Airline advertisements of yore boast about the "wide, soft berths" and spacious cabins of "castles in the sky." Those days are long gone, as anyone who has been on a plane in the past thirty years will tell you. But according to Harvard Business School historian NancyKoehn, things are only going to get worse. Much worse.
Airlines are a capital-intensive business with huge operating costs, and that means they have to get creative when it comes to making a profit, Koehn explained.
"If the plane lifts off the tarmac and its only half full, they're going to pay just as much to run it, just about, as they would if it was full," Koehn said. "Their sole objective as a profit-making enterprise is to try to maximize capacity...and revenue."
The drive to maximize capacity explains why, over the years, seat sizes have miniaturized even as the size of the average American passenger has done anything but. Today, the average amount of legroom on an airplane is around 30 inches—down from 32-36 in the 1980s—and that number is even smaller at ultra-budget airline Spirit, where it measures in at a cramped 28 inches.
That takes care of maximizing capacity. But what about revenue?
Koehn points out that of the easiest ways for airlines to make more money off flights is to level charges for amenities which, in the past, had often been free—products and services like checked luggage, early boarding, additional legroom, or in-flight snacks. Those move has proven to be extremely profitable. Last year, passengers on airlines based in the United States spent an estimated $31.5 billion on ancillary fees. Out of a total revenue base of $180 billion, that's a pretty significant chunk of change.
The reason they can get away with that, Koehn says, is because consumers consistently agree to pay them, and, alternatively, are willing to do without those amenities if it means lower ticket prices.
"We are, as customers, voting with our dollars. And we are voting for this," she said. "We are choosing this!"
Though to be fair, when it comes down to it, consumers don't really have too much of a choice. The four major airline carriers in the United States carry between 65-80% of all passengers, says Koehn, and no competition means no real incentive to change. That makes the prognosis for the future of air travel—despite current low fuel prices—look pretty bleak.
"As long as we have these big, big airlines, they have every incentive to chip away at anything that adds to or enhances customer service," Koehn said.
"I don't see anything but hell on wheels at 30,000 feet, or hell on wings, headed for us," she said.
To hear more from Nancy Koehn, tune in to her full interview on Boston Public Radio above.
