We take a look at the biggest political news of the week from around the region, including the latest on Amazon, scandals in Richmond and the debate over Metrorail hours.
The companies that power America’s online travel business could soon be flying into unfriendly skies. Google’s looming acquisition of a leading travel software maker has shaken online travel sites like Travelocity and Expedia. And a spat between American Airlines and Orbitz over online ticket distribution could have long term repercussions for business travelers. We explore what these changes on the back end mean for customers on the front end.
- Brett Snyder Writer, The Cranky Flier blog; travel columnist for CNN.com
- Carroll Rheem Director of Research for PhoCusWright, a travel industry research firm
MR. KOJO NNAMDIFrom WAMU 88.5 at American University in Washington, welcome to "The Kojo Nnamdi Show," connecting your neighborhood with the world. It's Tech Tuesday. Later in the broadcast, what William Donald Schaefer meant to Maryland and to William Donald Schaefer, but first, let's imagine for a second that you're planning a trip to Italy. Where would you go to find the best airfare? Most of us would say Travelocity, Expedia or one of several other travel sites, but if Google has anything to say about it, in a few years, you'll be going there first. It's a purchase of a software company that organizes flights and prices, and has the online travel world in an uproar, and industry watchers wondering how Google will affect your decisions about where to stay, what to do and where to eat.
MR. KOJO NNAMDIBut websites aren't the only ones worried about changes in travel technology. For years, outside companies have processed bookings for the airlines. Now, the airlines are ready to cut them out, and the result has been a spat that's already affected fliers. So what do these changes have to do with us and our wallets, and how soon could new technology on the backend impact how we buy tickets on the front-end? Joining us to have this conversation is Brett Snyder. He is a writer of "The Cranky Flier" blog and a travel columnist for CNN.com. He joins us from station KPCC in Pasadena, Calif. Brett, thank you for joining us.
MR. BRETT SNYDEROh, it's my pleasure, Kojo.
NNAMDIJoining us from the studios of the Argo Network in New York City is Carroll Rheem, director of research for PhoCusWright, which is a travel industry research firm. Carroll Rheem, thank you for joining us.
MS. CARROLL RHEEMHi, Kojo. Thank you.
NNAMDIWe've got two big stories on in online travel right now, but in the end, they're related to each other. So let's talk about them and what they mean for our pocketbooks and how we travel, starting with Google. Earlier this month, the Justice Department approved Google's $700 million acquisition of a flight search software maker called ITA. A lot of online travel companies, including Expedia and Travelocity, were not happy about it. Brett, let's start with you. What's so special about ITA that its purchase by Google would get so many travel sites upset?
SNYDERI think primarily what the other travel sites were concerned about is that Google would take ITA's technology and keep it to themselves, because right now, ITA's QPX technology, is what it's called, powers the back ends of a lot of these different fare searches out there, for example, Orbitz, a lot of the airline websites as well, you'll see are actually powered by this technology.
NNAMDIDoes Google really want to get into the pricing and booking business, Brett, I thought they were all about making money through advertising?
SNYDERWait, I don't think Google wants to get into the booking business. You know, they like the search aspect of it. So there was some concern, particularly from Kayak.com, who has been very vocal against this, which is a meta-search site, where you go to go KAYAK, and they show you results from several different places. And then, you click on those and book elsewhere, so it's an aggregator. You know, I think KAYAK had great concern that Google was going to come in, take this technology away from KAYAK and create their own product to do just what KAYAK is doing.
NNAMDICarroll, to quell the antitrust scrutiny of this move, the Justice Department said that Google has to follow a few rules, including developing ITA products and offering them to competitors. These conditions might placate everyone in the short term, but what are the long-term worries about Google's presence in the online travel market?
RHEEMSure. There are a lot of concerns that are sort of broader when we think about the impact of a very powerful consumer presence, sort of tipping their toe in the travel waters. So a lot remains to be seen of -- about how Google actually takes this technology and translates it into the consumer experience. But as a seller of travel, as a retailer of travel or any website that provides travel information, you can imagine why they would be nervous when a company like Google gets involved.
