The Decline of Airline Quality and the Rise of Oligopoly

For decades, the airline industry has undergone significant changes, leading to a consolidation that has allowed for the emergence of a handful of major players. This consolidation has had profound implications for service quality and the overall travel experience.

Consolidation and the Emergence of Oligopoly

A major factor in the airline industry’s decline in service quality has been the consolidation process. Airlines were allowed to merge and reduce competition, leading to an oligopoly where the big players control a significant portion of the market. This oligopoly means that remaining airlines have little need to compete on price, and they can collectively manipulate supply to maintain higher prices and increased profits.

With the few survivors facing no real competition on price for many routes, they have prioritized capacity over comfort, squeezing as much profit as possible from each flight. The result is a homogenous level of discomfort, where trips are on time, but the in-flight experience is far from pleasant. This has led to a situation where air travel has become a degrading “subhuman Kafkaesque horrorshow,” as many fliers describe it.

Control of Spin and Statistics

The oligopoly has also allowed airlines to tightly control their messaging. For instance, they may argue that fares are low when adjusted for inflation, but a more accurate assessment would show that these so-called "adjusted" fares are significantly higher when detailed adjustments are considered. For example, a non-refundable ticket that offers no flexibility and smaller seats with a lack of amenities would have a much higher cost when compared to the pre-adjusted fare.

Airlines have also found ways to reduce costs by making minor but impactful changes to service. For example, American Airlines once saved $100,000 a year by removing a single olive from an olive salad. This small change eventually led to a reduction in seat size, which, while unnoticed at first, significantly impacted passenger comfort. The rationale was clear: every inch saved in seat size could mean an extra row of seats, leading to increased revenue. Consequently, the once-comfortable airline experience has become cramped and uncomfortable.

The Cost-Benefit Analysis

Airline economics have shifted, making good service that costs even slightly more less attractive. Despite this, it is not the airlines' fault; regulatory environments have allowed them to operate this way. Congress did not envisage the transformation of air travel into a commodity where service quality is sacrificed for profit margins.

However, the story doesn’t end there. Airline consolidation has led to significant cost savings in other areas too. For example, the transition from packed meals to bulk peanuts saves airlines millions. These cost-cutting measures have become increasingly common as airlines aim to maximize profits in an oligopolistic market.

Impact on the Travel Experience

The ultimate effect of these changes is a diminished travel experience. Gone are the days when flying was considered a luxury. Today, comfort and quality are often sacrificed for efficiency and revenue. This trend is evident in the industry, where even the smallest improvements to cost efficiencies are rigorously pursued.

Quiz: Name 6 Airlines

Now that you understand the challenges faced by the airline industry, can you name at least six major airlines? This exercise will test your knowledge of the industry and its current state.

Example answer: American Airlines, Delta Air Lines, United Airlines, Southwest Airlines, Hawaiian Airlines, JetBlue Airways.