Wednesday, February 28, 2007

JetBlue redux

Another week, another weather-related service disruption for JetBlue at its New York City hub. Monday's snowstorm required JetBlue to cancel almost 70 flights, but that was nothing compared to the havoc caused by the "Valentine's Day Massacre" of a couple of weeks ago, which was a public relations nightmare for the popular airline. Newsweek financial columnist Allan Sloan suggests that JetBlue's biggest obstacle in the wake of that meltdown is not its need to change its operational structure to better deal with such weather-related disruptions in the future, but the simple fact that it, as an airline, is part of a money-losing business:

Consider this: since 1947, the first year for which the Air Transport Association has profit-and-loss figures, the U.S. airline industry has lost a cumulative $14 billion. And that's after including the up to $3 billion the association estimates that airlines made last year.

"Grocery stores give you better returns [than airlines]," says the Boyd Group's Michael Boyd, a Colorado-based airline expert. "Airlines are a crummy business, and will always be a crummy business." When people ask about starting an airline, Boyd told me, "first, we say no. Then, if they still want to do it, we say, 'Only if you're using your ex-wife's money'."

Sloan, noting that JetBlue was forced to shut down service to places like Richmond, Virgina; Raleigh-Durham, North Carolina; and Portland, Maine, goes on to bring up this interesting point:

A final note: Amtrak runs trains from New York to Richmond, Raleigh and Portland. I should have asked JetBlue why it didn't put its passengers on trains, but even I—an Amtrak Select Plus customer, yet—never considered rail service as an option. The lesson: we think of government-owned Amtrak as money-losing socialism, but the money-losing airline industry as a bunch of noble capitalists. Maybe we should re-examine our national transportation policies the way JetBlue is rethinking its customer-service policies.

The nation's commercial airline industry is, like the nation's passenger rail network, federally subsidized. Both industries are net money losers. It's funny how we hear so much controversy about one form of transportation in regard to its economic health, but comparatively little controversy about the other.

2 comments:

Mike said...

Don't forget our friend the Interstate Highway System - receipient of huge subsidies via the gas tax (and in Texas, even property & sales taxes). Until they give me a discount for all the driving I do which isn't on roads which get gas tax funding, I'm subsidizing suburbanites and especially long-haul truckers. Yay!

Christof Spieler said...

Interesting comparison: Continental has actually rebooked passengers onto Amtrak in the Northeast when planes were grounded. They also have some Amtrak routes as codeshares ( Philadelphia, PA; Wilmington, DE; Stamford, CT and New Haven, CT to/from Newark), advertise Amtrak and NJTransit Newark Liberty-Manhattan service in their magazine and website, and include Amtrak in their frequent flyer program. They have a similar alliance with SNCF in France.