NNAMDI800-433-8850 is our number here if you'd like to join this conversation. Do you see a day when we'll be going to search engines to plan and book our vacations? What do you like or not like about that? 800-433-8850. You can go to our website, kojoshow.org, join the conversation there. Send us a tweet, @kojoshow, or e-mail to firstname.lastname@example.org. Carroll, were the conditions imposed by the Justice Department really a surprise or a setback for Google?
RHEEMNot at all. I think we were all pretty much expecting that outcome, and ultimately, it doesn't sort of dampen the plans that Google has in place for what they would like to do with that product.
NNAMDISame question to you, Brett. Any surprises there?
SNYDERNo. I agree completely. I mean, this was not, you know, this was an agreement between Google and the Department of Justice. Most of these things are things they'd already said previously, that they intended to continue to license the technology to third parties. It's a big source of revenue, but ultimately, it's a backend technology issue, and it's what you do on the front-end with that information that, you know, I think, it's probably what has Google most excited.
NNAMDIWell, let's talk about that for a second. We'll prognosticate or speculate. What kind of online travel innovations could we see coming out of Google and its marriage to ITA, Brett?
SNYDERWell, in their blog post when they announced that the acquisition had been cleared, they said -- I actually have it right here. It says how cool would be if you could type flights to somewhere sunny for under $500 in May into Google and get not just a set of links but also flight times, fares and a link to sites where you can actually buy tickets quickly and easily? So I think they're trying to reach that, you know, broader, maybe -- I don't know -- more squishy type of audience where you don't have set dates and times. You're looking for something affordable. You're looking for ideas, sort of combining all of the travel planning process into this -- into the search box, effectively.
NNAMDIFor those of us who are in a constant state of disorganization, Carroll, that could be a very appealing thing.
RHEEMWell, certainly, the idea of inspiration is a powerful one. When we examine, however, the type of trips people tend to take in the United States, the American consumer very often knows where they want to go and when they want to travel because they're going to an event. They're going to a wedding. They're going to visit friends and family over the holidays. So there's actually not that much flexibility, so the majority of trips that Americans take are actually not flexible. So when you look at the broad impacts of something like this, I think about it as being complementary rather than Google replacing the infrastructure of the types of websites consumers use today.
NNAMDIYou mean they can't create a whole new market for the thoughtless. I'll just wake up this morning and go to Google and find something to do.
NNAMDIThere's a -- go ahead.
RHEEMWell, when we think about how the travel planning process has evolved over the past decade or so, it's been quite structured in the sense that you have that box where you type in the destination that you want to go to and the dates, and there's a very sort of systematic flow of the information that you input and the output that you get. And so Google's goal really is to break that open and bring a lot of flexibility, which is really useful...
RHEEM...if you don't know (unintelligible).
NNAMDITraveling for the dreamers, those of us who are simply dreaming about going someplace...
RHEEMYes. Yes. That...
NNAMDI...and have no specific destination in mind.
RHEEMUnfortunately, a lot of consumers don't have the opportunity to be that flexible, and so, it's a matter of this new type of technology and the new flexibility being added to the experience, but ultimately, when it comes down to it, you're going to want to weigh those prices. You're going to want to see everything outlined in a very systematic way that allows you to make these empowered decisions.
NNAMDIThere's a five-year limit on the Justice Department's ruling. Does that mean all bets are off after that, Brett?
SNYDERIt would appear that way, at least, you know, under the agreement, that's how it looks, but the reality is that this backend is something that ITA has built that is, you know, tremendously valuable to all these different websites. However, I would imagine that within five years, if -- and I know that today there are competitors, you know, trying to be built behind the scenes -- that within five years, you know, there should be an alternative if someone is looking for it. So, to me, it seems like a temporary transition type of thing.
NNAMDICarroll, how many of us really use search engines like Google to book our travel?
RHEEMWell, to book, nobody because you can't...
NNAMDIProbably not, right...
RHEEMBut earlier in the process, search is a very powerful and broadly influential source of information. It tends to happen much earlier in the phases of going through the process of planning, so it has a stronger sort of role to play in a hotel decision, for example, versus air, which tends to be much more centered around sort of price and more objective factors.
NNAMDISo this Google move is really targeted at people who have a lot of disposable cash and a lot of time on their hands, leisure travelers?
