Posts Tagged ‘travel’
“Success is in making money, not in the size of the airline”*…
Airlines make more money from mileage programs than from flying planes—and it shows. Ganesh Sitaraman explains…
… From the late 1930s through the ’70s, the federal government regulated airlines as a public utility. The Civil Aeronautics Board decided which airlines could fly what routes and how much they could charge. It aimed to set prices that were fair for travelers and that would provide airlines with a modest profit. Then, in 1978, Congress passed a sweeping law deregulating the airline industry and ultimately abolishing the CAB. Unleashed from regulation, airlines devised new tactics to capture the market. American Airlines was one of the most aggressive. In the lead-up to the deregulation bills, it created discount “super saver” fares to sell off the final few remaining seats on planes. That meant cheap prices for last-minute travelers and more revenue for American, because the planes were going to take off whether or not the seat was filled. But these fares upset business travelers, who tended to buy tickets further in advance for higher prices. So in 1981, American developed AAdvantage, its frequent-flier program, to give them additional benefits. Other airlines followed suit.
In the early years, these programs were simple, like the punch card at a café where your 11th coffee is free. But three big changes transformed them into the systems we know today. First, in 1987, American partnered with Citibank to offer a branded credit card that offered points redeemable for flights on the airline. Second, in the ’90s, the airlines proliferated the number of fare classes, charging differential prices for tickets. With more complicated fare structures came the third change: Virgin America realized that the amount people spend on a flight, based on the fare class, is more important to their bottom line than the number of miles flown. So, in 2007, it introduced a loyalty program rewarding money spent rather than mileage accrued.
These three shifts fundamentally transformed the airline industry. They turned frequent-flier systems into the sprawling points systems they are today. And they turned airlines into something more like financial institutions that happen to fly planes on the side.
Here’s how the system works now: Airlines create points out of nothing and sell them for real money to banks with co-branded credit cards. The banks award points to cardholders for spending, and both the banks and credit-card companies make money off the swipe fees from the use of the card. Cardholders can redeem points for flights, as well as other goods and services sold through the airlines’ proprietary e-commerce portals.
For the airlines, this is a great deal. They incur no costs from points until they are redeemed—or ever, if the points are forgotten. This setup has made loyalty programs highly lucrative. Consumers now charge nearly 1 percent of U.S. GDP to Delta’s American Express credit cards alone. A 2020 analysis by the Financial Times found that Wall Street lenders valued the major airlines’ mileage programs more highly than the airlines themselves. United’s MileagePlus program, for example, was valued at $22 billion, while the company’s market cap at the time was only $10.6 billion.
Is this a good deal for the American consumer? That’s a trickier question. Paying for a flight or a hotel room with points may feel like a free bonus, but because credit-card-swipe fees increase prices across the economy—Visa or Mastercard takes a cut of every sale—redeeming points is more like getting a little kickback. Certainly the system is bad for Americans who don’t have points-earning cards. They pay higher prices on ordinary goods and services but don’t get the points, effectively subsidizing the perks of card users, who tend to be wealthier already.
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The strange evolution of airlines into quasi-banks reflects how badly deregulation has gone. Regulation carefully set the terms under which airlines could do business. It was designed to ensure that they remained a stable business and a reliable mode of transportation. Deregulation, in turn, allowed the airlines to pursue profits in whatever way they could—including getting into the financial sector.
The proponents of deregulation made a few big promises. The cost of flying would go down once airlines were free to compete on price. The industry would get less monopolistic as hundreds of new players entered the market, and it would be stable even without the government guaranteeing profitable rates. Small cities wouldn’t lose service. In the deregulators’ minds, airlines were like any other business. If they were allowed to compete freely, the magic of the market would make everything better. Whatever was good for the airlines’ bottom line would be good for consumers.
They were wrong. As I explain in my forthcoming book, most of their predictions didn’t come true, because air travel isn’t a normal business. There are barriers to entry, such as the fixed supply of airport runways and gates. (And, for that matter, mileage programs, designed to keep customers from ditching an established airline for a rival.) There are network effects and economies of scale. There are high capital costs. (Airplanes aren’t cheap.) The idea that anyone could successfully start an airline and outcompete the big incumbents never made much sense.
