JASON KIRBY July 28 2008


JASON KIRBY July 28 2008



Delays, cancellations, miserable service, soaring prices...and it's only getting worse. The golden age of travel is over.


Last week, US Airways announced it was ripping the entertainment systems out of its planes flying domestic routes. The move would lighten the aircraft by 500 lb. and reduce fuel costs by $10 million a year, and if passengers were dismayed by the loss of another basic airline perk, well, they could always just stare out the window. The real surprise was that it didn’t happen sooner. With fuel prices on the rise, nothing is sacred as carriers hunt for ways to save.

An official at one Indian airline recently warned that the taps in its airplane washrooms may run dry since aircraft now carry less water on every flight, something several European airlines are also considering. In China, they’ve gone even further. For some time now, according to reports, at least one airline has asked passengers to avoid using toilets because a single flush at 30,000 feet consumes enough fuel to power a car for 10 km. No doubt airline CEOs in North America have already done the math on that one, and are just trying to come up with a delicate way to ask passengers to hold it until they land.

Back in the 1980s, a popular airline slogan invited people to “come fly the friendly skies.” Not these days. With analysts predicting airlines in the U.S. alone will lose $10 billion this year, and mass layoffs reaching into the

tens of thousands, the skies have gone from friendly to desperate. Since January, two dozen airlines worldwide have taxied out of existence, including Hawaii’s Aloha Airlines and Oasis Airlines, which offered flights from Vancouver to Hong Kong for $250. Most experts suspect some of the world’s biggest airlines will soon follow. This week, Richard Branson, chairman of Virgin Atlantic Airways, warned there will be “spectacular casualties” in the industry over the coming year.

And so cost-cutting is the order of the day. Routes have been chopped, service sliced to the bone, and passengers have found themselves nickled and dimed on everything from blankets and snacks to checking in luggage and selecting a seat. Those passengers who collect loyalty points had better be prepared to cough up dough for their “free flights”— several airlines have started charging fees to redeem points, assuming, that is, those points haven’t already been cancelled as per some obscure footnote in their contracts. At the same time, delays and cancellations in both Canada and the U.S. are on the rise as a result of pilot shortages, traffic congestion and financial troubles. Delays at Canada’s largest airports are up 31 per cent over the last two years, while at some U.S. airports barely half of all flights are on time. And good luck to

the poor traveller who needs help. With layoffs looming, customer service agents are on the endangered species list.

Is it any wonder then that there is such a steady flow of horror stories from the trenches of the global airline industry? In late June, passengers on a Chinese flight that had sat on the tarmac for three hours, only to be cancelled, refused to get off and instead camped out on the airplane overnight. Last week, passengers waiting for an American Airlines flight from Miami to New York were left standing around for an hour and a half for their flight crew to arrive. When the employees finally showed up (they’d been stuck in customs) a few passengers booed, hollered and hurled obscenities. Two flight attendants refused to work and the flight was cancelled, forcing passengers to wait another day before reaching LaGuardia. To top it off, their bags were sent to John F. Kennedy International.

Canadians have been particularly vexed about Air Canada’s extra fees and customer service levels. When the airline instituted its “On My Way” program in April, in which passengers who pay a fee of $25 to $35 get extra service in the event of a weather-related cancellation, critics argued it was just another way for the airline to hold its customers for ransom. Blogs and forums are littered with complaints. One site even sells “Err Canada ruined my vacation” T-shirts to disgruntled travellers. And even though most experts say Canadians are far better served than Americans when it comes to air travel, it doesn’t really matter. Whether in Montreal or Mumbai, New York or Nanjing, passengers are feeling the brunt of cutbacks everywhere.

An economic slowdown, particularly in the U.S., combined with soaring fuel costs, threatens to squeeze airlines at both ends. The question is whether this is a temporary g state of affairs, or if something fundamental if has changed. We’ve grown accustomed to £ hopping on a plane to hit Vegas for the week13 end, and think nothing of traversing whole m oceans to visit family and friends. Now, as ^ the airlines axe flights and jack up prices to w stay in the air, it’s starting to look like all of

that could be coming to an end. Orson Welles once said there are only two emotions that one experiences when flying: boredom and terror. If he were alive today, he’d have to add loathing to the list. Flying has become a miserable experience. And it’s going to get a lot worse before it gets better.

