Outside the marginals

a commentary on the politics that followed the UK 2010 & 2015 elections

You get what you pay for?

The baggage handling chaos at Gatwick has “resulted” in Monarch Airlines sacking baggage handlers Swissport.

The BBC reports that Monarch Airlines has ended two contracts with the baggage firm at Gatwick and in Manchester, following last weekend’s fiasco that saw people waiting up to three hour to collect their luggage.

On Thursday airlines warned travellers flying from Gatwick over the coming weekend that they could run the risk of travelling without their luggage due to the shortage of baggage handlers.

On Sunday, hundreds of travellers were advised to leave Gatwick airport without their luggage as “resourcing issues” – believed to have been down to Swissport being understaffed – had left passengers from British Airways, Monarch Airlines, Thomas Cook and Thomson waiting for over 90 minutes for their luggage before being told their bags would be delivered to them separately.
The Independent 31 July 2014 : Gatwick chaos: Airline axes baggage handler Swissport after extended delays

Is this a case of an outsourced supplier being “held to account”, or is it an inevitable result of the cost pressures within this particular industry?

A few decades ago most airfares were near extortionately expensive – save for “charters” which were cheaper. They were cheaper because of the buying power of the big holiday companies (which sometimes owned the charter airlines), the comparative lack of frills and because (one class) seat utilisation was very high.

Now very few air travellers travel other than with a “budget” airline – and in some cases we have seen fares drop dramatically. Some airlines try to make a virtue of being skinflints with “no frills” travel.

With “no frills”, you need to have lower expectations. But at what stage does this become unacceptable? If you are not paying your airline very much, you can be pretty certain that they will try to cut what they pay their suppliers – the airports and ancillary services (such as baggage handling) and will try to fly the routes that minimise fuel use. They would probably like to also deeply cut items like maintenance costs – but fortunately aircraft maintenance is heavily regulated.

So what is tolerable? Which?© list the “Top 10 airport frustrations” reported in a member survey.

  1. Queuing for security – 49%
  2. Paying to drop off/pick up passengers – 47%
  3. Price of airport car parking – 46%
  4. Lack of seating (such as too few seats or uncomfortable seating) – 43%
  5. Queuing at passport control – 43%
  6. Queuing at check-in – 41%
  7. Price of food at outlets – 39%
  8. Waiting at baggage reclaim – 37%
  9. Lack of space to dress after security – 37%
  10. Having to walk long distances between terminals – 35%

Which?© 31 July 2014 : Top 10 airport frustrations revealed

All of these are arguably the result of cost paring – driven by consumer pressure for low airfares and the airlines’ desire for profits.

But when it gets to the stage that an Airport warns passengers “that they could run the risk of travelling without their luggage”, surely it has gone too far? Going on holiday without your baggage seriously impacts on your trip being what you expect of a holiday.

But how long should you wait for your baggage when returning?

Last month, Gatwick apologised after passengers faced delays of up to 90 minutes to reclaim their baggage, and blamed those problems on a shortage of staff at Swissport.

At the time, the airport said Swissport’s licence required it to deliver bags from each flight “within 55 minutes”.

On Sunday afternoon, a spokesman for the airport said: “Things are fine now. It was very much an overnight issue that carried on into the early hours of the morning.

“By about eight or nine o’ clock, the situation started to return to normal and that has continued throughout the day. Everything is back to normal.”
BBC News Website 31 July 2014 : Gatwick baggage delays prompt hand luggage advice

A “normal” target of 55 minutes seems excessive (just as airlines’ request to turn up two hours before your flight seems excessive). But in a cut-throat business, such as air travel, can you afford a better target?

It is an issue of resources.

Swissport said last weekend’s problems were exceptional and should not be repeated.

It has blamed the delays on too many aircraft arriving in quick succession – either late or early – which it called “off-schedule arrivals”.
BBC News website 31 July 2014 : Gatwick staff to help with baggage handling at weekend

Unfortunately resourcing to meet unexpected peaks is difficult as it means (assuming machinery capacity) having excess available staff “on shift”. Such peaks arrive too unexpectedly to play the “zero hours” “on standby” employment trick. And that means cost – out of proportion to the benefit – at least in the eyes of the employer.