RHEEMIt's not -- there's definitely a correlation between sort of income and means and flexibility, but the mindset of the, what I would call, the discretionary traveler, the person who gets to really choose their destination and be completely open to new ideas kind of transcends, you know, the range of income levels. It's more of a psychographic. I'd like to think of it that way.
NNAMDIBrett, is there anywhere on the Web where we can see what a potential Google travel site could look like?
SNYDEROh, I don't know if there's anything specifically that looks like what they're trying to do. There are, you know, dozens of travel sites out there that try to help with this inspiration-type of thing. They're more focused on finding the destination as opposed to marrying that with fares so much, but it's one of those things that -- I'm not sure that this is the only thing Google has its eyes on here either. I think, you know, they're all about trying to organize information, right? And then, if you can match advertising with that, then it's a winner for them. But I would imagine we're going to see things more than just this inspirational part of the travel search process coming out of Google here.
NNAMDIHere is Adam in Fulton, Md. Adam, you're on the air. Go ahead, please.
ADAMThank you, Kojo. As a customer of air travel, a lot of us are being, you know, quite frustrated in increases in baggage costs, and I personally see Google getting involved is only a win-win situation for customers because I think it's going to increase competitiveness and, hopefully, lower some of the increases in travel costs that we're currently seeing. Thank you.
NNAMDIWhat do you think about that, Carroll?
RHEEMI think that's a great point, and I do agree that more information empowers consumers, and Google getting involved and bringing in more aspects of information is a great thing for consumers. When it comes to bringing down costs, it's a -- that's a difficult connection to make directly, but I think it will increase competitiveness, which is a great thing for consumers.
NNAMDIThe number to call is 800-433-8850. Do you start vacation planning with search engines? 800-433-8850. Here is Carol in Hyattsville, Md. Hi, Carol.
CAROLHi, Kojo. I don't like dealing with computers. When I travel, I want to talk to a human being. I want to find out what flight I can get an upgrade with my frequent flyer miles. That's very difficult to do over the computer. Also when I'm making travel arrangements, what I found is that these websites frequently are not up to date and are in error. So if I want information, I'd go to a travel agent, and hey, I do not mind paying that travel agent. I'm very willing to pay for that service. I think the airlines have gotten away from service. That's the complaint that I hear a lot. I don't mind paying extra if I have someone to assist me. I'm an old lady, and I need the help.
NNAMDICarroll Rheem, what does your research tell us about how many people like our caller, Carol, are still out there?
RHEEMThere is a big segment of consumers that still prefer to have that personal service. And, you know, you're certainly not alone, Carol. And a lot of consumers will actually use a mix of channels, so they might reference the internet in the earlier stages, where they're trying to decide where they wanna go or looking at different options. And then, ultimately, when they're -- when it comes the time to book, they want that extra level of service and the experience that travel agents bring to the table, because they do nothing but think about travel all day long. So sometimes it helps to get that advice.
NNAMDIThank you for your call, Carol. Brett, here is this email we got from Bill. "I thought the trend was for all airlines to eventually sell tickets only on their own website such as Southwest and American do now. The airlines save money by never paying commissions to travel sites or to ITA. I'm wondering what Google is thinking here." What do you say, Brett?
SNYDERWell, this really isn't about booking. It's about getting the information, getting the fares and schedules and marrying that all together. I think previous caller had mentioned about how there's inaccuracy sometimes online, and that is sort of what's come out of this system, where there's caching of data. Sometimes you click on a fare, you know, you might be on Orbitz and it says, oh, sorry, that's not longer available. It is a pretty complex system.
SNYDERBut this isn't about booking for Google at all. But I would also say that while the airlines like to go direct, they know that that's not gonna be entirely possible, especially with corporate travel, where there, you know, there are travel managers, corporate travel agencies that handle these things. So for them, it's about trying to figure out the best way to reach those people. And, you know, where the travelers are is where the airlines wanna be, and they're gonna do what they can to reduce their cost to get to that point. I think we're probably moving into a later discussion about other happenings this last couple of weeks.
