Interesting Facts About Airlines
THIS LOUSY CUSTOMER SERVICE IS WHY YOUR AIRLINE IS GOING BANKRUPT!
It was fall of ’97, and I was yelling at a gate attendant for TWA in St. Louis, one of the airline’s hubs. At this point, the airline had declared bankruptcy several times, and was finally purchased by American Airlines in 2001.
I had been sent to a customer service desk 5 gates down from my gate- really for no good reason. As I rushed back and stopped to buy a Wall Street Journal, the gate attendant yelled: “Sir, you don’t have time to buy a paper!”
Now, I had to call BS, because was there on time- then sent on a wild goose chase 5 gates away. So I lost my temper and yelled back. In fact, he came right on the plane with me and we yelled some more.
Unfortunately, I was commuting every week and took TWA weekly. Got some stares from then on out.
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Losing TWA was a big deal for St. Louis, my hometown. It affected thousands of St. Louis residents, including pilots, flight attendants, home office staff, and other people that I knew personally.
A long, strange trip it’s been
It’s hard to make money running an airline. As Warren Buffet points out, it requires a huge capital investment, and may make little or no money. Airlines have to deal with huge swings in fuel prices, labor union issues, and the biggest unknown of all: weather.
Can you image a worse business- one in which customer satisfaction is closely tied to weather?
Yuck.
Selling miles: not seats on planes
A prominent airline analyst points out that many airlines earn up to 50% of income from selling block of miles to credit card companies. The credit card companies sell the miles to cardholders, and here’s the best part: if the customer doesn’t use the miles, the airline has no expenses- the entire sale represents profit.
Governments propping up airlines
Neal Freyman’s answer pointed out that many airlines have been supported- in one way or another- by their governments. Here are some examples:
- Monarch Airlines, which went out of business in October of 2017, discussed getting a bridge loan from the UK government. 2,000 were laid off and 860,000 travelers had their flights cancelled.
- Alitalia: In May of 2017, the Italian government approved a 600 million Euro ($655 million US dollar) six-month bridge loan to help this airline recover.
- Ryanair: This budget Irish airline, and other European carriers, have been supported by government subsidies that support unprofitable airports.
Many governments view airlines as an important asset for their country- an essential service for citizens.
Many of these same governments have financial problems of their own. If you’re recovering from a financial setback, this article may help.
The Wright Brothers- Doing the impossible
My daughter went to college at the University of Dayton, home of the Dayton Flyers. Dayton was also the hometown of the Wright Brothers. By making the first powered, manned airplane flights, Orville and Wilbur Wright are a great example of ignoring the critics and doing the impossible. Consider the interesting facts:
- The brothers tossed a coin to see who would test the Wright flyer first.
- Neither brother received a high school diploma
- The two only flew together one time- they were concerned about being injured or killed at the same time.
Most importantly, other inventors had far more funding- and knowledge about flight. The Wright Brothers were poorly financed bicycle makers.
But they succeeded, anyway. A lesson for all of us.
Ken Boyd
Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies
(email) ken@stltest.net
(website and blog) https://www.accountingaccidentally.com/
(you tube channel) kenboydstl
Image: Frustation, Jason Bolonski, (CC By 2.0)