could have bought all the fuel they needed dirt cheap. But a deal’s a deal, so Delta cried tears of oily sadness every time they pulled a plane up to the self-serve island, swiped the debit card and watched the numbers climb into the stratosphere.

So, if you ran an airline and you were losing money by the bundle, what would you do? Keep in mind that the economy is still receding – and thought by most people to be far worse than it really is, which has the effect of making it worse – and folks are watching their expenditures. Keep in mind, as well, that few experiences come with more built-in annoyances than flying. Stand. Wait. Sit. Wait to hear your name called. Sit back down. Put your possessions on this conveyor belt. Stand still while we wave this wand all over you.

Strip down to your underwear. OK, it’s not all bad.

What would you do? You would make the experience even more annoying! In the case of Delta, the strategy for achieving this is to charge an extra $50 fee for the checking of a second bag. Keep in mind, they already charge $50 for the first one. So now, if you check two bags on your trip, you can add $100 to cost of your trip – and since any trip requiring that much luggage would presumably be a round-trip journey, make that $200.

Delta says it expects to earn an additional $100 million by making this move.

I have a feeling. I think they won’t. I think people won’t pay it. Oh, I know, some people will. But within the community of airline flyers, I theorize there is a significant percentage that lies near a tipping point at which I long since arrived. This is the tipping point at which you say, “I would rather drive all day, every day, for a week than put up with this nonsense!”

Those who reside near the tipping point don’t need much to push them over. The guess here is that an extra $50 just for the privilege of bringing your stuff with you will push many of them over quite efficiently – and they will never fly again.

There is, I realize, an economic case to be made for flying instead of driving. Once you pay for gas and hotels, the cost difference is not that great. Once you consider the time you save, and calculate the value of that time, flying may be the better buy. I get that. But it’s beside the point.

People will reject flying because flying is annoying. People tell you where to stand, where to sit, when to wait, when to walk, when to buckle your seatbelt and when you can go to the bathroom. They put a movie in front of you but charge you 10 bucks if you want to be able to hear it. They make you volunteer for safety patrol in the event you’re sitting near an emergency exit and the plane lands in water. (Of course, when does that ever happen?)

I drive. Always. Everywhere. I refuse to be annoyed, especially by people who are dumb enough to lose $800 million and think the solution is to make you tip a big mechanical bellboy $100 to carry your bags.

And soon, you will be joining me on the road. Delta Airlines has just assured it. Welcome. Just don’t hog the left lane. That annoys me!

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