NNAMDIIndeed. Thank you for saying that, because we're gonna take a short break. And when we come back, we will go into those other occurrences that are taking place that could be affecting your online air travel. You can call us now at 800-433-8850 to join this Tech Tuesday conversation. What would your ideal travel website be able to do? You can also go to our website, kojoshow.org, or send us a tweet, @kojoshow. I'm Kojo Nnamdi.
NNAMDIWelcome back to our Tech Tuesday conversation on tech developments in online travel and how they may affect your arrangements. We're talking with Carroll Rheem, director of research for PhoCusWright, a travel industry research firm. She joins us from studios in New York City. And joining us from studios in Pasadena is Brett Snyder, writer of "The Cranky Flier" blog and a travel columnist for cnn.com. We've been talking about the power of a software company that presents us with the price and airline we want to use when we book leisure travel online.
NNAMDIBut also making headlines are the companies that handle the actual bookings for airlines. These companies are called global distribution systems or GDSs, and they're worried that they'll become obsolete because airlines want to cut them and their high fees out and do bookings directly with online travel sites. Exactly what are GDSs, global distribution systems? Brett, can you tell us a little bit about their history or why they're so important to airlines?
SNYDERSure. So the airlines were very early in adopting technology for reservations. And once we got into the '70s and into the '80s, in particular, the global distribution systems became these powerhouse central reservation systems that the airlines used but also travel agents had access to and provided really exactly what it is, a distribution system for people who wanted to book travel. So if you book through a travel agent, it would go through this distribution system.
SNYDERIt would interface with the airline reservation systems. They actually originally were owned by the airlines themselves. Sabre was started by American Airlines, for example.
NNAMDIWell, ITA is not a global distribution system since its focus is on aggregating and presenting ticket prices. But is it ITA's kind of technology that makes airlines want to cut out these third party GDSs altogether?
SNYDERWell, ITA has actually dabbled in this reservation system world a little bit. But certainly most of what they do is, you know, doing the search of fares and schedules and has nothing to do with the booking itself. I don't know that what ITA is doing is going to really make much of a difference for their current products. That doesn't mean that they're not working on something else that we just don't know about yet.
NNAMDIHow much do these GDSs charge airlines to book flights? And how is that cost passed on to us?
SNYDERSo the GDSs, it can be, you know, all the airlines have their own agreements, but it can be up to a couple of dollars a segment or more per flight segment, which, you know, that can add up quite significantly. And the way that it works is the airlines pay the GDSs, and the GDSs, in order to increase the volume of business that they do, they end up paying the travel agents to use their system to make bookings.
NNAMDICarroll, can you help us understand why American Airlines has filed a lawsuit last week against Orbitz and Travelport, which is a GDS?
RHEEMWell, a lot of the, sort of headline grabbing news these days is really sort of the -- a public eye on commercial negotiations and sometimes they break down and sometimes they play for the attention. And I really kind of categorize the situation between -- or particularly around this lawsuit that American has filed against Travelport and Orbitz. So, ultimately, what it boils down to is airlines like American are really doing as much as they possibly can to exert as much pressure on all sort of intermediaries to minimize their distribution costs.
RHEEMAnd Brett had alluded to a few dollars per segment. When you add things up, it's roughly -- when you think about the price of a ticket, an average ticket, it's around 2 percent. So when you think about the distribution of airline tickets at 2 percent cost, it's really not much that we're talking about here. And especially when you consider that in comparison to the hotel world, where distribution costs are, you know, 10, 20 percent even sometimes, because it's much more competitive between the hotels themselves.
RHEEMSo in the grand scheme of things, what we're looking at is a little bit of a battle between a supplier -- what we would call supplier and an intermediary, someone who sort of distributes their product. And it's a tension that exists between, you know, all sorts of merchandise and all sorts of products. But in this situation, it's really, sort of, boiled over because this battle is on the precipice of a lot of change in terms of the way airlines would like to sell tickets.
NNAMDIWhat's wrong, Carroll, with cutting out the middle man in favor of a direct connection to sites like Orbitz? Wouldn't that ultimately save American's customers' money since American wouldn't have to pay extra fees?
