Tuesday, May 3, 2011

What an odd editorial....

Something about today's Apple Dumpling Gang effort addressing new airline regulations struck me as odd.

On the one hand, the Gang is happy that the government is increasing regulation on airlines, ostensibly in the name of customer service, but (as many observers believe) sure to come with a raft of unintended consequences. On the other hand, they end with this:
The new rules come at a tough time for the industry, as increased fuel prices and other economic pressures are putting a major squeeze on air carriers.

For the first quarter of 2011, the newly combined United/Continental Airline reported losses of $213 million, wider than those of $182 million for the same period a year ago. Airline officials also blamed a loss of business caused by the Japan earthquake for the red ink.

Those numbers in the red affect airline employees in Houston, and the situation won't be helped by expenses incurred by the expanded regulations detailed above. That's the part of this we don't like.
Whua?

It makes no sense to me that an organization could be so pro-Statist and yet express dismay that overly onerous regulations cost companies money. That's not to say that some of this is not needed. Let's face it, for the most part, airlines have done a not-so-hot job with customer service. Leaving people stuck on a plane, for hours, with no relief or information is ludicrous. Charging bag fees and then losing the bad and not offering a refund is stupid. Yes, these are isolated incidents, but when they happen you just have to wonder who in middle-management gave the gren-flag to these decisions, and to what position did his/her "outside the box decision-making style" get them promoted? Sr. Management? VP*?

OF COURSE these regulations are going to cost airlines money. That's what regulation does. That being said, I'm a firm believer that you regulate the things that people need (a very short list: power, food, water, etc.) and try to minimize regulation on things that they want. (Air Travel being firmly in the 'want' camp.) This is why I think electricity deregulation was a bad idea while airline deregulation was overall pretty good. Yes many airlines run as if the concept of customer service has been buried in Houson's gumbo soil for three months but overall they do a pretty good job of getting you from point A to point B (sometimes with a few stops in between) somewhat efficiently. Yes the food is terrible, the service mediocre and the response time dismal when something goes wrong, but the actual "getting there" is pretty solid.

Another problem with excessive regulation are the unintended consequences. Sure, it's annoying to have to wait on a delayed flight. The problem is, now that airlines face steep fines for delays, the alternative is just to cancel the flight altogether. (no fines) So now passengers are faced with the prospect of not getting there at all (or having to jump through significant hoops to do so) rather than just being late.

Finally, show me a regulation that the Apple Dumpling Gang hasn't approved of. Two months ago they came out with the position that gas-well hydro-fracking was safe and had been around for a long time. About a week-ago they came out and decided that regulation was "reasonable" and oil and gas companies should just bear the cost. Funny no crocodile tears for them. Do you think these regulation are going to hurt the bottom line?

Of course not, because the oil and gas companies will just pass the costs onto the conumer, which is the same thing airlines will do. Which is what you should not like about this regulation, what it's going to do to your travel and your pocketbook.









*Most companies won't admit it, but the hard business reality is that most VP's only function is to point fingers when things go wrong and generate paperwork. Typically, there are two types of VP, the one who was promoted because they've been around for a while, or the one that was promoted as a result of a bad policy suggestion that made the company money. There is a third type, the VP who knows their stuff, but they are so rare as to be insignificant in the conversation. The reality is most companies could decide tomorrow to eliminate the entire VP staff and profitability and company morale would improve immediately.

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