When terrorists attacked the World Trade Center using passenger planes as missiles, it sent the airline industry into a tailspin from which many worried it might never recover. But after some painful adjustments, air travel roared back to life. New discount carriers launched, fares continued to fall, and air travel was more popular than ever. Soon, though, analysts were fretting about the possibility of oil reaching $50 a barrel, then $80, then $130. Now, some economists believe it’s just a matter of time before the price of oil hits $200 a barrel. The result is a strange and, in the eyes of many analysts, unsustainable business environment. The typical airline ticket is 50

per cent cheaper than it was 12 years ago, say experts, yet the price of jet fuel has jumped more than fivefold. Today, 45 per cent of all airline revenue goes to filling up the gas tank, says Vaughn Cordle, chief analyst at AirlineForecasts, an independent research firm, and some U.S. airlines are losing anywhere from $9 to $60 per passenger. “We’re in uncharted territory with the magnitude of all this,” he says. And passengers have a front-row seat to all the action.

The crisis kicked into high gear earlier this year when several U.S. airlines announced the first round of painful cutbacks. In June, Air Canada followed suit, saying it would cut 2,000 jobs. It started the process last week by announcing the elimination of 630 flight attendant positions. Delta Airlines plans to cut 4,000 more positions and American Airlines has said it will eliminate 7,000 jobs by the end of the year. At the same time the airlines are trimming the number of flights they offer. In the endless quest to shed weight, and costs, airlines are even reducing the amount of spare fuel they carry. One Air Canada Jazz pilot, who asked not to be identified, said that while the amounts are still within legal limits, it does cause problems if there’s a delay on the ground. “There have been a few instances where aircraft had to return to the gate for more fuel,” he says. A spokesperson for the airline said that fuel levels are always within safe limits to allow for “diversions, delays or circling above an airport waiting for authorization to land.”

At today’s fuel prices it can easily cost in excess of $80,000 to fuel up a passenger jet. Air Canada has said its fuel bill this year will jump by $1 billion. And airlines are going to extraordinary lengths to keep those figures in check. Several airlines have experimented with stripping off exterior paint, which can total about 350 lb., and there’s a booming business underway in spray-washing jet engines, which removes gunk and enables them to run more efficiently. Other initiatives are apt to raise passengers’ ire. Planes are flying slower than they used to, for example. And according to financial pundit Paul Kedrosky, one airline found that removing just five magazines per aircraft could save $10,000 a year in fuel. Lighter beverage carts save $500,000, especially now that airlines are carrying fewer drinks on each flight. And since airlines aren’t feeding passengers hot meals anymore, they’ve been able to scrap ovens and galley equipment, saving 17 gallons a year for every pound eliminated.

But of all the steps airlines have taken to deal with rising costs, few have rankled passengers quite like the bewildering array of fees, charges and surcharges. There have been 27 attempted fare hikes so far this year in the U.S., of which 15 became permanent. Canada hasn’t seen anywhere near that many, but as anyone who’s ever scouted out airfares online knows, Canadians were already paying far more than Americans to travel roughly the same distances. In May, Air Canada, followed by Westjet and Porter Airlines, introduced fuel surcharges of between $20 and $60 each way, depending on the length of the flight. The airlines didn’t stop there. Now there are fees to check a second piece of luggage, and on some U.S. airlines even the first bag will cost you. Want to pick a specific seat, reserve by phone, change your reservation or just get a pillow? Ka-ching. Ka-ching.

Airline analysts credit Air Canada with first introducing the à-la-carte approach to airline tickets, but it’s not an achievement Canadians are likely to celebrate. “As consumers we’re getting a pretty rough ride,” says Bruce Cran, head of the Consumer Association of Canada. “If you want to put the fare up, put it up front. I defy anyone to figure out the surcharges on surcharges.” Despite calls for Ottawa to force airlines to disclose the final ticket price in their ads, that’s not likely to happen soon. In the absence of spelling out its fares in full, Air Canada has opted for cheekiness—in an advertisement for flights from Vancouver to Newfoundland last week, the airline listed the price at $334, with a big, red asterisk. The fine print read, “That’s one-way, of course, and doesn’t include fuel surcharges, taxes and stuff. It’s another $334 should you choose to return home.” For what it’s worth, that “stuff” adds up to a round-trip flight worth $903.50.

Aside from costs, the current airline crisis has created a host of other headaches for passengers, while exposing problems that have been brewing for years. If you’ve found yourself twiddling your thumbs in airports a lot


lately, there’s good reason. An astonishing number of passengers are having to wait around for disrupted flights. Last month, 30 per cent of all flights in the U.S. were late or cancelled, with the average delay running 62 minutes, up slightly from last year. Those planning to fly to New York or Chicago should be ready to kill some time. At LaGuardia and O’Hare, only slightly more than half of all flights last month arrived on time.

