Preventing the Next Southwest Airlines Meltdown

 

Congresscritters are making noises about forcing more government management of Southwest Airlines in response to Southwest’s Christmas meltdown. And alleged Transportation Secretary Buttigieg has sent a sternly worded warning to the CEO.

But as with so many things, the market is really a better disciplinary tool, and provides better incentives for Southwest to improve its performance, than what any government punishment, management, or incentive can provide.

There is no action the government can take that is likely to produce better or faster results than what will come about because Southwest now has to convince hundreds of thousands of prospective customers that it can reliably get them to their destinations. Until Southwest gets customers back on board, the CEO and other executives will be facing unhappy shareholders.

And it’s not like the federal government has any great track record of implementing reliable large-scale technology or great customer service.

Published in Domestic Policy
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  1. Full Size Tabby Member
    Full Size Tabby
    @FullSizeTabby

    Metalheaddoc (View Comment):

    While I am not in favor of government regulation, the EU 261 rule does seem to work to incentivize carriers to get people where they are going. There are specific compensations for specific delays and cancellations. There are carve outs for weather and things out of their control. But it seems the like the rule is enforced in such a way that the airlines can’t just say “it was weather” and get out of it. Scheduling problems, mechanical problems, crew problems aren’t carved out. The airlines have pay up. They have paid out compensation into the millions since the regulation was implemented. The airlines can weasel out of it by offering you some other (lesser) compensation on the spot. If you take that, you can’t file a 261 claim.

    The process isn’t necessarily fast. I got money back from Lufthansa for a cancelled flight during the summer. But I am still waiting for Aegean to pay me back for a 5 hour delay.

    Metalheaddoc (View Comment):

    And one of my concerns about a regulatory solution such as requiring compensation for delays is that such a regulation itself is a barrier to entry for competing airlines.

    [snip]

    I don’t see why that is a barrier to entry. You would have to have an operational setup to minimize delays. Are you saying that new upstart airlines have to have crappy performance just because they are small? Would you be in favor of such a compensation regulation kicking in only after an airline has reached a certain size which would allow growth and development and refinement before potentially getting penalized?

    Of course a rule requiring specific compensation for specific delays and cancellations is a barrier to entry. Any regulation is a barrier to entry as in increases the cost threshold before a new entrant can enter the market.

    A specific rule on delays and cancellations removes the ability of different carriers to compete by trading performance reliability and price for those customers willing to make that trade. In the United States many airlines started with relatively poor schedule performance but really low fares because some passengers are willing to make that trade. It costs an airline money (sometimes a lot of money) to get to a high schedule reliability. The airline has to have lots of extra staff and extra equipment available. Staff and equipment cost money. And if the low reliability airline pays compensation to delayed passengers, that potential compensation has to be built into the fares, which diminishes the airline’s competitive selling point. Or it takes away from the funds available to improve reliability. 

    • #31
  2. Metalheaddoc Member
    Metalheaddoc
    @Metalheaddoc

    Full Size Tabby (View Comment):

    Metalheaddoc (View Comment):

    While I am not in favor of government regulation, the EU 261 rule does seem to work to incentivize carriers to get people where they are going. There are specific compensations for specific delays and cancellations. There are carve outs for weather and things out of their control. But it seems the like the rule is enforced in such a way that the airlines can’t just say “it was weather” and get out of it. Scheduling problems, mechanical problems, crew problems aren’t carved out. The airlines have pay up. They have paid out compensation into the millions since the regulation was implemented. The airlines can weasel out of it by offering you some other (lesser) compensation on the spot. If you take that, you can’t file a 261 claim.

    The process isn’t necessarily fast. I got money back from Lufthansa for a cancelled flight during the summer. But I am still waiting for Aegean to pay me back for a 5 hour delay.

    Metalheaddoc (View Comment):

    And one of my concerns about a regulatory solution such as requiring compensation for delays is that such a regulation itself is a barrier to entry for competing airlines.

