FAA Says Some Electronics Can Now Be Used Throughout Your Flight

Flickr/Jetstar

If you’re tired of shutting off your gadgets during take off and landing (or you’re one of those passengers who surreptitiously leaves them on) then get ready for some good news. The Federal Aviation Administration (FAA) announced today that it is loosening restrictions on the use of electronics in-flight, meaning some devices can now be used the entire time you’re on the plane.

Under the changes, travelers will be able to use e-readers, play games, and watch videos on their portable devices throughout their journey. Bluetooth devices like wireless keyboards can also be used on flights. Cell phones will still face some restrictions, with passengers required to keep them in airplane mode. And as is currently the case, no phone calls will be allowed at any time onboard. The FAA says passengers may be asked to stow some heavier devices during takeoff and landing for safety reasons, but in general, the new rules reflect much more freedom for fliers.The FAA says it came to the decision after receiving input from pilots, electronics manufacturers, and passengers, and that the new rules balance safety with travelers’ increasing appetite to use electronics during flights.

The new rules won’t necessarily apply immediately, and exactly how they’ll be implemented will probably differ from one airline to the next. But the FAA believes most carriers will have the changes in place by the end of the year.

Department of Transportation mulls expanded passenger delay rule

The Department of Transportation is thinking about getting even stricter with the airlines. After implementing a rule last spring that involves heavy fines for carriers that keep passengers on a plane on the ground for at least three hours, the DOT is already considering expanding the scope to small airports and international flights.

MSNBC reports:

“The situation is much worse than the [official] statistics indicate,” said George Hobica of AirfareWatchdog.com. “We have to include every airport, every type of plane and every type of flight.”

Unsurprisingly, the International Air Transport Association isn’t crazy about Hobica’s approach, with spokesman Steve Lott saying, “If DOT goes ahead with this, they’re going to cause a much larger problem than the one they think they’re trying to solve.”

The final rule won’t come down until the spring, so there’s plenty of time for both sides to fight this out.

For the airline sector, this measure seems to be seen as a signal of something much worse – the prospect of broad regulation and constraints on its ability to operate effectively in the manner to which it has become accustomed.

For its part, DOT won’t announce a final rule until next spring, but you can expect a lot of others to weigh in before then. Hundreds of last-minute ideas were lobbed over to the DOT, according to MSNBC, addressing all kinds of passenger and watchdog hot buttons, such as: advertising, fee disclosure and compensation for those denied boarding. The big one, of course, was the issue of delays on the tarmac.

International carriers oppose the expanded rules – shocking, right?! Lott, taking the standard industry stance, raises the issue of cancellation instead of risking a $27,500 per passenger customer fine, telling MSNBC, “I don’t think getting stranded in a U.S. city for a day or more is necessarily helping passengers.”

This may be a risk, but the data tells the only reliable story:

Meanwhile, as the airline industry and consumer advocates press their points of view, two truths regarding tarmac delays remain. Delays of three hours or more for domestic flights are down substantially since the original rule went into effect – there were only three in July, says DOT, compared to 161 during the same period last year – and international flights do present a much more challenging scenario.

[photo by williamcho via Flickr]

Five business travel factors for Obama and the midterm elections

Leisure travel is irrelevant during the election season, but the woes of business travelers seem to resonate. With the midterm contests two months away, all eyes are on the White House … and President Obama‘s success rate with road, rail and runway repair.

This is the one time business travelers make the presidential agenda, according to Portfolio.com: “Presidents (or people campaigning for any office) only talk about business-travel infrastructure during election season. Our issues almost never seem to rate presidential attention at any other time in the cycle.”

Well, let’s take a look at what Obama’s done for the white collar travel crowd. Here are five business traveler issues that could attract some attention in November:1. Secretary of Transportation appointed: With passengers’ rights considered and a solution implemented (and one that seems to be working), Ray LaHood seems to have been a savvy secretary. And, airlines have been slapped with some hefty fines, proving that they need to take responsibility for their actions.

2. Not so much at the TSA, though:
While Portfolio.com gives Obama high marks on behalf of business travelers for LaHood, it’s a little tougher on his choice for top dog of the TSA. The president waited a year to tap someone for the job, suffered through Senate procedural tricks and eventually had to go with his third nominee.

3. Security is solid:
The system is relatively safe, Portfolio.com opines, but expect some rancor over the body scans that are set to be implemented, as “the TSA is about to ratchet up the security kabuki at airport checkpoints.”

4. Travel consumer rights on the rise: It took 47 passengers getting stuck overnight on a Minnesota runway, but passengers finally got some rights. The airline industry warned of (self-servingly) of unintended consequences … which have yet to materialize. The Obama administration has airline fee structures on the agenda now.

5. Merger-mania managed: Despite the fact that the “balancing act is tricky,” the administration has done a decent job of facilitating healthy competition without impeding too much of the urge to merge.