RHEEMNot necessarily, because this technology can get very expensive. So when you have lots of different agencies and lots of different airlines, you can imagine the crisscross of all those different direct connects. So this technology that lives in the middle is trying to aggregate all of that, so not everyone needs to connect to everyone else. And so there is some efficiency at play that actually makes the economics works. So it's not necessarily cheaper, for example, for an airline to connect to all these different agencies individually.
NNAMDIThe number again, 800-433-8850. Here is Nina in Fairfax, Va. Nina, you're on the air. Go ahead, please.
NINAI think it's a great idea that Google try to make it more flexible for customer. I'm a full-time employee, but when I'm looking for vacation, I'm always looking for the price so -- and I need to decide when to go and where to go based on the price. So for me, it's always more time consuming to do it by myself manually going through the different dates and different locations to find where to go. It would be nice to have it. When it's gonna -- site is gonna be up?
NNAMDISo you'd like to see Google do this?
NNAMDIWell, here's a comment we got from Ryan, Brett, and you can listen to this also, Nina and Carroll, "I would love to see Google pull this off," writes Ryan, "There used to be a wonderful site called FareChase that never failed to save me hundreds of dollars over other websites and travel agents. Then Yahoo! bought FareChase. While it still gave great results, they hid it on their website and kept it as a separate entity from Yahoo! Travel. They finally took it offline, and it is no longer available. If Google can replicate FareChase, I will be a big user. And if anyone from Yahoo! is listening, I'll buy the technology from you." What say you, Brett?
SNYDERWell, so that is a -- I mean, FareChase was bought by Yahoo!. My understanding is, you know, they had a deal with Travelocity as well for actually Yahoo! Travel. And this is, sort of, a separate product for them. And they were making more money off of the Travelocity relationship, and FareChase ended up dying a quiet death there. But what FareChase did is exactly what KAYAK does, what Bing Travel does, Fly.com, there are several of these aggregators that are out there trying to do the same thing.
SNYDERAnd maybe, you know, this person had a better experience with FareChase than others and, you know, maybe Google will be able to do something better in that regard, but there is certainly no lack of companies trying to do this type of thing.
NNAMDIAnd we have an email from Ron who says, "Without question, I would use Google for --" he said, "I always use Google already anyhow. And without question, I use Google for everything. I may eventually get to KAYAK or similar for planning flights, but ultimately, I go right to the airline to book the flight." This dispute, Brett, has been going on for quite a while. And at one point, American pulled its flights off of Orbitz. Can you update us on where we can or can't find American's flights online now?
SNYDERSo American and Expedia kissed and made up, so you can now find American's flights on Expedia once again. Orbitz is the hold out here. But I would agree, this is a commercial dispute. The long-term ramification between if it's a direct connect or if it's through the GDSs, it really won't matter to the consumer. The fight between Orbitz and American right now -- it sort of spilled over to impact the consumer. But it won't really matter which technology they use. It's what they do with the information that's really important.
SNYDERYou can look at Priceline, for example. American and Priceline have already implemented this direct connection between the two. It doesn't look any different if you're on Priceline.com, if you book American versus anyone else. What American is saying -- one of the things they're saying besides the money savings that they expect, which in a razor-thin margin industry like the airlines, even the 2 percent distribution costs if that's what the number is, that can still make a big difference if you can trim that, you know, at all. But it's one of those things that I think we're gonna see eventually in the next couple of months, whenever it might be, there will be some sort of resolution.
SNYDERIt's -- in the long run, you know, the direct connect, American wants to be able to show more ancillary revenue opportunities, sell things like priority boarding, better seating, whatever it might be, they're saying that the GDSs don't offer that and they're saying the direct connect does. Now, whether the online travel agents actually use that information and display it the way American says that it should be displayed, that's really up to them anyway. It's -- they're just fighting over who's the pipe here.
NNAMDICarroll, how can GDSs stay in the game if bookings are really going to go to direct connect or are they going to go to direct connect?
RHEEMWell, they're not necessarily mutually exclusive, so the GDSs actually have their own direct connects. (laugh) We're starting to get into a lot of the really sort of nitty-gritty details of all these different connection sites.
