Q: Hi, I would like to know why are airlines cutting long flights and what happen with the marginal cost,marginal revenue analysis in those cases.

Submitted by Josefina from Queens from Queens

A: It is my understanding that most of the flights that are being cut are the short flights into smaller communities and the Regional Airline carriers that sub-contract these flight services to the major network airlines are being hit the hardest with capacity and route reductions. The long haul international flights are making money and are being increased.

Answered 07/22/08 16:11:33 by George Donohue

Q: Can you think of a way in which a stand by system, perhaps a computer based auction in the last hours before departure could be employed to raise ridership to fill "excess capacity" ?? I am retired and my time is VERY flexible...........& I would be willing to jump through hoops to get a very good fare on especially exotic places such as the Marshal Islands.

Submitted by Thomas George from Martha's Vineyard, MA

A: At todays high load factors, there is very little "excess capacity" to fill. The airlines "yield management system" effectively does run an auction on ticket price and in the past, at low load factors, the ticket price could go down as the flight push back time approached. The airlines also used the frequent flyer miles to fill excess capacity at zero marginal revenue. Today, airline flight crew that fly stand-by are finding it increasingly difficult to get back to their home base due to the high load factors.

Answered 07/22/08 16:07:47 by George Donohue

Q: I would like to know why Airlines cut long flights to save fuel costs, and how does an increase in the price of jet fuel affect the marginal cost of a flight, if cost is a function of flight distance, and what is the shape of the marginal cost here of the flight as a function of the number of miles of the flight, because if the airline cut long flights to save fuel costs is because they are dont doing well in the market system.

Submitted by Josefina from Queens

A: Short flights are less fuel efficient than long flights. Aircraft use more fuel in the climb phase of flight and todays long taxi delays use fuel inefficiently on the ground. Short flights spend more time on the ground. Also, there is a tendency to use larger aircraft on long flights and they are more fuel efficient per passenger than small aircraft. Flights are removed because of market dynamics like the perceived passenger price elasticity and willingness to pay for a ticket at an increased cost.

Answered 07/22/08 15:59:37 by George Donohue

Q: Do you agree with the following about "excess capacity" dragging the airlines down? I've tried to think it through and it goes like this: First off, there is no such thing as "excess capacity," since the airlines are flying with more than 80% of seats filled (load factor). This means they're going out loaded even at 3pm or 10pm - off peak hours. What matters most is system-wide operations in terms of revenue and cost, usually measured on the basis of seat cost and revenue yield x miles flown. Or, perhaps, revenue / cost on an aircraft (type) flown mileage basis. I'm sure the airlines live by these ratios and numbers are their business. What counts is a system operation that generates a profit. What the airlines can do - and zeroing in on - is to eliminate markets, city pairs, or support operations that are considered unprofitable. Call that "excess capacity." And to do it, they must eliminate all direct and indirect costs that are associated with these operations - cities served, aircraft, people, all direct costs, fixed costs and overhead, the works. The trick is to create a new business model for the airline and reschedule system operations with the appropriate aircraft type in higher revenue yield markets. The target is to generate sufficient cash flow and cover all costs to achieve profitability goals and provide an adequate return on investment. Something like that, but not easily done. I think it'll take radical surgery. Ed Meyer

Submitted by Ed Meyer from Key Biscayne, Florida

A: I think you have it about right. For a number of reasons, the airlines have been decreasing the average size of their aircraft for the last 10 years while increasing the number of operations. There were some internal pilot pay and some marketing reasons for doing this. Unfortunately, this has proven to be disastrous for both hub airport congestion, flight delays, flight cancellations and ultimately legacy airline profitability. Southwest AL never went to small regional jets (RJs), maintained a fleet of modern B737s and has been profitable. The legacy airlines are now shedding the small aircraft and must eliminate service to smaller communities that were served by these aircraft. They did not invest in larger more cost effective aircraft to serve the high volume trunk routes and the small communities are going to pay the price.

Answered 07/21/08 11:29:44 by George Donohue

Q: I have been flying internationally since 1987 and my experience, that even before this mess happened, the best airlines are foriegn. Your treated decently, your told the truth, very seldom are your bags lost, and service generally is good. Is it all possible to permit some of these airlines to compete locally, since they already have the loyalty of many US Citizens. I invariably will travel a foreign airline to a US airline whenever possible. I mean its a matter of self interest. These people really want your business and work to earn it, contrary to what is experienced on US airlines. Traveling within the US by air is absolutely a HATEFUL experience! Even Russia during its totaltarian heyday provided better service then US airlines.

Submitted by Clem Kadidlehopper from Aurora, Colorado

A: I agree with you. This is further evidence that the problem is US air transportation policy. All US airlines could not collude to provide such bad service if the rules under which they operate did not, in some sense, force them to behave the way they do. We try to explain the "Prisoner's dilemma" that they face in our book. You should send these comments to the chairs of the Senate and House transportation committees and demand they fix the current rules that lead to this situation.