Things are better in Canada, but not overwhelmingly so. Unlike in the U.S., Canadian authorities do not require Air Canada or Westjet to disclose how many of their flights are delayed or cancelled. Neither airline would provide data on its flight performance for this story. Fortunately, there’s Portlandbased, which collects detailed

information on departures and arrivals for flights in North America, Europe and Asia. At the request of Maclean’s, the company compiled extensive data on the on-time performance of Canadian flights to hundreds of airports on three continents. Based on the data FlightStats provided, we examined how the airlines performed when flying into Canada’s eight largest airports. The results aren’t broken down by the individual carriers, but were startling nonetheless. Last month 21 per cent of domestic flights didn’t make it to their destination on time, up from 16 per cent two years ago. Meanwhile, in 2006 barely 0.2 per cent of flights were cancelled. Last month that number had jumped to 4-4 per cent. “The Canadian situation is way better than in the U.S., but there is still

a lot of airport congestion,” says Meara McLaughlin, the vice-president of business development for FlightStats. “When flights are delayed into Canada’s hubs it reverberates across the country.”

With delays on the rise, there’s been a push for an airline passenger bill of rights that would guarantee passengers a minimum level of compensation in the event their flights are delayed a certain amount of time. Last month, a motion calling for such a law won unanimous support from MPs in Ottawa. Gerry Byrne, a Liberal MP from Newfoundland who brought the motion, said it was prompted by horror stories of passengers being trapped on airport tarmacs for hours on end.

In April, for instance, two Cubana Airlines flights from Havana to Montreal were diverted

to Ottawa because of a snowstorm. Passengers were kept stranded on the plane for nearly 12 hours as pilots waited to get clearance to approach the gate. With their food and water gone, and the toilets backing up, passengers finally dialed 911 and asked for help. The RCMP had to intervene before they were let off. “If you were on one of those planes, there is absolutely no provision in law or regulation to protect you,” says Byrne. “Consumer protection in the airline industry is woefully inadequate compared to other jurisdictions.” Yet few are holding their breath for real change. As one astute letter writer to the Globe and Mail pointed out recently, passengers already have several rights—“The right to show up, pay up, queue up, shut up and sit up. But don’t throw up, or you’ll be

charged extra for the air-sickness bag.”

Bill of rights or no bill of rights, passengers are too often left in the dark when there are delays, experts say. “For goodness sakes, they’re your customers,” says Bruce Hood, who was Canada’s air travel complaints commissioner from 2000 to 2002. “Don’t treat them like they’re a nuisance to you.” In fact, poor customer service is by far the biggest complaint passengers have at the moment, according to a study last month by J.D. Power, which found customer satisfaction with the airlines in North America has fallen to a threeyear low. The report said Air Canada was one of only two airlines covered in the survey that improved, though that’s not saying much—the carrier placed dead last in the 2006 survey and now ranks fifth out of nine airlines in its category. Now some passengers are dreading what the recent job cuts will mean for service. Last month, Anne Holloway and a friend planned to travel from Toronto to Newfoundland. After an initial delay in taking off, the captain informed everyone that because of fog in St. John’s they were headed for Halifax instead. Holloway, a book editor, wasn’t too concerned at first. But her mood soon changed. When passengers left the plane near midnight, an Air Canada agent pressed a list of phone numbers into her hand without any offer of assistance or even so much as a commiserating smile. Making matters worse, when they phoned the number Air Canada had provided for booking a hotel, the agent on the other end of the line, presumably sitting in some distant call centre, had never heard of Halifax. In the end, Holloway and her friend were

stuck for three days waiting for the first available seats to St.John’s. “They’re not offering service now,” she complains. “What’s it going to be like after they cut all those jobs?”

Air Canada declined a full interview but did offer responses to a few concerns via email. The airline said safety will never be compromised, and that staff and capacity cuts are just a reflection of tough economics. “Some flights that were profitable when oil was at lower levels clearly are no longer profitable at these levels,” wrote Angela Mah, an Air Canada spokesperson. “In response, we are reducing capacity by seven per cent in the fall/winter schedule. This reduction in flying will require fewer employees to operate the airline and the announced reductions in staff are directly

related to the reductions in flying.”

