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Financially, the airlines have never been healthier: operating profits for the second quarter of this year were $2.8 billion, up 17% from the same period in 1997. Though airline stocks dropped 20% in the recent stock-market plunge, analysts feel the industry is better equipped than it has been to handle future economic downturns. One reason for its profitability is low oil prices; another is that planes are flying at a record capacity, with load factors of more than 70%. That increased efficiency has helped hold down fares, but it also means more crowded planes. Airline employees--particularly the overburdened gate and ticket agents--seem increasingly unable to cope. "Ten years ago, employees were trained in customer service," says Michael Boyd, president of the Boyd Group, a Colorado-based aviation-research firm. "Today they're trained to process passengers."
The airlines' secretive and sometimes high-handed manner doesn't help. Passengers are routinely herded onto planes and only afterward told they must endure an hourlong air-traffic delay. Big discount fares are advertised widely, but prices seem to slide up and down with little explanation. Nor will the airlines reveal how many discount seats are allocated on flights (the number varies according to demand for the flight, with the goal of maximizing revenue). And the airlines have drained most of the spontaneity from the nation's leisure-time travel, with those money-saving but anxiety-producing "nonrefundable" fares, which require long advance purchases and slap heavy penalties for even a slight change in plans. (The Internet has lately helped reverse this a bit, offering customers a chance to bid for cheap last-minute fares.)
Airline deregulation, instituted in 1978, has reduced competition, with major hub cities like Atlanta and Minneapolis dominated by a single carrier, which can virtually dictate fares. American Airlines, which dominates the market from Miami to the Caribbean, cut fares drastically a couple of years ago, when a reconstituted Pan Am came on the scene; only hours after Pan Am shut down last February, American's fares shot up. Miami travelers complain that American's busy schedule is something of a sham, with flights often canceled for mysterious reasons. On the route to Nassau, says Perla Martinez, a Miami travel agent, "everybody books American because it has so many flights. But when you get to the airport, it's, 'Sorry, your flight is canceled for mechanical problems.'"
Airline executives deny that they engage in anticompetitive practices, contend that individual horror stories don't reflect the industry's generally good service record and argue that the benefits of the hub system far outweigh its drawbacks. "It allows medium-size cities like Sacramento to have one-stop service to 200 cities," says American spokesman Chris Chiames. "If we didn't have the hub system," asserts Northwest spokesman Marta Laughlin, "we wouldn't have the number of passengers that are needed for the volume of service we offer. You pay a premium for convenience and accessibility."