Answered 07/21/08 11:19:52 by George Donohue

Q: Why do the airline lie so often about why flights are late? I fly every other week and some of the stories are unbelievable. Such as "weather". I explain that w/o weather we would live in a vaccuum. Then call the tower in that city and am told- clear ,15 mile visability and 10 knot winds. How can we get a reliable answer?

Submitted by Alan M Hess from Boynton Beach, Fl

A: Frequently, the local airline "official" does not understand what is happening either. GDPs and congestion flight cancelations are made at the operations centers, not at the airports. Weather is a convenient "Act-of-God" to scapegoat. The fact that your flight was Triaged to help maintain over-all network schedule coherence to a schedule that looked good to marketers but was rarely technically feasible in the first place in not an answer the airlines want to give. There is no law forbidding them lying to you. However, a Passenger's Bill of Rights" without hub airport slot controls presents the airlines with a "Prisoner's Dilemma" in a cut-throat competitive industry. Our book tries to cover this issue in some detail.

Answered 07/18/08 17:18:45 by George Donohue

Q: Why doesn't the US have a national transportation policy? We claim to have policies for ground and air movement, but there is little apparent focus on national transportation in general. Is air transportation the right place to start?

Submitted by John Retelle from Arlington, VA

A: Both the air and highway systems are in a state of crisis. Rail and Maritime are almost ignored. Rail must be part of the solution. This will require serious attention in the next administration and MUST involve BOTH the WH/DOT and the Congress. The problems have gotten so bad, that the fixes will not be easy, minor or in some cases cheap.

Answered 07/18/08 17:10:31 by George Donohue

Q: Why hasn't the FAA implemented a "just in time" system of delivering aircraft to the runway for takeoff to reduce idle time on the taxiway. An aircraft ready for gate departure could be put in a queue maintained by the controller. Based on the time for engine start and taxi from the aircraft's gate to the runway, aircraft could be instructed to begin their taxi so as to arrive for takeoff only when needed.

Submitted by Jon Weiner from Coral Gables, FL

A: The airlines control the flight schedule and aircraft push-back. The FAA tries to maintain safe aircraft separation. When infeasible schedules collide with aircraft separation rules, long delays are incurred. Very long delays result in flight cancelations. The FAA works with the airline operations centers to impose and distribute Ground Delay Programs (GDPs)to try and accommodate an over-scheduled system in the way you suggest. This can not solve the underlying problem, however. The airlines are publishing and selling tickets on flights that are infeasible under current safety rules.

Answered 07/18/08 17:06:50 by George Donohue

Q: Why do the airlines want to cut capacity when system load factors are over 80% - virtually all seats sold? We always hear (from the "experts") that the airlines have to cut "excess capacity" as a solution to their problems, but it doesn't make sense if you can't get a seat.

Submitted by Ed Meyer from Key Biscayne, FL

A: The airlines have been reducing aircraft size for years to increase flight frequency. This is effectively cutting capacity on a per flight basis and increasing per passenger cost due to loss of economies of scale. Pilot "scope clauses" have been part of this movement as well. This increase in frequency of smaller aircraft has greatly increased the hub airport congestion leading to increased flight delays and flight cancelations. As fuel costs have risen, pilots salaries have decreased as a % of operating costs. With a necessity to increase price to cover fuel costs and to give them some profit margin to keep them out of bankruptcy, and high load factors, the airlines can afford to spill leisure passengers who will not be willing to pay the higher fares.

Answered 07/18/08 17:00:39 by George Donohue

Q: It's hard to take anything seriously that is endorsed by Robert Poole of the Reason Foundation. What business relationship or sponsorship relationship do you have with that organization and what affect did it have on your research?

Submitted by Steven Sirag from NY, NY

A: Our center has never had a business relationship with Robert Poole or the Reason Foundation. Our research has been funded by NASA, FAA and the NSF. Mr. Poole has access to our research papers that are available to everyone on our center's web page. He has indicated that some of our research was interesting to him and he has found it to be useful in his public policy possitions. Robert and I agree on some issues and disagree on others. He was kind enough to review the manuscript and agreed to have his comments published as a forward.

Answered 07/14/08 14:31:26 by George Donohue

Q: Travelling by air in Europe and Asia is (mostly) just efficient and sometimes even pleasant. In the US, it is mostly tedious if not an outright horror. Why? Europe has high fuel costs, high labour costs, tight regulation, strict passenger compensation codes, and yet has profitable mainline and low-cost carriers. Unlike the US, there is also competition from fast rail, but also a symbiosis with mainline rail service as many major airports integrate a mainline rail station.

Submitted by Jürg Gassmann from Bühler, Switzerland

A: You are correct. Europe has a much better overall transportation policy. European airport slot controls help to provide safer aircraft seperation margins and greater travel schedule predictability. Europe would do better with a one sky policy which would address a serious problem in airspace efficency. Also, I do not like the IATA slot allocation rules, which serve to limit competion, but the combined air-rail-road policies are much better than in the US. The largest failure of the US system is a set of bad public policies related to transportation.

