February 8, 2005

Changing Planes at O'Hare: God Smiles on Me!

I've now experienced this sort of a very pleasant, unexpected airline experience twice.... in 15 years. Changing planes recently at O'hare, I literally jogged from one end of Terminal B to the far end of terminal F in 9 minutes, trying to catch an early flight to Madison. I arrived at the gate with 6 minutes to spare.

The gate attendant waved me through and I walked outside, toward the 50 seat jet. A member of the ground crew then told me that because the Canadair jet's doors had just closed, I had to return to the terminal. During this discussion, the Air Wisconsin (United Express) Pilot sent another ground crew member toward me to walk me to the plane. They opened the aircraft and I walked on board.....

Flying through O'Hare several times the past few months, I noticed that flights are far more reliable and predictable than one year ago. I emailed Kevin LaWare, Air Wisconsin's Vice President of Operations to thank him for this vast improvement in service.

LaWare is in a tough spot, working with a bankrupt major carrier (United Airlines). United is evidently shopping their regional services again (squeezing prices) - putting some more pressure on Appleton based regional carrier Air Wisconsin.

I'm impressed with their service and hope they continue to improve.

UPDATE: The Boyd Group takes apart a recent Wharton Study on the airline industry's problems.

Hot Flash - January 31, 2005

Misinformation. Bad Conclusions. Outright Errors & Idiotic Opinions.
More Reasons To Home-School Kids
Beyond The 12th Grade

Anybody catch the missive put out on the airline industry last week from the Wharton School of Business?

It got great press circulation, which is quite unfortunate for Wharton. If the date was April 1st, we might have an explanation as to why the document was issued. But short of that, all we can say is that higher education in America apparently isn't what it used to be.

The Article, "Why Most Airlines Are Caught In A Tailspin" should have been titled, "Why Are People Paying To Get An Education From This Place?" (If you have the stomach, a link to the article is provided below.)

For those into wild conspiracy theories, it could be a terrorist plot. There's evidence that dozens of university professors have been abducted and forced to live trapped inside the hallowed walls of universities for so long that they've plumb lost all contact with the outside world, not to mention reality. The sinister result is that thousands of American students may be graduating each year without enough real-world skills to properly boil an egg, let alone enter the business environment.

Whatever the reason, it appears that in the rarified intellectual atmosphere of these supposed towers of higher learning, some professors are denied any real counter-input to some of the crackpot ideas they come up with. In their world, they have no competition - they print and say what they will, and if a student disagrees, it's F-city for the kid. This system has produced a whole genre of academics that are so far from reality that they'll need a visa to get back. And, referring to the terrorist plot concept, a lot of what they're teaching our young what can only be described as intellectual el toro doo-doo.

wharton1.JPG (57823 bytes)But, because of the "prestige" of the university, much of this sheer nonsense gets printed as fact. Not just funny opinions, but information that is so inaccurate as to cast doubt on whether some of these institutions aren't really just joking. This past week we were regaled by just such an article.

Again, this is from the Wharton Business School, no less. Not East Upchuck Community College. It's from the school that's just sooo highly rated in cranking out MBA grads in full metal jacket mode to save American business.

Rule One: Get The Grade. Don't Argue With The Prof. In the article, three learned Wharton faculty opined on what's wrong with airlines today, and what must be done to fix them. What they missed is that before one can promulgate solutions, it's always nice to get a grasp of the problem first. One can only hope that their students don't buy into this stuff.

All We Need Is Three. The professors have determined that since there are only three automakers left in America, well, then that's about the right number of airlines we should have, too. "This industry, like others, is an oligopoly," one professor noted. "How many domestic automakers do we have? Three. The airline industry should be like that."

Just three airlines is all we need. And, according to the profs, Southwest is the model. No discussion of the fundamental economic and structural differences between airline systems. No investigation of the reasons that Southwest was profitable last quarter. No, the sages have spoken - just three airlines is all we need. Just like the automobile industry. Come to think of it, when the conclusions from these guys are fully considered, maybe that rule should be applied to B-schools, too.

Don't Argue The Theory: Airline Bankruptcies Definitely Cause Other Bankruptcies. Forget readin' writin' & 'rithmatic, these guys are buried in the wonderful world of theory, often insulated from any taint of reality. In that regard, the Wharton Brain Trust concluded that if one airline goes bankrupt, it will "cut prices" thereby causing non-bankrupt carriers to do so, with the result being that all carriers will be tossed into the murky depths of bankruptcy, too.

Wow, what a revelation. What great theory. What great textbook babble.

And in the real world, as proven over the past two years, it's a giant 55-gallon drum of hogwash.

Gee, it seems that these professors missed the story about United being in bankruptcy for over two years, and somehow their grand domino theory hasn't played out. To start with, they've missed the fact that United has not had any real control over industry pricing. That's because airline pricing involves a whole lot more than just costs at one airline, bankrupt or not. Too bad they don't know this. But the statement, "The government allows a carrier to dramatically cut costs in bankruptcy and then push others into the financial abyss"  has a nice, front-of-the-classroom ring to it. Even if it is total garbage.