It appears that we do not like the frustrations of “normal” airline travel. It appears we are exceptionally annoyed when the situation is worse than a barely acceptable “normal”. And we profess to being uncomfortable about relying on a service that uses dubious employment practices (such as zero hours contracts).

So what gives? Either we have to pay more, or we need to define a system of regulation that can make the air travel supply chain give up profit to provide better service. I fear the latter is unachievable.

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4 thoughts on “You get what you pay for?

  1. Peter on said:

    Much like what is said about supermarkets, I am not convinced at all that lower airline prices are ‘driven by consumer pressure’. The passenger will appreciate the lower prices and happily accept them.

    However, I see no evidence for the lower prices other than airlines desire to outdo each other and steal market share from each other. The customer never ‘demanded’ lower prices. Both airline and supermarkets are very similar in that their business plan seems to be based on trying to confuse and mislead the passenger as much as possible.

    Poor service and excessive car parking and shop prices are the fault of the air industry, not the consumer.

    • Perhaps this is “chicken and egg”. I agree that there is probably very little evidence (pre-budget flights) of people asking, for instance, British Airways the cost of a flight to Cyprus and then turning away and saying “too expensive, make it cheaper and I might fly”.

      Prior to the introduction of charter flights, few took overseas holidays (other than perhaps to areas reachable by ferry and car). Charter flights associated with package tours proved that there was an unmet – and largely unvocalised demand.

      I very much doubt that Freddie Laker would have risked launching Skytrain unless he was certain that there was consumer demand for Transatlantic flight at £32.50 and £37.50.

      Running at low prices is risky as your margins are very thin (you need a lot of volume to ensure you cover your fixed costs) – and you risk cannibalising any high price and high margin business that you may have. It only works if you are confident of that low-price demand.

      Once there is a low-cost operator on a route, customers of the high-cost operators will demand matching prices (or will change airlines). (Long-haul business flights might be the exception.) If your customers are going to the low-cost competition, is it customer pressure or profit maintenance that causes you to lower your prices?

      It used to be that airports were there to allow aircraft to land and take off and for airlines to embark and disembark passengers. Airlines paid the airports for this facility – that was their business.

      The airports business has now skewed from being “airports” funded by landing fees, to being “captive shopping malls” (and equally captive carparks) funded by facilities fees and rentals paid by retail operators. These retailers recover their costs direct from us through their prices! All the “stuff” associated with non-core business – like embarking customers (and their baggage) is a distraction.

      Is this change driven by airports trying to be more attractive, or trying to enhance or maintain profits as their traditional landing fees business comes under pressure? Arguably this is airline pressure changing the (inevitable) “taking of money off the consumer” from being via pricey airline tickets to being via airport parking and shop prices and lower airline price tickets.

      But if landing fees are under pressure is this due to airlines trying to enhance profits or to maintaining profits as operating margins are squeezed by “the need” for lower ticket prices to maintain passenger volume?

      Obfuscatory pricing and fake promotions are, I agree, business practices driven by companies (airlines or supermarkets) under pressure.

  2. Peter on said:

    Another ‘dishonest’ practice is that of the price of water. The airports must have thought they had won the lottery when passengers were unable to take bottled water through security. Thus they can quite legally deprive you of all your free water and charge up to £2 per small bottle to get it back on the other side of security. They can do this safe in the knowledge that the majority will not have access to reasonably priced water until they leave their destination airport possibly more than 6 hours later.

    More amazing is that I’ve never seen a single objection to this, so it’s unlikely that any attempt to stop it will have any hope of success.

    Of course the car parking costs will continue to rise as long as the current trend of making no effort to provide adequate public transport to airports is maintained.

  3. It’s strange that a government that does not believe in “big government” does lots of things to “look big” especially when they can claim that they are “protecting us” from terrorists and terrorism. This includes causing people to be dehydrated when flying – not a good idea.

    It is unfortunate that taking actions to “look big” does not extend to providing an integrated transport system – particularly around major hubs such as airports.

    (If car parking fees are greater than public transport fares, does this lead to a greater indication of economic activity? So if we want to “grow GDP” and “every little helps” (as the bankers say), perhaps expensive car parking rip-offs are a good thing. The same argument would apply to selling water at £2 for 500ml. But then the more I think about our economy and the fetish for GDP growth, the more stupid it appears.)

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