[photo by jurvetson via Flickr]

Open skies agreement between EU and US signed

The United States and the European Union have signed an open skies agreement that makes it easier for airlines to buy one another.

This is the second open skies agreement between the two governments. The first open skies agreement took effect in 2008 and opened up transatlantic routes to all carriers. Previously some routes were limited to specific carriers.

This new agreement will allow foreign owners to have a majority stake in an airline. Until now, European airlines could only own 25% of a US carrier, and US airlines could only own 49.9% of a European airline. The new limits have yet to be set and the move still has to be approved by Congress.

The deal also equalizes rules on emissions, fuel, and noise, and establishes a closer cooperation with the carbon trading scheme. European airlines will also now be able to fly in and out of the U.S. without first landing or taking off in the EU. Expect more services to non-EU destinations by EU airlines in the near future.

Airlines: why it always has to come down to price

Imagine what would be pretty much a perfect world, at least for airline CEOs. You’re running a reasonable profit – let’s say 10 percent, enough to keep the shareholders off their backs. And, they’re growing annually at a low double-digit rate, as well. Again, the shareholders are seeing an upside, so there’s no pressure on the airline’s management. Since the numbers being posted are healthy, the need for cutthroat competition evaporates, and passengers make their choices by destination and service, the latter playing a minor role, because in this perfect world, service is pretty much consistent (and high) from one airline to the next.

Blissful, right? Well, it’s just about impossible.

What shatters this fantasy, in which Santa‘s the pilot and the tooth fairy is pushing the drink cart, is the concept of price. The travel market – like any market – doesn’t carve itself up neatly into the best possible outcomes for all involved. Some people make fantastic decisions, while others behave like morons. The leaders of each company think they can find an edge. Even in the perfect world described above, the mere possibility of an advantage can send the whole system into mayhem, but we’ll get to that in a moment.

The perfectly coordinated airline industry has a practical barrier. Such harmonizing is also known as “collusion.” And, it’s illegal. Just imagine every grocery store in your neighborhood setting the same prices. In doing so, they could guarantee themselves a tidy profit, as long as all agree not to break ranks. Now, if the airlines did this, they could basically set the prices they want, regardless of service. In fact, if all agreed to provide shitty service for a universally high price, you’d be screwed.

A lesser form of this is regulation. The prices are fixed, and there are no secrets about it. We tried this for a while in the United States, and I’ve heard great things about the experience of flying in those days. But, the thought of the government setting prices for anything makes me a tad uncomfortable. Business owners should be free to make a profit that reflects their hard work and skill.

So, we are where we are now … which is pretty ugly. Most airlines are struggling to keep planes in the air. Bankruptcy announcements are not met with surprise (unlike profitable quarters). Even the layman, who knows nothing about the air transportation industry, knows that the airlines are screwed up. The challenge is finding where the blame needs to go and fixing the problem. While it’s pretty easy to beat up the airlines on this one, the reality is that the system as a whole is pretty close to unsustainable.

Fares sell by price
We may complain about having to pay for soda or not getting those crappy little pillows and blankets (which we complained about getting before they were taken away), but we still beeline for the cheapest flights available. Need proof? I’ve heard countless people wonder aloud about an airline that charged just a little more for something resembling customer service. Yet, those wheels never go up. Meanwhile, Ryanair plans to get rid of some seats and creating a standing room only section on its flights and will probably sell tickets for those torture devices before filling the cheap regular seats on the plane. We’re addicted to cheap. If there were real demand for anything slightly better than what we have now, it would exist.

There’s a reason fares sell by price
Sure, there are travelers with a little extra disposable income, and they’d pay for a class that’s lightly better than coach. Maybe they’d shell out an extra $50 or $100 – maybe more. But, there’s always the squeal point. The squeal point, per ticket, gets lower when multipliers are involved. I’d pay an extra $100 for a little more legroom and coffee in a ceramic mug. Seriously. I don’t need a pillow or a blanket; I really don’t even give a damn about getting a smile. I just want to stretch out a little and sip my coffee from a civilized receptacle. Here’s the problem: if I fly with my wife, that $100 luxury becomes $200. If we were a family of four, it would jump to $400. Legroom isn’t worth that much.

For the business travelers, the situation is even more severe. It’s easy to figure that these guys would go for the extras because they don’t have to pay for it. Well, that’s true. But, someone does. These guys are accountable to the people who write the checks. Would a client notice a weekly expense bill that’s $100 higher? Probably not. When I lived that life, I’d run up $3,000 to $5,000 in travel expenses a week. Flight prices changed from time to time. The $100 wouldn’t be noticed. If someone did notice, he probably wouldn’t care.

But, we have to deal with the multiplier.

If you have 100 consultants or other professionals on a project where each has a weekly flight and hotel stay for an entire year (call it 50 weeks to leave room for vacation), the money adds up fast. The extra $100 becomes $5,000 per traveler. For the entire project team, this small taste of luxury would amount to half a million dollars … which would be noticed and to which the client would object. Business travelers are constantly pressured to keep expenses as low as possible, which takes us right back to buying on price. With business travel off substantially this year, we’re experiencing this dynamic today.

