Don’t Blame Capitalism for Shrinking Airline Legroom
(Bloomberg Opinion) -- A viral video of a man punching the back of a women's reclined airline seat got Delta Air Lines Chief Executive Officer Ed Bastian's attention. But he made things worse, when he asked flyers to be polite and check with the passengers behind them before hitting the recline button. This angered many people who have watched seats shrink over the years, as airlines try to raise profit margins by packing ever-more paying customers onto their planes:
Why, observers asked, should flyers be forced into a vicious zero-sum battle over physical comfort just to fatten the coffers of companies that already earn billions of dollars a year? Some blamed the capitalist system itself.
Defenders of the system will tend to retort that airlines are just giving people what they want; smaller seats, they argue, are simply the price consumers have chosen in exchange for cheaper airfares. It’s hard to tell how airfares have changed over time, because just looking at ticket prices isn’t an apples-to-apples comparison; the average flight distance changes, and customers nowadays pay fees for things such as checked baggage and meals that once were included in fares. But the data from the Bureau of Labor Statistics, which tries to account for all of these factors, suggest that flying has indeed gotten cheaper during the past 20 years:
This decline has happened in spite of a slight rise in real oil prices.
There are still some customers who will fall through the cracks in this system -- if you want just a little more legroom than coach provides, for just a little more money, you might not be able to find a seat. But overall, for customers who are willing to do a little shopping, today’s free-market air-travel system makes it easier for people to optimize their own personal mix of legroom and ticket price.
And as always when discussing the short-comings of capitalism, it’s important to think about what the alternative would be. In this case, that would mean nationalization of the industry. That’s not as crazy a notion as it might sound; Qatar Airways and Singapore Airlines, rated the top two carriers in the world in 2019 by consulting firm Skytrax, are both state-owned.
But it’s far from clear that American Airlines or United Airlines could match the performance of those champions under state ownership. Very high U.S. infrastructure costs suggest that the federal government may have problems in its decision-making processes that make cost control difficult.
In most developed nations, the trend has been toward privatization. Most European airlines, once owned by national governments, have been privatized; Korean Air was privatized in 1969 and Japan Airlines in 1987. This was generally a result of financial distress. Meanwhile, the vast majority of remaining state-owned carriers are in developing countries, with Singapore and Qatar being the exceptions.
Proponents of nationalization might argue that without the need to make a profit, airlines could reduce fares or increase leg room while holding fares constant. A wave of big airline mergers has increased the industry’s profitability since 2005, and common ownership may also be reducing competition. But airlines were operating on the edge of bankruptcy before the consolidation wave; now, their margins are merely up to the normal level for a U.S. business. So there’s not a lot of profit to be squeezed out of the system -- perhaps only $20 per flight, or less than one inch worth of leg room.
Nationalized airlines could also be run at a loss, subsidized by tax money, but this would likely lead to the airlines becoming a political bone of contention, with eventual privatization as the result. Or salaries could be cut and the savings passed on to flyers, but this would likely degrade operational efficiency and quality.
So although no one likes having to choose between paying an upgrade fee and being shoe-horned into a tiny seat, it’s unlikely that nationalization would improve matters.
With only limited scope to increase comfort while also keeping costs low, airlines should try to improve the flying experience by making it more egalitarian. That makes being told how to behave while flying by a man who makes a multimillion-dollar salary by packing more people onto planes particularly galling. So yes, airline CEOs should avoid seeming like they’re talking down to passengers.
Meanwhile, it might be a good idea to offer flights with identical seats -- no premium economy, business class and so on -- as well as no preferred boarding. Eliminating those visible inequalities might make flyers feel better about the air-travel experience. Who knows -- they might even be willing to pay a little more for the pleasure.
To contact the editor responsible for this story: James Greiff at jgreiff@bloomberg.net
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Noah Smith is a Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.
©2020 Bloomberg L.P.