    [snip]

    I don’t see why that is a barrier to entry. You would have to have an operational setup to minimize delays. Are you saying that new upstart airlines have to have crappy performance just because they are small? Would you be in favor of such a compensation regulation kicking in only after an airline has reached a certain size which would allow growth and development and refinement before potentially getting penalized?

    Of course a rule requiring specific compensation for specific delays and cancellations is a barrier to entry. Any regulation is a barrier to entry as in increases the cost threshold before a new entrant can enter the market.

    A specific rule on delays and cancellations removes the ability of different carriers to compete by trading performance reliability and price for those customers willing to make that trade. In the United States many airlines started with relatively poor schedule performance but really low fares because some passengers are willing to make that trade. It costs an airline money (sometimes a lot of money) to get to a high schedule reliability. The airline has to have lots of extra staff and extra equipment available. Staff and equipment cost money. And if the low reliability airline pays compensation to delayed passengers, that potential compensation has to be built into the fares, which diminishes the airline’s competitive selling point. Or it takes away from the funds available to improve reliability.

    So it’s a tradeoff between regulation and increased competition. Fair enough. In this case, I would lean towards consumer protection. But I see where you’re coming from. 

    • #32
  3. Steve Fast Member
    Steve Fast
    @SteveFast

    Metalheaddoc (View Comment):

    Full Size Tabby (View Comment):

    A specific rule on delays and cancellations removes the ability of different carriers to compete by trading performance reliability and price for those customers willing to make that trade. In the United States many airlines started with relatively poor schedule performance but really low fares because some passengers are willing to make that trade. It costs an airline money (sometimes a lot of money) to get to a high schedule reliability. The airline has to have lots of extra staff and extra equipment available. Staff and equipment cost money. And if the low reliability airline pays compensation to delayed passengers, that potential compensation has to be built into the fares, which diminishes the airline’s competitive selling point. Or it takes away from the funds available to improve reliability.

    So it’s a tradeoff between regulation and increased competition. Fair enough. In this case, I would lean towards consumer protection. But I see where you’re coming from.

    I would lean toward consumer choice. Some people want an airline that will guarantee on-time flights while others have flexible schedules or more willingness to put up with hardship that results from delays. Airlines used to have reputations for the type of service that they delivered.

    • #33
  4. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    All I know is I did not like flying on them before, I will never board them again if I have any choice on the tickets. 

    My airline of choice, Delta, had the best on time record for 2022. And they let me pick my seat, which at 6′ is worth some extra sheckles. 

    It does not hurt that they are based in my city. 

    • #34
  5. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    https://twitter.com/Caroline94127/status/1608148289249226754?t=OWCtqiMbAW6FWMFui3rMFA&s=19

    Another reason not to fly them, though this may be all airlines. 

     

    • #35
  6. cdor Member
    cdor
    @cdor

    For anyone still following this situation, a friend flew Southwest during the holidays. her flight got rescheduled. She told me yesterday that Southwest had voluntarily added 25000 pts to her and her companion’s accounts and sent them a form for them to detail all extra expenses they had incurred (meals, rental car, hotel bills, etc.) as a result of their delay, to be reimbursed later. 

    Southwest is going to have a difficult time regaining its customer’s trust, but that is the best way to start. Unless they upgrade their operations so that this doesn’t happen again, it will be all for naught.

    • #36
  7. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    cdor (View Comment):

    For anyone still following this situation, a friend flew Southwest during the holidays. her flight got rescheduled. She told me yesterday that Southwest had voluntarily added 25000 pts to her and her companion’s accounts and sent them a form for them to detail all extra expenses they had incurred (meals, rental car, hotel bills, etc.) as a result of their delay, to be reimbursed later.

    Southwest is going to have a difficult time regaining its customer’s trust, but that is the best way to start. Unless they upgrade their operations so that this doesn’t happen again, it will be all for naught.