Airlines have to live with this
Since customers make their decisions based on the cost of a ticket, this is how airlines have to position themselves in the market. Being the best can mean going out of business. Instead, an airline has to be the cheapest for a particular route in order to win in the market – there’s no alternative to this. That’s why people complain about the service they get; if they weren’t flying these airlines, they wouldn’t be complaining.

So, to succeed, an airline has to make the calculated decision that anything can be sacrificed in the name of low prices. Whatever misery is inflicted on the passengers, they’ll accept it – they made that decision when they bought their tickets. I’m not trying to be mean, here, just honest. We’re not talking about Santa any more.

The market has evolved into one in which passengers have little likelihood of being happy … in part because they are making the conscious decision to fly that way. As long as price is king, the airlines have few levers they can pull.

Of course, this isn’t universal. There are some airlines with excellent financial track records (Southwest comes to mind immediately), and their flights can be decent, even enjoyable. While customer service is an obvious way to make even a no-frills flight much better, there are structural problems in the industry that have to be overcome. An obvious thought is that the big airlines should cut back to be more like their smaller, regional counterparts, which tend to do a better job of running profitably.

Let’s think through this.

First, cutting some routes can cause a chain reaction of change in the vast network that an airline traces around the world. There aren’t any easy answers here, but it can be done. Many airlines have cut back on flights and cities this year and have lived to tell about it. Take it to the extreme. The large airlines carve themselves up into little guys, run their routes and post strong earnings. Unfortunately, profits are intoxicating – and shareholders will want more. Eventually, this requires growth into new markets (e.g., adding routes) or acquiring other airlines. It may take a while, but the airline industry would eventually return to where it is today … and would assume the problems it has now.

Doing the right thing, essentially, would lead the industry back to doing the wrong thing.

The exceptions to the rule
Alternatives do exist for passengers who want more than the claustrophobic experience that is coach. Business class and first class come to mind. The problem is that the gap is far too wide – both in terms of amenities and cost. Most coach passengers could be fairly happy with much less than business and first offer. Unfortunately, it’s all or nothing, and the prices reflect the “all.”

There are passengers who pay the extra cost for these improved offerings, but there’s always a reason. They may have the financial means to make the decision easy. Or, in the corporate world, they reside far enough up the food chain that corporate travel policies favor them.

The super-luxury travel market has plenty of services available for passengers who don’t buy on price. You could use an exclusive service (though many of them have fallen on tough times), get a private jet share or simply buy your own wings. Again, this is far more than the legroom and ceramic mug I’m looking for.

Of course, even these upscale services aren’t making as much as the airlines had hoped, even at lower prices.

Why even collusion wouldn’t work
Let’s circle back to where we started, that imaginary airline industry in which everything is perfect. Even that is doomed to failure. Take regulation out of the picture (that’s a whole different animal), and think about airlines in which passengers can get something slightly better than what we have now. They pay a little more, but air travel is no longer a dehumanizing experience.

Now, think about a smoke-filled backroom in which a guy with a new idea is surrounded by cigar-chomping investors.

“I have something for you. I want to start an airline. Yes, I know that the guys in the market now have gotten together to fix their prices – it’s an open secret. But, I’m not going to play ball with them. I figure we can cut prices and run at a thinner margin. What we lose per flight we’ll make up in volume. Hell, people will buy on price, and they’ll flock to us. We’ll grow like mad.

“The other airlines will try to make a play on service, on how they give a little extra legroom and coffee in a ceramic mug. But, we’ll only need to say, ‘We’re cheaper.’

“It starts with short flights. If you’re only flying from Boston to New York, do you really need the extra legroom? How about Boston to Washington? The slope is awfully slippery. Next thing you know, people will go for the cheaper fares on flights from New England to Orlando … and then Orlando to Los Angeles. Finally, they’ll cut their comfort when they cross oceans.

“And, they’ll be flying our airline.”

The investors would be fools not to drive dump trucks up to this guy and unload their cash at his feet … at first. For a while, this airline would dominate the skies. But, the others would catch on. One by one, they’d break ranks from the agreement to keep their prices high, and they wouldn’t stop until the industry looks a lot like it does today.

What the airlines can do
It looks like the airlines are out of options. They are doomed to a low-margin (at best) existence in which cost-cutting, layoffs and disgruntled passengers are the norm. A Hobbesian state of nature will always play itself out at the gate. Knees will always poke chins in increasingly compact quarters.

This doesn’t mean the airlines are powerless to make the experience better, though. Even with small seats and no meals, there are plenty of ways to win on service. A smile can go a long way. Being polite can defuse a nasty situation.

Of course, none of this addresses the cost and price pressures and their impacts on the industry. But, does anyone think that’ll ever change?