Tuesday, July 15, 2008

Class Warfare in the Air

The New York Times recently had an article titled You Still Fly Commercial? That’s So Down-Market:

We are developing in this country an upstairs-downstairs air transportation system. Downstairs is the commercial airline industry — constricting, retrenching, ever more expensive to fly and struggling for survival.
Upstairs, for those who can pay the price, is business aviation — thriving and expanding....
In 2000, commercial airlines flew 79 million so-called premium passengers (defined as those flying first-class, business-class and full-fare coach) on one-way domestic trips. Last year, despite a sharp increase in overall passenger traffic, that number was 42 million. Premium passengers, incidentally, account for about twice the revenue per passenger mile as nonpremium passengers.
No wonder the airline industry is in trouble-- it's gone from being something that only the upper classes can afford, to being a mass-market mode of transportation that the upper classes would rather avoid, the result of which is that the highest-paying customers are being sucked away. (As an aside, I can't help thinking how this could compare to things like health insurance and Social Security: for these systems to work, you need a broad base of people paying in, some of whom don't get sick all that much, or die before they collect their full benefits. If people are able to opt out, you're left with the wrong balance of participants)

On the Wall Street Journal website, Robert Frank recently wrote about private jets, bringing up some other issues associated with the shift from commercial to private aviation which affect all of us, not just travelers:
A new report released by Essential Action and the Institute for Policy Studies — two left-leaning Washington think thanks — makes the case that America’s fleet of 10,000 private jets are extracting a huge cost from everyday Americans.... The reasons include:

POLLUTION — An hour of flying a private jet burns as much fuel as an entire year of driving a car, the report says, contending that four passengers flying in a Citation X from L.A. to New York will each contribute five times as much CO2 as a commercial-airline passenger.

TAXES — In 2008, the report says, the private-jet lobby won special tax breaks for purchasers of new aircraft, essentially allowing buyers to take larger tax deductions in the first year of their purchase.

SAFETY — Private-jet travelers don’t pay their fair share of costs associated with air-traffic safety, the report argues. A commercial flight from New York’s LaGuardia to Miami International would pay $2,015 in taxes. A corporate-owned Gulfstream flying from Teterboro to Miami would pay only $236, “even though they incur the same air-traffic control costs.” The report says commercial planes pay 95% of FAA air-traffic-control costs, even though they use only 73% of its services.
It's funny, airplanes used to be thought of as good opportunities to meet people and make business connections. I have a cousin who met a rich guy on an airplane and they ended up dating for a while, and on another occasion someone gave her his card and told her to contact his company about getting a job. It didn't hurt that my cousin was young, gorgeous and very friendly, of course, but how are young, gorgeous, friendly women supposed to get ahead if all the wealthy corporate alpha males are hidden away on private jets??? How many flight attendants can those private jets possibly employ?*

As for the rest of us who still fly economy, it sounds like we'll be forever doomed to rubbing elbows with other middle class stiffs, not to mention having to buy our own peanuts...

*Lest I be accused of perpetrating sexist notions of women in business, I have to add a link to an article that appeared after I'd finished writing this post: A Boss in the Private Jet is Likely to Be a Woman:
XOJet, the big private jet company, says that about 15 percent of its customers who contract for 100 hours or more a year in flight time are female. And while few keep precise statistics, all of the private jet companies I spoke with, including charter operators, said that women are a growing part of their market.
For women, ego and status seem to be less important as motivators than considerations like avoiding the problems and delays of commercial airports. Essentially, some say, you are buying time....

In Los Angeles, Nancy Furlotti, a psychotherapist and real estate investor, said she uses her private jet, an eight-passenger Cessna Citation X, when flying commercially would waste time.

“I have a private practice, but I’m also currently president of the C. G. Jung Institute in Los Angeles, and I have to do a tremendous amount of traveling to various conferences and things like that,” she said. “Many times I would not be able to get to these meetings and get back in time for my practice here, and for family.”

Many businesswomen who are balancing work and family responsibilities say a business jet solves logistical problems.

Recently, she added, her son’s wedding required getting her 87-year-old mother, 94-year-old mother-in-law and several other relatives to San Francisco. “Managing that on a commercial flight? A potential disaster,” she said.

None of this comes cheap. And the surge in private jet travel only underscores the growing disparity between the haves and have-nots in air transportation.

A 25-hour Marquis Jet card on the Hawker XP model that Ms. Swanson flies costs about $132,000 (plus trip taxes and government fees) as of Jan. 1. XOJet said that for a Citation X like the one Ms. Furlotti uses, a $375,000 upfront fee guarantees 100 hours of on-demand flying time over five years, with an additional hourly flying charge of $3,600 to $4,000.


Anonymous said...

Yea, I'll be staying in economy class with my ipod on and praying that the person next to me doesn't touch me or talk to me! I guess I can suffer through just about anything for a few hours.
I think air travel will remain a middle class thing. The economy tickets are getting more and more expensive....so those who are struggling will end up on the Greyhound or driving.

Noel Larson said...

There is areason that Geyhound is pretty much out of business.Deregulation did its job very well. Air travel is more accessable than ever before. However, that same accessability is the reason why airlines have such a hard time raising rates. For the non-business traveler it is 100% rate dependant, service is secondary.

My felling is that they could sell more Business calss seats if the upcharge was reasonable. My las tinternational flight came back with three quotes; $550 for coach, $7500 fo business, $14k for first.


Anonymous said...

Sometimes you need to see people face to face in 3D, especially for us old fogeys, but perhaps the gas crisis will make more and more demand for telecommuting, and computer cameras, to become more like real life, and more cost effective.

Anonymous said...

One day when I have accumulateed enough wealth I will be able to fly first class (or at least business class)...until then economy all the way with my ipod and my laptop...

Anonymous said...

Funny post...I've flown both business class (at the expense of my employer when I've traveled for work internationally) and economy (on my dime). There is definitely a noticable level of difference in service, but I would never spend my money or even frequent flier miles on it. For a few hours of relative discomfort...to enjoy all the addtional hours of the destination you're about to reach...the difference in cost just ain't worth it to the average joe or jane. Just rough it for the trip and you'll be fine after!