    I cannot imagine wanting 25000 points on a an airline I would never fly again for doing that to me. 

    To get me back would have taken doing whatever it took to send me home, not having me kicked out of the airport where nowhere to go for Trespassing. 

    • #37
  8. Full Size Tabby Member
    Full Size Tabby
    @FullSizeTabby

    cdor (View Comment):

    For anyone still following this situation, a friend flew Southwest during the holidays. her flight got rescheduled. She told me yesterday that Southwest had voluntarily added 25000 pts to her and her companion’s accounts and sent them a form for them to detail all extra expenses they had incurred (meals, rental car, hotel bills, etc.) as a result of their delay, to be reimbursed later.

    Southwest is going to have a difficult time regaining its customer’s trust, but that is the best way to start. Unless they upgrade their operations so that this doesn’t happen again, it will be all for naught.

    An illustration that the customer reaction will drive Southwest to fix the problem far faster and more effectively than anything the government does. 

    • #38
  9. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    Full Size Tabby (View Comment):

    cdor (View Comment):

    For anyone still following this situation, a friend flew Southwest during the holidays. her flight got rescheduled. She told me yesterday that Southwest had voluntarily added 25000 pts to her and her companion’s accounts and sent them a form for them to detail all extra expenses they had incurred (meals, rental car, hotel bills, etc.) as a result of their delay, to be reimbursed later.

    Southwest is going to have a difficult time regaining its customer’s trust, but that is the best way to start. Unless they upgrade their operations so that this doesn’t happen again, it will be all for naught.

    An illustration that the customer reaction will drive Southwest to fix the problem far faster and more effectively than anything the government does.

    I agree with that. 

    And I also for the government punishing bad actors when they happen. I am for regulations that even the score. It is unreasonable for the airline to sell me a trip that if *I* miss, I have no recourse, but if they bump me because the oversold, I still have no recourse. It seems to me if you are going to stop someone from backing out at the last moment, there is no reason to overbook the flight to fill the seats. 

     

    • #39
  10. cdor Member
    cdor
    @cdor

    Bryan G. Stephens (View Comment):

    Full Size Tabby (View Comment):

    cdor (View Comment):

    For anyone still following this situation, a friend flew Southwest during the holidays. her flight got rescheduled. She told me yesterday that Southwest had voluntarily added 25000 pts to her and her companion’s accounts and sent them a form for them to detail all extra expenses they had incurred (meals, rental car, hotel bills, etc.) as a result of their delay, to be reimbursed later.

    Southwest is going to have a difficult time regaining its customer’s trust, but that is the best way to start. Unless they upgrade their operations so that this doesn’t happen again, it will be all for naught.

    An illustration that the customer reaction will drive Southwest to fix the problem far faster and more effectively than anything the government does.

    I agree with that.

    And I also for the government punishing bad actors when they happen. I am for regulations that even the score. It is unreasonable for the airline to sell me a trip that if *I* miss, I have no recourse, but if they bump me because the oversold, I still have no recourse. It seems to me if you are going to stop someone from backing out at the last moment, there is no reason to overbook the flight to fill the seats.

     

    If your trip is expensive and very important, buy trip insurance. It’s worth the extra 10%.

    • #40
  11. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    cdor (View Comment):

    Bryan G. Stephens (View Comment):

    Full Size Tabby (View Comment):

    cdor (View Comment):

    For anyone still following this situation, a friend flew Southwest during the holidays. her flight got rescheduled. She told me yesterday that Southwest had voluntarily added 25000 pts to her and her companion’s accounts and sent them a form for them to detail all extra expenses they had incurred (meals, rental car, hotel bills, etc.) as a result of their delay, to be reimbursed later.

    Southwest is going to have a difficult time regaining its customer’s trust, but that is the best way to start. Unless they upgrade their operations so that this doesn’t happen again, it will be all for naught.

    An illustration that the customer reaction will drive Southwest to fix the problem far faster and more effectively than anything the government does.

    I agree with that.