After a relatively short period of fierce competition, the deregulated era quickly turned to consolidation and cost-cutting, as dozens of airlines either went bankrupt or were acquired. Service keeps getting worse, because the airlines, facing little competition, have nothing to fear from antagonizing passengers with cramped legroom, cancellations, and ever-multiplying fees for baggage and snacks. Worse still, without mandated service, cities and regions across the country have lost commercial air service, with serious consequences for their economies. And when a crisis like 9/11 or the coronavirus pandemic comes along, the airlines—which prefer to direct their profits to stock buybacks rather than rainy-day funds—need massive financial relief from the federal government.
Deregulation even failed to deliver the one thing it is sometimes credited with: lowering prices. Airfare did get cheaper in the years after the 1978 deregulation law. But the cost of flying had already been falling before deregulation, and it kept falling after at about the same rate.
The old system of airline regulation wasn’t perfect. Barred from competing directly on price, the airlines got into an amenities arms race that notoriously included in-flight piano bars. But the cure was worse than the disease. The industry went from being a regulated oligopoly, which had real problems, to an unregulated oligopoly, which we are now seeing is much worse…
Painful reading: “Airlines Are Just Banks Now” (gift article) from @GaneshSitaraman in @TheAtlantic.
* Gordon Bethune (Long-time chair of Continental Airlines)
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As we pray for an aisle seat, we might console ourselves that at least we’re not boarding the S.S. Minnow; on this date in 1964 Gilligan’s Island premiered on CBS. Seven castaways– five paying passengers who’d booked a “three hour tour” from Honolulu, and their two-person crew– spent the next three seasons marooned on an uncharted island.
“We’re all pilgrims on the same journey but some pilgrims have better road maps”*…
Tis the season for road trips. These days, we tend to navigate via Google Maps; but for centuries, travelers relied on road atlases. From the Bodleian Library‘s Map Room, a wonderful example from the 18th century…
As a general rule we do not fold our atlases in half. It would be bad for them, and probably quite difficult. This is a rare example of an atlas that was designed to be folded in half.
It’s an early road atlas to be carried while traveling. When the soft, rather tattered brown leather covers are opened, it reveals that a previous owner has made some notes of place names and distances in the inside of the cover.
The book itself could be folded or rolled, making it smaller and more portable. It is Thomas Kitchin’s Post-chaise companion, and dates from 1767. It has clearly grown accustomed to being folded in half, as can be seen from the weights required to hold it open for photography:
The very earliest road atlases date from the seventeenth century. Previously travellers relied on road books, lists of names that would enable them to ask the way from one town to the next. Arguably the first road atlas was produced by Matthew Simmons in the 1630s, with triangular distance tables (like those sometimes found in modern road atlases) and very tiny maps. The big innovation was John Ogilby’s Britannia in 1675, which used strip maps to show the major roads throughout Great Britain in unprecedented detail; this design continued to be copied for over a century, as can be seen here. Britannia was however a large volume, too bulky to transport easily.
Perhaps surprisingly, it was around fifty years after the publication of Britannia before smaller, more portable versions were produced, and then rival versions by three different publishers appeared around the same time in the 1720s; one of these, by Emanuel Bowen, was reissued in multiple editions into the 1760s. Thomas Kitchin, who produced this work, had been apprenticed to Bowen, and had married Bowen’s daughter before setting up as an independent mapmaker, embarking on a long, prolific and successful career, and being appointed Hydrographer to George III.
Although many road atlases of this period survive, the binding is what makes this one unusual. Its appearance caused a certain amount of excitement in the Map Room as some of us had heard of road atlases being made to this design, but had never seen one before. Unsurprisingly the soft backed versions are less likely to have survived, being less robust and more heavily used than the hardbacks. The fact that this one has the notes relating to a previous owner’s journeys makes it additionally interesting…
A traveler’s companion: “On the road,” at @bodleianlibs.