Answered 07/14/08 14:26:14 by George Donohue

Q: I think getting frequent flier miles when traveling on company business is effectively a kickback by the airline to an individual. The large company where I worked for did not allow its employees to accept frequent flier miles. This meant trips were made with regard to the company's needs; not the employee mapping out an itinerary which maximized his/her frequent flier points. Employees can be swayed to choose an itinerary which may not have been the best use of his/her time and at worst making unnecessary business trips. The company pays for this inefficiency. Attempts to use accumulated frequent flier points for future company travel proved unworkable. The company's policy of not allowing the acceptance of frequent flier points policy also had the effect removing the anomaly whereby there was an effective difference in pay between employees on the same salary level. The person who traveled a lot on company business was effectively better off thanks to the frequent flier kickbacks. I find trying to use my frequent flier points a nightmare as do most people. All airlines have frequent flier programs now so the competitive advantage of a program is minimal and the administrative cost substantial. No single airline can get off the frequent flier merry-go-round, but I say let's scrap all frequent flier programs. What do you think?

Submitted by Mukinduri from Oakland, California

A: I think the frequent flier benefit is rapidly fading. It was a markting ploy to build product loyalty. Today, unused miles are a large financial libility for the airlines and the empty seats with zero marginal cost are not available anymore. The rules and restrictions on using frrequent flier miles will continue to degrade.

Answered 07/14/08 14:19:55 by George Donohue

Q: Hello: Considering actual fuel costs and load factors, who would "win" (if any): Boeing with the B787 Dreamliner flying Point to Point or Airbus Industrie with the A380 flying from Hub to Hub ?

Submitted by Francisco Salas from Caracas, Venezuela

A: This is an intersting question that does not have an easy answer. For some markets, like New York JFK or EWR to chicago ORD, the A380 might be best. For other markets, like Chicago to LAX or SFO, the B787 flying a hub-and-spoke route might make better sense. These are very complex decisions that airlines must make in light of customer demand, customer price elasticity, and overall fleet network structure and business model. The government regulations shape how these decsions are made in some very fundamental ways. Our book tries to illustrate how airport slot controls would change the aircraft choices of the airlines.

Answered 07/14/08 12:28:48 by George Donohue

Q: Why aren't you using a spell checker?

Submitted by Bonnie from San Francisco, CA

A: Good point. This interface does not give me access to one. I am used to using it in my normal work. I am sorry that mis-spellings are getting through. I am an engineer and spelling was never one of my strong points.

Answered 07/14/08 12:22:05 by George Donohue

Q: Re: My prior question regarding lost baggage and your reply..... Perhaps we should discuss this off-line especially my comments about the effectiveness of TSA... McLean is only a few minutes away from GMU... either Fairfax or Clarendon campuses... - - - - - - - Comparing baggage manifests to passenger manifests would... for all practical purposes... eliminate the lost baggage problem... which is costly to the airlines in passenger relations as well as operating costs.. Thus I wonder how much their financial gain would be from eliminating the lost baggage problem... A relatively simple computer program utilizing baggage scanning as the bags are loaded on the aircraft or in the container for larger aircraft would minimize the search and removal from the aircraft of luggage without a matching passnger.... reducing the search and removal time factor to a minimum. Plus I wonder why all the costly..... in tax dollars.... and passnger time.... along with the cost of the recent purchase of new.... SuperShuttle blue.... shirts for TSA staff.... that the TSA screening of passengers really accomplishes when another PanAm Lockabie Scotland could be pulled off so easily because the baggage manifest is not checked against the passenger manifest... Thus.. the TSA screening seems to be nothing but a very costly smoke screen.... being like wearing winter long-johns with no buttons for closing the back-flap.... As far as the hub-&-spoke scheduling system... one wonders why the airlines have not gone back to point-to-point.... It seems that the only airlines making money these days are those flying point-to-point because one small hick-up in hub-&-spoke results in a domino effect which compounds the lost baggage problem... with the resultant fiasco that we now have for domestic airline travel

Submitted by Paul D Lane from McLean VA

A: A hub-and-spoke system is inherently efficient in connecting the most number of dispersed airports with the highest frequency using the fewest number of aircraft, thus producing the lowest cost per passenger. The problem comes when the hubs are scheduled beyound thier safe and weather predictable capacity, at which point the entire network suffers. The problem is a failure in government regulatory policy, not the hub and spoke system. I also agree that the current TSA system is no better than the old FAA/Airline system, but far more expensive to the flying public. All any government can do, short of living in a totalitrian police state, is provide a reasonable deterent to terrorism. No government can provide complete security to an intelegent agent who wants to make a political statement through a hostile act. The terrorist always has second move advantage against any static defensive system. It will always be much cheaper to attack a fixed defensive system than to defend it. This leads to an arms race instability for counter-terrorism. The best defense has always been good intellegence and good police work.

Answered 07/10/08 11:56:54 by George Donohue