Winged Bureaucracy

About halfway through my extensive dealings with Lufthansa last week — after I had been sent, futilely, to Dulles Airport to change a ticket but before I was told, definitively, that the ticket could not be changed — I began to have a sense of deja vu. There was something about the combination of rudeness and incompetence, something about the haughtiness of the half-dozen people I encountered at the other end of telephone lines, something about the failure to apologize for bureaucratic error, something that reminded me — if ever so faintly — of the Soviet Union.

Don’t laugh: By that, I don’t mean that Lufthansa is involved in human rights abuse or totalitarian employment practices. I don’t want to single out Lufthansa in any case. In recent years, I have been told by a United Airlines flight attendant that it was “against company policy” to assist passengers with their hand luggage, even if the passengers had small children in tow. I have discovered that when an airline, any airline, loses your baggage, it can take not one, not two, but three days to deliver it — and even then it arrives after midnight. Any frequent traveler will have had similar experiences, if not far worse ones. Even infrequent travelers will have encountered the impossibly complex fare systems, the incomprehensible reservation and cancellation rules, the bad service on the ground and in the air typical of most airlines.

The point is not that the airline industry is the evil empire but that all these problems — from the bureaucratic inflexibility of airline employees to the overwrought complexity of the system — are typical of heavily subsidized, uncompetitive companies operating in a centrally planned economy. Which is no surprise, as most airlines nowadays are heavily subsidized, uncompetitive companies, operating in what is, in effect, a centrally planned economy.

They also lose money, just like companies in centrally planned economies. U.S. airlines lost more than $18 billion in 2001 and 2002 and are slated to lose more in 2003. International air travel was down in June 12 percent from last year. It’s true that not all of the fault was the airlines’: Terrorism, SARS and war in Iraq have also cut into airline profits. But terrorism, SARS and war in Iraq have also hurt the hotel industry, the restaurant industry and the economies of places as varied as Washington and Orlando, Fla., yet nobody has talked about massive subsidies for the land of Mickey Mouse or the drivers of tourist buses in the nation’s capital.

Where airlines are involved, they do. Despite the fact that the industry has survived numerous major bankruptcies — Eastern, TWA, Pan Am — people still shiver at the thought that United might also vanish into the history books, or that a European national carrier might disappear for good. Terrified at that prospect, Congress approved $3.1 billion worth of financial aid to the airline industry last April, which came on top of $15 billion worth of subsidies doled out, infamously, after 9/11. European airlines are even more heavily subsidized, one way or another. Others have pointed out why this makes no economic sense, so I won’t repeat the full argument here. Suffice to say that instead of forcing the airline industry to get used to operating in new circumstances, like everyone else, subsidies just delay the inevitable industry shakeout.

But it is equally true that subsidies have left a mark on airline culture, and I don’t mean just the culture of the people who answer the phones. Although on the verge of bankruptcy, most major carriers appear to believe in the certainty of their own permanence. Last year, as profits plunged, payments to airline CEOs — including the bosses of Delta, US Airways and Continental — all went up. Only the CEO of Southwest Airlines took a pay cut. Perhaps that helps explain why Southwest, although hurting, is surviving the slump better than most.

It’s small comfort, of course, to everyone who is reading this while squeezed into an economy class seat, eating cheap pretzels, cursing the fact that a pair of much-loved nail scissors had accidentally been left in the carry-on luggage and is now gone forever. But think how few of the people who led the Soviet Union in its final days ever dreamed that that particular conglomerate would collapse. No company has an inalienable right to exist forever. No company is indispensable. On the contrary, it might be a good thing for the industry if an airline or two went bankrupt — and think how little their passengers would protest.

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