* Nelson DeMille
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As we plan a route, we might ponder a very specific path, recalling that today– and every June 16– is Bloomsday, a commemoration and celebration of the life of Irish writer James Joyce, during which the events of his novel Ulysses (a modern classic set on this date in 1904) are relived: Leopold Bloom goes about Dublin, James Joyce’s immortalization of his first outing with Nora Barnacle, the woman who would eventually become his wife.
The first Bloomsday was observed on the 50th anniversary of the events in the novel, in 1954, when John Ryan (artist, critic, publican and founder of Envoy magazine) and the novelist Brian O’Nolan organized what was to be a daylong pilgrimage along the Ulysses route. They were joined by Patrick Kavanagh, Anthony Cronin, Tom Joyce (a dentist who, as Joyce’s cousin, represented the family interest), and AJ Leventhal (a lecturer in French at Trinity College, Dublin).
“Personally, I would like to renounce speech altogether and, like organic nature, communicate everything I have to say visually”*…
Driving across America, one encounters a wide variety of cultures, landscapes, people, and animals. But the one consistent thing that will stay the same from Maine to California are the signs one passes on the highway. That’s because, as Jon Keegan explains, America’s roads and highways have a big, fat style guide…
First published in 1935, the Federal Highway Administration’s (FHWA) “Manual on Uniform Traffic Control” (MUTCD), is a hefty tome consisting of close to 900 pages that contains the federal standards for all traffic safety signs, roadway markings and other “traffic control devices” that a driver on a road in the U.S. might encounter.
The MUTCD states that it “shall be recognized as the national standard for all traffic control devices installed on any street, highway, bikeway, or private road open to public travel”. Exact specifications for the font, size, spacing of letters, background colors, reflectivity, mounting location and orientation help ensure that traffic signs are consistently readable at a glance while driving anywhere in the U.S…
The remarkable– and enlightening– story: “The Style Guide for America’s Highways: The Manual on Uniform Traffic Control Devices,” from @jonkeegan. TotH to @kottke.
* Johann Wolfgang von Goethe
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As we read the signs, we might send elegantly-designed birthday greetings to Walter de Silva; he was born on this date in 1951. A car designer and automotive executive, he began as a designer at Fiat in 1972, then went on to lead design at Alfa Romeo, SEAT, Audi, and finally Volkswagen Group– where, in 2007, he became Chairman.
“Oh the places you’ll go”*…
The amazing life of “Gudrid the Far-Traveled” has, Frank Jacobs argues, been unjustly overshadowed by her in-laws, Erik the Red and Leif Erikson…
She’s been called “the greatest female explorer of all time,” and the “best-traveled woman of the Middle Ages.” Just after the year 1000 AD, she gave birth to the first European baby in North America. And she concluded her global odyssey with a pilgrimage on foot to Rome. Yet few today can name this extraordinary Viking lady, even if they have heard of Erik the Red and Leif Erikson, her father- and brother-in-law…
An extraordinary story: “The Viking woman who sailed to America and walked to Rome,” from @VeryStrangeMaps in @bigthink.
* Dr. Seuss
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As we tag along, we might recall that this date in 2014 was purportedly the date of the final battle in Ragnarök, a series of events (many natural disasters) culminating in a catastrophic battle and the end of the world-as-we-know-it: giants and demons approach from all points of the compass and attack the gods (Odin, Thor, Týr, Freyr, Heimdall, Loki, et al.), who meet them and face death like heroes. At the conflict’s end, the sun darkens, the stars vanish, and the earth sinks into the sea. (Happily, afterward, the earth rises again, the innocent Balder returns from the dead, and leads hosts of the just to a life in a hall roofed with gold.)
In the event, of course, the world did not end that day. The prediction had been promoted by the Jorvik Viking Centre in York, England, intended to draw attention to an event that the institution was to hold on that date. In an obvious lift from the 2012 Mayan Prophecy frenzy, the Centre attributed the claim to a “Viking Calendar,” though no such calendar is known to have existed. Authentic scholars were predictably (and understandably) irked, though as philologist Joseph Hopkins noted, the media response was an example of a broad revival of interest in the Viking Age and ancient Germanic topics.