Many passengers are wondering what will happen once the airlines are finished cutting back their capacity. In simple terms, it will mean fewer flights to fewer destinations. Air Canada has already said it will chop departures between Vancouver and China by half, while axing service to Trinidad and Tobago entirely. It’s also cancelled non-stop flights from Toronto to Rome, a major European hub. At the same time, Air Canada Jazz will cease flights from Hamilton to Ottawa and Montreal. Not everyone is cutting, mind you. Last week, Westjet inked a deal with Dallasbased Southwest Airlines allowing it to sell tickets to more U.S. destinations. But WestJet and Southwest’s expansion plans are rare exceptions in a contracting industry.

It’s bad enough that some airlines rou-

finely overbook their flights by 20 per cent in an attempt to make sure their planes are full. (Westjet says it never overbooks. Air Canada, which does oversell flights, says the practice is “extremely conservative, and in fact, our incidents of denied boardings have been decreasing over the past few years.”) But with these new capacity cuts, it’s only going to get harder to snag a seat. That could be a problem for people who have already booked onto flights that are set to be cut. In the U.S., many passengers have had to scramble to rearrange travel plans after learning their original flights no longer exist. Once Air Canada’s capacity cuts take effect in the fall and winter there could be similar problems here. The airline has said that either it,

or travel agents, will contact passengers who have already booked so they can make alternate arrangements. Unfortunately things don’t always go smoothly. Last month when some passengers arrived at Charles de Gaulle Airport in Paris to catch their Air Canada flight to Montreal, staff told them the flight had been cancelled months earlier because too few seats had been sold. Unfortunately, some never got the email announcing the change, and the alternative flight had already departed. When asked why the email wasn’t sent, one employee said the system often gets “plugged up” (fréquemment abouti) and that “they should fix that problem.”

While the airlines bear the brunt of customer resentment, it’s worth pointing out that a significant cause of the problems facing passengers have to do with the airports them-


selves—things like high gate fees, a dysfunctional air traffic control system in the U.S., and all the post-9/ll security hassles. It’s come to border on the ridiculous. Recently a woman in Vancouver was forced to dump out several bottles of breast milk because she didn’t have her baby with her. Then there’s Jim Dickie of Fredericton. Like many Canadians, he booked a flight through Bangor, Maine, recently in order to get a cheaper fare. It was bad enough when the airline lost his luggage. But for Dickie, the security regimen, which forced his plane to be delayed, was worse. “It’s just ridiculous,” he says. “They even seized my terrorist hair gel.” From now on Dickie says his family will pay the extra $400 to fly out of Canada. “Better yet, I think we’ll just stay home.”

There’s no shortage of blame being thrown about as a result of all the chaos. Last week the carriers launched an attack on oil speculators, calling on Washington to curb fuel prices. The unions accuse executives of failing to foresee higher oil prices and take appropriate action to protect themselves. Disgruntled customers, meanwhile, complain that airline employees were so focused on their pensions they forgot what customer service is all about. Even passengers have come in for knocks. “Look at the class of people flying nowadays,” one commentator wrote on the Huffington Post news site recently. “These people would be better off taking the bus.”

Whatever the cause of the industry’s woes, there’s a sinking feeling that everything is about to change. “We have to accept the fact that air transportation is probably going back to being something for higher-income people,” Henry Harteveldt, an analyst at Forrester Research, said recently. “It’s the end of an era.” At the very least, the current model is horribly broken. And the threat to the economy is severe. Inexpensive air travel has become an integral part of global commerce. The free flow of people is just as crucial as the transport of goods. “The industry itself and how it functions is one very small part of this huge thing that relies on it,” says Debra Ward, an industry expert in Toronto. “It’s a sharp little point that so much is balancing on.”

All sorts of solutions have been proposed. Bob Crandall, the former CEO of American Airlines, has come out and said the government needs to step in and partially re-regulate the industry. Meanwhile, analysts say the skies are just too crowded with too many underperforming airlines for any real change to occur. Cordle says “weak and feeble” U.S. airlines should be allowed to fail, which would enable the survivors to boost fares to the level where they’re profitable.

Cordle says the industry would be better off with more airlines like Southwest and especially Westjet. Its workforce is young, non-unionized and motivated through share ownership in the company. It uses only one type of aircraft, allowing it to cut down on costs for maintenance and spare parts. And it’s got a deeply loyal customer base. “WestJet is the airline of the future,” says Cordle.

For now, the reality is airlines are going to continue putting the squeeze on passengers, charging more for seats, snacks and service. For passengers the best idea, unfortunately, is to always expect the worst, says Hood. “That way, when things do go wrong, at least you can say T told you so.’ ” M

Aleksandar Zivojinovic

Susan Mohammad

Duncan Hood