It’s hard to tell how airfares have changed over time, because just looking at ticket prices isn’t an apples-to-apples comparison; the average flight distance changes, and customers nowadays pay fees for things such as checked baggage and meals that once were included in fares.
But the data from the US Bureau of Labor Statistics, which tries to account for all of these factors, suggest that flying has gotten cheaper during the past 20 years.This decline has happened in spite of a slight rise in real oil prices.
Defenders of the system will tend to retort that airlines are just giving people what they want; smaller seats, they argue, are simply the price consumers have chosen in exchange for cheaper airfares.
What’s more, air travel today offers consumers a bigger menu of choices. They can go with a discount airline and less leg room in exchange for a cheaper ticket. They can upgrade to premium seats with more space.
There are still some customers who will fall through the cracks in this system – if you want just a little more legroom than coach provides, for just a little more money, you might not be able to find a seat. But overall, for customers who are willing to do a little shopping, today’s free-market air-travel system makes it easier for people to optimise their own personal mix of legroom and ticket price.
And as always when discussing the short-comings of capitalism, it’s important to think about what the alternative would be. In this case, that would mean nationalisation of the industry. That’s not as crazy a notion as it might sound; Qatar Airways and Singapore Airlines, rated the top two carriers in the world in 2019 by consulting firm Skytrax, are both state-owned.
But it’s far from clear that American Airlines or United Airlines could match the performance of those champions under state ownership. In most developed nations, the trend has been toward privatisation. Most European airlines, once owned by national governments, have been privatised; Korean Air was privatised in 1969, and Japan Airlines in 1987. This was generally a result of financial distress. Meanwhile, the majority of remaining state-owned carriers are in developing countries, with Singapore and Qatar being the exceptions.
With only limited scope to increase comfort while also keeping costs low, airlines should try to improve the flying experience by making it more egalitarian.
Proponents of nationalisation might argue that without the need to make a profit, airlines could reduce fares or increase leg room while holding fares constant. A wave of big airline mergers has increased the industry’s profitability since 2005, and common ownership may also be reducing competition.
But airlines were operating on the edge of bankruptcy before the consolidation wave; now, their margins are merely up to the normal level for a US business. So there’s not a lot of profit to be squeezed out of the system – perhaps only $US20 per flight, or less than one inch worth of leg room.
Nationalised airlines could also be run at a loss, subsidised by tax money, but this would likely lead to the airlines becoming a political bone of contention, with eventual privatisation as the result. Or salaries could be cut and the savings passed on to flyers, but this would likely degrade operational efficiency and quality.
So although no one likes having to choose between paying an upgrade fee and being shoe-horned into a tiny seat, it’s unlikely that nationalisation would improve matters.
With only limited scope to increase comfort while also keeping costs low, airlines should try to improve the flying experience by making it more egalitarian. That makes being told how to behave while flying by a man who makes a multimillion-dollar salary by packing more people onto planes particularly galling. So yes, airline CEOs should avoid seeming like they’re talking down to passengers.
Meanwhile, it might be a good idea to offer flights with identical seats – no premium economy, business class and so on – as well as no preferred boarding. Eliminating those visible inequalities might make flyers feel better about the air-travel experience. Who knows – they might even be willing to pay a little more for the pleasure.