(Historians believe that Gudrid did in fact exist and did make the journeys discussed above.)
“The future belonged to the showy and the promiscuous”*…
Emily J. Orlando on the enduring relevance and the foresight of Edith Wharton…
If ever there were a good time to read the American writer Edith Wharton, who published over forty books across four decades, it’s now. Those who think they don’t know Wharton might be surprised to learn they do. A reverence for Wharton’s fiction informs HBO’s Sex and the City, whose pilot features Carrie Bradshaw’s “welcome to the age of un-innocence.” The CW’s Gossip Girl opens, like Wharton’s The House of Mirth, with a bachelor spying an out-of-reach love interest at Grand Central Station while Season 2 reminds us that “Before Gossip Girl, there was Edith Wharton.”
But why Wharton? Why now? Perhaps it’s because for all its new technologies, conveniences, and modes of travel and communication, our own “Gilded Age” is a lot like hers [see here]. For the post-war and post-flu-epidemic climate that engendered her Pulitzer-Prize-winning novel The Age of Innocence is not far removed from our post-COVID-19 reality. In both historical moments, citizens of the world have witnessed a retreat into conservatism and a rise of white supremacy.
Fringe groups like the “Proud Boys” and “QAnon” and deniers of everything from the coronavirus to climate change are invited to the table in the name of free speech and here Wharton’s distrust of false narratives resonates particularly well. Post-9/11 calls for patriotism and the alignment of the American flag with one political party harken back to Wharton’s poignant questioning, in a 1919 letter, of the compulsion to profess national allegiance:
how much longer are we going to think it necessary to be “American” before (or in contradistinction to) being cultivated, being enlightened, being humane, & having the same intellectual discipline as other civilized countries?
Her cosmopolitan critique of nationalist fervor remains instructive to us today…
Eminently worth reading in full (then picking up one of Wharton’s wonderful novels): “How Edith Wharton Foresaw the 21st Century,” in @lithub.
See also: “These days, the bigger the company, the less you can figure out what it does.”
* Edith Wharton, The Custom of the Country
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As we prize perspicacity, we might recall that it was on this date in 1884, in the midst of the Gilded Age, that Harper’s Bazaar proclaimed, “…it is not convenable, according to European ideas, to wear a loose flowing robe of the tea-gown pattern out of one’s bedroom or boudoir. It has been done by ignorant people at a watering-place, but it never looks well. It is really an undress, although lace and satin may be used in its composition. A plain, high, and tight-fitting garment is much the more elegant dress for the afternoon teas as we give them.”
Embraced by artists and reformers, the Aesthetic Dress Movement of the 1870s and 1880s was a non-mainstream movement within fashion that looked to the Renaissance and Rococo periods for inspiration. The movement began in response to reformers seeking to call attention to the unhealthy side effects of wearing a corset, thus, the main feature of this movement in women’s dress was the loose-fitting dress, which was worn without a corset. Artists and progressive social reformers embraced the Aesthetic Dress movement by appearing uncorseted and in loose-fitting dresses in public. For many that fell into these categories, Aesthetic Dress was an artistic statement. Appearing in public uncorseted was considered controversial for women, as it suggested intimacy. In fact, many women across the country were arrested for appearing in public wearing Aesthetic costumes, as authorities and more conservative citizens associated this type of dress with prostitution.
But for most wealthy women, the influence of the Aesthetic Dress movement on their wardrobes took the form of the Tea Gowns. Like most dresses that could be considered “Aesthetic,” Tea Gowns were loose and meant to be worn without a corset. However, they were less controversial than the Aesthetic ensembles of more artistic and progressive women. This is because they were not typically worn in public or in the company of the opposite sex. Tea Gowns were a common ensemble for hosts of all-female teas that were held in the wearer’s home. Thus, because no men were in attendance, Tea Gowns were socially acceptable in these scenarios. Mainstream magazines like Harper’s Bazar were not especially keen on the Tea Gown and cautioned their readers not to appear wearing one in public.
“Gilded Age Fashion”
For a sense of what was at stake, see “The Corset X-Rays of Dr Ludovic O’Followell (1908)“
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