RHEEMYeah. (laugh) But the GDSs don't -- they're not necessarily completely, sort of, skirted by this concept of direct connect. And I think it's worth noting there are two different sort of elements that can flow through these connections. One is the core, sort of ticket situation and then the other is this world of ancillary products. And so we might end up with a scenario where an airline uses the traditional pipes, if you will, for the core ticket and then uses direct connect for these other ancillary type services that have a broader range of flexibility and different packaging that don't necessarily adhere to the same sort of rigid structure that fares and ticket prices do.
NNAMDIHere is Charles in Washington, D.C. Charles, you're on the air. Go ahead, please.
CHARLESHi. Well, this is a very short but very heartfelt rant. And it has to do with the concept of razor-thin margins and those people who operate on razor-thin margins. It's like the death of a thousand cuts to customers. It's a slippery slope where the total alienation against these business practices. The airline competition really has nothing to offer anymore except penalties. They're competing with each other to take away services or to charge for services. And it really is disgusting. I don't know. Perhaps, I'd welcome re-regulation.
NNAMDICharles, thank you very much for your call, because as far as Charles is concerned, Carroll Rheem, this is where the rubber hits the road. You spend, Carroll, a lot of time looking at consumer sentiment in air travel. All of the stuff we've been talking about for the past 30 minutes or so, how much do consumers care about all this, especially in the midst of soaring travel prices and what some consumers feel of being nickeled and dimed for every bag they carry or every morsel they'd like to consume?
RHEEMYeah, a lot of this stuff actually has no impact on that whatsoever, because what we're talking about is the distribution and the technicalities of how tickets get distributed. But ultimately, when it comes to pricing and decisions about what to charge for and what not to charge for, none of this has any impact on that. And I do spend a lot of time looking at sentiment, and we just released a study that takes a deeper look at it. And, you know, certainly, the last caller is not alone in his sentiments. Consumers are very frustrated, and they feel a bit helpless in that they don't have a lot of options in a lot of cases.
NNAMDIBrett, wouldn't you think that after such a rocky -- and Charles, thank you for your call -- that after such a rocky decade financially, the airlines would be doing just about anything they could to make our experience with them better, or is that what they think they are doing?
SNYDERWell, really, for them, they are trying to find a way to make a profit and the fact that, you know, we're at a place right now where we're at $100-plus oil per barrel, and the airlines actually are able to turn something of a profit. It's fairly remarkable that they've been able to transform the business that quickly. And, well, depends on your definition of quickly, I guess, but over the last decade. So there are certainly some airlines that are out there that are trying to become more friendly, I can tell you, Frontier Airlines, for example, just lowered their change fee, eliminated it on some of the higher fare categories.
SNYDERSo there's nothing out there preventing airlines that want to try and compete on customer service, the problem is that most people tend to make their purchase decisions based on price and schedule. And so, you know, you could be -- you could have the best customer service in the world, but if you're too expensive, then you're gonna have trouble attracting a lot of customers. At least, that's the historical view on this. And, you know, to the comment about welcoming re-regulation, that would make fares incredibly expensive, if you go back to, you know, what was the case before deregulation in the '70s.
NNAMDIWe got this email from Carl. "The biggest issue I have with online searches now is that it's very difficult to compare the actual flight cost, because companies have added so many fees and require you to pay extra for every little thing. Sites like KAYAK only compare the base fares. Will Google do anything to help this? I would love to see an option that allows you to select the number of bags you have, whether you'd like to pre-select a seat, whether you would like to eat a meal, et cetera, and get an actual cost comparison." See that coming down the road, Carroll Rheem, from Google or anyone else?
RHEEMWell, there have been several attempts to sort of build in a calculator to help you get there, but the challenge is you want to make the flow of the planning process to be as simple as possible. So there isn't a lot of variation when it comes to bag fees. You can kind of assume most people check one bag, it's $25, and you can kind of do that, that mental math. And it's become so standard that a lot of sites might have tried a calculator and found that people really weren't using it because it's pretty standard across the board, so people like that sort of base fare comparison.
RHEEMIt's not exactly apples to apples in some situation, but they find that if they try to include things, another thing that happens is you see their price go up and suddenly conversion metrics go down because another site doesn't have it. And so, they have to be careful to sort of balance it, and they definitely have been trying to watch sort of usage of the different types of calculators and things like that. So it's not out of the question. I think it's a matter of trying to crack the nut in terms of how to incorporate it in a seamless way that gives people all the information pieces that they need.