Go ahead, students, be sure to remember this idiotic ooze during finals. Get the grade. Tell the prof what he or she wants to hear. Then after you graduate, ignore it, because it's nonsense.

Mired over their heads in academic quicksand, these professors are oblivious to the fact that bankruptcy isn't the only way that airline costs can be pared, union work rules changed, and operational systems made more effective. Too much involved in trying to prove theories instead of learning about the industry, they failed to note that while United wallowed in bankruptcy, other carriers, such as American, Continental, and Northwest, proceeded to get commensurate cost savings without filing Chapter 11. They latter two did so before going to their unions for concessions. If fuel had not jumped 40% in 2004, they likely would not have done so at all.

There goes the sacred textbook theory. It's a shame these guys haven't noticed what's gone on in the last three years. But, they're on a roll...

Chapter 11 As A Blood Sport. Then the Wharton trio danced into glittering generalities. "It's ludicrous to allow a company to go bankrupt repeatedly," one of these academic luminaries declared, implying that the number one O&D market for legacy carriers is to the local bankruptcy court. Here's a fact that their students likely know, but won't say for fear of getting an "F" in the course. Of major airlines, there have been very few "repeated bankruptcies" - Continental being the most obvious before the recent double-header at US Airways - and that was ten years ago.

Somebody Call AA's CEO - Quick. He's Been In Chapter 11 - And Didn't Know It. But having a working knowledge of the airline industry may not be a prerequisite for professorship at Wharton. One noted, "Continental and American, both of which restructured in bankruptcy, should be able to keep flying." Hello, Ivory Tower. Continental came out of bankruptcy a decade ago, which makes the challenges it faces now a non sequitur regarding how it restructured back then.

And American has never "restructured in bankruptcy" as these professors so confidently declared. Real world to the Wharton Brain Trust: You don't know that? Y'all should be pretty embarrassed spouting out stuff that proves you don't know what's going on in the industry. Do you really teach students this inaccurate drivel?

More Trendy Panaceas. The professors in the article worship Southwest, which is okay. But they kept implying that every airline should be like Southwest. "For instance, Southwest pioneered the concept of standardizing its fleet - using only Boeing 737s and thus saving on training and maintenance costs..."   It would be nice if they had any idea what a "737" is.  Or more correctly, what 737s are.The fact is that Southwest, until it retired its last 737-200 last week, actually had three types of aircraft. The -200s, the -300/500s, and the 737-700s. They look a lot alike, but there are fundamental differences in these three types.

What these guys - who, shockingly, are actually teaching our children - don't understand is that a "standardized" fleet has mission limitations. The 737 low-cost model can't deliver system passengers and revenue from Bangor or Beijing. If all airlines were like Southwest, or just two out of the three these clowns think are all that's necessary, over half of all US communities that now have scheduled air service would find themselves singing the blues.

News Flash, Professors. There's Something Called Alliances. These professors just kept on coming with statements that proved beyond doubt that maybe MBA degrees aren't all they're cracked up to be. Get this gem of wisdom: "I'm sure a foreign carrier would buy US Airways because it would like access to the US Airways network," one stated.

What we're sure of, professor, is that you need to get up to speed on what's going on in the airline industry. Hello, up there. US Airways is having trouble accessing the traffic on its own network. Oh, and by the way, have you ever heard of the Star Alliance? Well, we'll go slow so you can keep up. The Star Alliance is a system that already allows foreign carriers, like Lufthansa, to get access to the US Airways network. They don't need to buy US Airways to get access to that lucrative Elmira-Athens traffic. If you had a clue about the subject matter, you'd never have made such a moronic statement.

And, It's Those Union Rules, Too. No academic paper from the intellectual stratosphere is complete without a perfunctory attack on those nasty, bat-wielding labor unions. "For instance, legacy carriers are saddled with union rules that boosted salaries..."  Heck, let's not pop their bubble. We won't suggest that these guys take the elevator down to where 2+2 really equals four. They don't need to identify those "union rules" and whether they even exist in many cases after three years of concessionary contracts at carriers like American, United and others. Or how Continental and Northwest had success in paring operational costs before the recent spike in fuel costs, and how they did it before asking for any labor concessions.

We won't suggest they take a gander at the current maintenance contracts at Southwest and at, say, American. Or, the fact that some of Southwest's contracts could be a real challenge for the carrier going forward. No, we won't rain on their parade. Facts need to be set aside and made secondary to sacred theory. This is academia, right?

If you're interested in visiting intellectual fantasy land, click here to view the entire article.

Posted by James Zellmer at February 8, 2005 12:02 AM | Subscribe to this site via RSS:
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