Photo: Pink SherbetI typed this from 10,000 feet, while on my way to the annual econ gabfest known as the ASSA meetings. I was lucky enough to score an upgrade to first class, and as I settled into my seat I was informed about the most astonishing cost-cutting measure: U.S. Airways has taken the coat hangers out of its planes.
Arriving uncrumpled used to be one of the few perks for those at the front of the plane, but now the racks behind seat 4B sit unemployed. It can’t be that these hangers had much value on the secondary market, and the number of flight attendants hasn’t changed, so I can only guess that the cost reductions come from the fuel savings that come from carrying a few less ounces. (How big could these be?)
But U.S. Airways beware: If I were an aspiring entrepreneur, I would be rushing a collapsible travel hanger onto the market; and if this occurs, passengers will simply be adding that extra weight onto their carry-on bags, undoing the airline’s cost savings. And that’s the difference between the simple accounting of cost-cutting and the economic approach, which takes account of how behavior responds to incentives.
In fact, I had a hanger in the bottom of my bag, and so I arrived in San Francisco, recognizable as the least-crumpled economist.
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I would have suspected that someone once discovered that their seat had a damaged hanger and punched an air hostess because of this. Having estimated that this will happen on one percent of flights and carry a compensation bill of $500,000 it becomes worthwhile, through wholly imagined numbers, to remove all hangers and save 5 grand a flight.
A kilogram of weight costs $131/year to fly on an A310, or about 60 gallons of fuel. The actual issue is how much weight is actually removed by the measure vs how much is customer satisfaction decreased. Do customers care? Do they begin to bring their own hangars? Do they now carry a travel iron to touch up their wrinkled suits? Do they become frustrated and fly another airline (for a savings of about 150kg/person in operating costs but with attendant losses in revenue)? In short, too many variables to decide with the data available but I strongly suspect the decrease in service (always dangerous) was judged not to create enough dissatisfaction that someone doomed to fly USAirways frequently would defect to another carrier (because there is no one else with direct flights out of Charlotte, perhaps?).
Great thing about this process change: There’s no way to measure your success or failure financially (signal is so small as to become completely lost in the noise and no one will put “no coat hanger” on the customer satisfaction survey) so someone gets promoted for a bit of slightly fuzzy math and for decreased customer satisfaction. Brilliant!
Is there an economic name for the principle that goes something like penny wise but pound foolish?
The ridiculous thing here is that they pulled out the hangars but not the closet. On Southwest (and many other airlines) the aircraft interiors were finished without closets. With Southwest, this was part of their (at the time of their founding) a MAJOR departure from the standard, high service, regulated fares competition they faced.
The reason they did it? More space for seats. They correctly predicted that a large segment of Americans would choose much cheaper tickets for much cheaper amenities. This is also why SWA doesn’t have beverage carts – eliminating the stowage area of the carts also helps to add space for more passenger seating (in addition to the faster/more flexible service not trundling the carts up the aisle allows).
The move mentioned here eliminates a perk for first class – one of the few tickets on a plane that is undoubtedly profitable and differentiated from SWA and other low cost carriers. In these times, one would think the pendulum could swing back to providing differentiated services at premium prices – at least for those customers willing & able to pay for it, but here as in many other cases, the legacy carriers have embraced a “race for the bottom” approach that may leave them as higher cost/lower service providers.
#2, ain’t no such thing as a ten pound DVD player that’s FAA certified. Most, maybe all, of the certified systems weigh well over 100 pounds. (Why does it have to be FAA certified? It must be instantly interrupted by cockpit and attendant announcements, which while sometimes are shilling for airline credit cards, occasionally include real safety information.)
Then there is the cost of the movies themselves, which also must be specially edited for flight use, not just the usual pan-and-scan 4:3 aspect ratio stuff.
Weigh (pun intended) all of this against the increasing number of folks bringing aboard their own entertainment as DVD players, laptops, smartphones, etc.
I may not like it either, but I think removing the movies is a justifiable business decision with solid pluses and minuses on both sides.
But hangers? Hangers?
Hanging up coats is (was) a service provided by the flight attendant in first class. They would hang up coats as one boarded and bring the coats back to the customers’ seats at the end of the flight. Without hangers, no service.
So… might this be a labor issue rather than a weight issue? Maybe it will lead to fewer attendants. That _would_ be a cost saving.
I wish some airlines would read the quoted line below, and just make some sort of effort to think before changing a policy:
“And that’s the difference between the simple accounting of cost-cutting and the economic approach, which takes account of how behavior responds to incentives”
I recently flew on American Airlines. I had two bags I was planning on checking – one a large suitcase, one small enough to be a carry-on if I so chose. When checking in, I noticed a $50 charge for checking the 2nd bag. After inquiring (politely) about the charge, the AA rep said that there was indeed a $50 charge for a 2nd checked bag. Since one bag was small enough (barely) to be a carry-on, I carried it on.
On the return trip, I tried convincing the AA rep that it makes sense for them to simply let me check the bag. If I checked it, THEY decide where it goes on their plane, letting them load balance the plane better than I could (one bag won’t matter, but there were many of us with that sized bag on the plane), and it would save time by NOT having a klutzy passenger lug a suitcase onto a plane then try to stuff it in an overhead bin.
The rep wanted nothing to do with it, and so I had to keep the 2nd bag. Lo and behold, when it came time to board, I found out that it was not a puddle-jumper, and all carry-ons were checked at the gate. Ironically, the rep had moved from ticketing to the gate area while I was waiting, so she took the bag anyways.
In the end, AA aggravated a paying customer, showed no sense (neither logical nor economic) in their policy-making, and may have lost a customer. I’ve always been more fond of Southwest Airlines anyways.
I’m not surprised at the need to quantify things here, but I’m still amused by it. I think it can be said that the airlines are screwing up in a way that is hard to put a number to, but was mentioned about – Good service.
I flew NWA this year for the holidays. I got caught in the Seattle snow “storm”, and spent 15 hours in Seatac airport. Why? Because the airlines under bought de-icing fluid. The NWA rep who made the announcement said specifically that that was the reason. I’ll spare you the mass amounts of confusion leading up to the flight eventually getting out of that airport, and skip ahead to the next airport, where we had of course missed our connection.
I get to the NWA counter, and they have no flights to my final destination until the next morning. They do not offer to put us up in a hotel, insinuating that we need to pay for it ourselves or spend another night in an airport. They would admit no liability in us having missed our connection, it was amazing. The only reason I didn’t push the point was that we were on standby for the last flight out to our destination, and 17 people were going to miss that connection because of… More problems in Seattle. We made it on that flight, relieved yet angry. At no point did NWA feel helpful in the least.
Of course, there are all the other things missing in between. No space to hang up my garment bag, no movie on a 3hr 45min flight, less legroom than I can ever remember having (I’m 6′ and my knees touched the seat in front of me the entire flight), no food service, etc etc. The more everyone scales back, the more they all become budget airlines. So in the end, how do you get good service if you can’t afford first class? Demanding it goes nowhere when they’re trying to service an entire plane of people with missed connections, etc. Write a letter? Right.
It’s simply a disappointing state of affairs in the industry. I foresee a MAJOR restructuring if airline travel is to become anything resembling comfortable for the coach passenger again.
If you’re cruising at 10,000 feet, then the airlines are taking much more extreme measures than dumping their hangers: that’s less than a third of the normal cruising altitude