NNAMDIHere's Dan in Northern Virginia. Hi, Dan. You're on the air. Go ahead, please.
DANHi, Kojo. Thank you. So -- very quickly, I have to agree with the caller that you had on previously. I mean, the airlines are just holding a gun to the consumer's head and they're nickel-and-diming people to death. And on top of that, they turn around and they give a terrible service. You jump through all kinds of hoops, you turn around and get tickets this way, that way and whatnot. And then when you get to the airport, they have the audacity to overbook the flight, and they want you to give your seat up.
DANI mean, what -- when is the consumer gonna turn around and have the rights that they used to have where -- when in the United States, you used to walk in and buy something, and the consumer was always right. And on top of that, we have these agencies that work for the government that don't give a damn about what's happening to the consumer as long as the big business is okay. Meanwhile, we have airplanes that have holes popping in them and air traffic controllers falling asleep. I mean, you know, it's about time the American public say enough already. Either put regulatory controls on these people, and these companies and control them with a heavy hand or get the hell out of the business.
DANI'll take my answer off the air. Thank you.
NNAMDIBrett Snyder, remind us of the good old days when there was a lot more regulation of airlines. Was the service greater, were the fares lower, were the -- was the reliability better?
SNYDERThe fares were significantly higher. Fares have gone down, I mean, just an absurd amount since deregulation. I mean, you were looking at $1,000-plus fares in today's dollars to go across the country as -- at the lowest fare that's out there. Certainly, from an operational perspective, it was easier for them because at these high fares, there were a lot fewer seats and they only filled about half of them anyway, so it was easier to recover. That's one of the issues that we see a lot today is airlines are running higher and higher load factors, number of people on the plane. And so that means when something goes wrong, there's not much excess capacity for them to be able to re-accommodate people and help them out.
SNYDERSo that's certainly one of the big issues that people have seen, in particular when there's a big event, maybe a big storm like we had in New York, in the Northeast right before Christmas. It can have a greater impact from that perspective. But, you know, for the caller, if you don't like overbooking, then fly an airline that doesn't overbook. For example, JetBlue, they don't overbook their flights. It's one of those things where I think the airlines that do try to differentiate themselves often will find that people don't end up choosing them if they don't have the lowest price anyway.
SNYDERAnd so, the airlines -- a lot of it falls back on the customer to choose the airlines that are doing things right. If you hate bag fees, fly Southwest or fly JetBlue, which doesn't charge for a first bag either. You know, it's a customer choice type of thing.
NNAMDICarroll, you get the final word on this. Looking at the airlines as they operate today in a less regulated environment, do you feel they're trying to improve products and customer services or simply trying to make a profit, and as a result, the consumers are the ones who are feeling the pinch?
RHEEMWell, I think it's a bit unfair to say that they're not doing anything to try to improve their services. They certainly have a very tough job, and those razor-thin margins, you know, are a reality. With the volatility in the price of fuel, they've got a very, very difficult job. And, you know, I think a lot of consumers do recognize that, but where they get upset is where they feel that they're being treated somehow unfairly. And I think they could do a much better job in addressing those -- their frustrations.
NNAMDICarroll Rheem is director of research for PhoCusWright, which is a travel industry research firm. Carroll, thank you so much for joining us.
NNAMDIBrett Snyder is writer of "The Cranky Flier" blog and a travel columnist for cnn.com. Brett, thank you for joining us.
NNAMDIWe're gonna take a short break. When we come back, the late William Donald Schaefer, a reflection on the life of the former governor of Maryland and mayor of Baltimore. I'm Kojo Nnamdi.
Most Recent Shows
Kojo explores various matchmaking services in the Washington region – from Washington Post's Date Lab column to an online matchmaking service.
Ferebee, the former Indianapolis Public Schools superintendent, is the mayor's nominee to lead D.C.'s public school system. What will he do for the District's 49,000 students?
Expanding two local highways has been central to Gov. Larry Hogan's transportation policy, but some legislators are trying to slow down the process.