    And I also for the government punishing bad actors when they happen. I am for regulations that even the score. It is unreasonable for the airline to sell me a trip that if *I* miss, I have no recourse, but if they bump me because the oversold, I still have no recourse. It seems to me if you are going to stop someone from backing out at the last moment, there is no reason to overbook the flight to fill the seats.

     

    If your trip is expensive and very important, buy trip insurance. It’s worth the extra 10%.

     It’s the principle of the Thing. They shouldn’t be allowed overbook if they’re also going to be allowed to charge me even if I don’t fly.

    • #41
  12. cdor Member
    cdor
    @cdor

    Bryan G. Stephens (View Comment):

    cdor (View Comment):

    Bryan G. Stephens (View Comment):

    Full Size Tabby (View Comment):

    cdor (View Comment):

    For anyone still following this situation, a friend flew Southwest during the holidays. her flight got rescheduled. She told me yesterday that Southwest had voluntarily added 25000 pts to her and her companion’s accounts and sent them a form for them to detail all extra expenses they had incurred (meals, rental car, hotel bills, etc.) as a result of their delay, to be reimbursed later.

    Southwest is going to have a difficult time regaining its customer’s trust, but that is the best way to start. Unless they upgrade their operations so that this doesn’t happen again, it will be all for naught.

    An illustration that the customer reaction will drive Southwest to fix the problem far faster and more effectively than anything the government does.

    I agree with that.

    And I also for the government punishing bad actors when they happen. I am for regulations that even the score. It is unreasonable for the airline to sell me a trip that if *I* miss, I have no recourse, but if they bump me because the oversold, I still have no recourse. It seems to me if you are going to stop someone from backing out at the last moment, there is no reason to overbook the flight to fill the seats.

     

    If your trip is expensive and very important, buy trip insurance. It’s worth the extra 10%.

    It’s the principle of the Thing. They shouldn’t be allowed overbook if they’re also going to be allowed to charge me even if I don’t fly.

    My principles tell me that it’s better to keep the government out of it. If the government gets involved, you can bet the prices of tickets will increase to the point where you would rather have been paying for trip insurance.

    • #42
  13. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    cdor (View Comment):

    Bryan G. Stephens (View Comment):

    cdor (View Comment):

    Bryan G. Stephens (View Comment):

    Full Size Tabby (View Comment):

    cdor (View Comment):

    For anyone still following this situation, a friend flew Southwest during the holidays. her flight got rescheduled. She told me yesterday that Southwest had voluntarily added 25000 pts to her and her companion’s accounts and sent them a form for them to detail all extra expenses they had incurred (meals, rental car, hotel bills, etc.) as a result of their delay, to be reimbursed later.

    Southwest is going to have a difficult time regaining its customer’s trust, but that is the best way to start. Unless they upgrade their operations so that this doesn’t happen again, it will be all for naught.

    An illustration that the customer reaction will drive Southwest to fix the problem far faster and more effectively than anything the government does.

    I agree with that.

    And I also for the government punishing bad actors when they happen. I am for regulations that even the score. It is unreasonable for the airline to sell me a trip that if *I* miss, I have no recourse, but if they bump me because the oversold, I still have no recourse. It seems to me if you are going to stop someone from backing out at the last moment, there is no reason to overbook the flight to fill the seats.

     

    If your trip is expensive and very important, buy trip insurance. It’s worth the extra 10%.

    It’s the principle of the Thing. They shouldn’t be allowed overbook if they’re also going to be allowed to charge me even if I don’t fly.

    My principles tell me that it’s better to keep the government out of it. If the government gets involved, you can bet the prices of tickets will increase to the point where you would rather have been paying for trip insurance.

    But i don’t have a market choice. The airline holds all the power. The only reason they offer cash at all is because the government makes them.

    The idea that government should have no say in how companies operate is libertarian nonsense. I am all for airplanes being regulated, even if it drives up the price.

     

    • #43
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