Our CFO’s favorite phrase is “underpromise and overdeliver”. On that front, I have failed you guys. We have fallen behind on the PECOTA Takes on Prospects Series, but I hope to wrap that up by the end of next week, enabling me to write about some non-PECOTA topics that have been sitting in the hopper for a long time. In the meantime, I hope you’ll indulge me this diversion.
I’ve had to endure a couple of very frustrating travel days within the past week and a half. Kudos to the helpful folks at U.S. Airways and United who had the foresight to reroute me through New York rather than Washington, allowing me to avoid a probable missed connection as I returned to Chicago today from Portland, Maine.
Still, I was left with plenty of time to reflect on the airline industry, and one thing that’s very clear is that the industry has gotten much better about managing the consumer’s expectations. The airlines employ a couple of different tactics to do this. One is simply to divulge more information to the consumer. Whereas before, if there was a long queue of planes waiting to take off from LaGuardia or O’Hare, you might have simply heard “we’re going to be sitting on the tarmac for awhile”, you’re now more likely to get specific information about what your position is in line, how long it’s going to be until wheels up, and what the pilot is trying to do about it. The airlines are giving their passengers credit for a certain level of sophistication rather than playing dumb.
Related to this is that the airlines are more likely to divulge the cause of the delay — particularly when they can construe it as not being their fault. On a JetBlue flight out of JFK last week that was delayed by upwards of five hours, the pilot conveyed repeatedly that the problems were caused by weather, and that there was little that JetBlue could do about it. At Portland today, I saw one of the arrival monitors as listing a flight as “DELAY/FAA”. Now, I’m not more than a semi-frequent flier, and I could be picking at straws based on small sample sizes, but all of these things seem to be becoming much more common.
Other methods are a bit more insidious. On-time percentages are calculated essentially based on when an airline claims that its flight is supposed to arrive. Increasingly, airlines are building in estimates of the time they expect to spend taxiing on the runway into their arrival estimates. Underpromise and overdeliver? That’s exactly what we’re talking about. The actual time spent in the air on a westbound commercial flight from New York-LaGuardia to Chicago-O’Hare is probably on the order of an hour and 45 minutes. However, such are the problems with departing from LaGuardia and arriving at O’Hare that the airlines routinely budget as much as 2:45 for making this connection, particularly for flights late in the day. It’s easy to be cynical about such behavior; after all, their airline is going to come out looking heroic if the flight gets in “early”, whereas frustration is the inevitable result if a flight arrives late. Nevertheless, these wider flight windows are probably helpful to the consumer on balance. There’s nothing worse than missing a meeting or a connection based on an unrealistic expectation about when a flight is going to arrive, and taxi-out delays are so routine at airports like LaGuardia that they have to be considered part of the cost of doing business.
The Department of Transportation is doing its best to help out too. The Bureau of Transportation Statistics (BTS) provides a very robust set of on-time percentage data, broken down by airline, airport, and cause of delay. The last of these factors — cause of delay — is particularly interesting. For example, here are the on-time percentages for nine major carriers in 2006 without regard to the cause of the delay:
90.1% Hawaiian Airlines
80.8% Delta Air Lines
76.9% Southwest Airlines
73.4% Continental Airlines
70.9% US Airways
69.4% United Airlines
67.1% American Airlines
66.6% Northwest Airlines
64.8% JetBlue Airlines
This statistic is reported routinely in the media, and contributes to the perception (for example) that JetBlue is doing a poor job of preparing itself for delays.
Suppose, however, that we instead concentrate exclusively on two types of flights: those that arrive on time and those that the BTS classifies as an Air Carrier Delay — something that was “within the airline’s control”. The on-time percentages if we think about things this way — excluding causes like weather, security problems, and systemwide delays — come out looking quite a bit different.
94.1% Delta Air Lines
93.9% Continental Airlines
93.6% Hawaiian Airlines
93.4% Southwest Airlines
91.9% United Airlines
91.7% JetBlue Airlines
90.0% American Airlines
89.6% US Airways
85.5% Northwest Airlines
Instead of seeing huge differences between JetBlue and Hawaiian Airlines, for example, they are now barely distinguishable from one another. This is no coincidence, since JetBlue relies on short-haul flights from busy airports in bad-weather cities — all factors that are highly correlated with delays — whereas Hawaiian Airlines is the polar opposite on each of these dimensions.
But where the airline industry has gotten better about managing expectations — if only because angry consumers have insisted that they do — baseball still lags behind. Major League Baseball resembles the airlines in a number of important ways, most notably that while it is nominally private, it is regarded as being something of a public trust. This perception is not entirely unreasonable, given the level of public subsidy provided to things like new ballparks and new airports. Anyway, what you have is a relatively high level of public scrutiny, coupled with a relatively low level of public disclosure.
One paramount example of the failure to manage expectations is in Milwaukee, where until very recently, a lot of folks were very angry about what they perceived as a broken promise on the part of the Selig family, who succeeded in getting Miller Park built for the Brewers on a promise of competitive payrolls, only to reverse course a couple years after the fact and field teams that were neither competitive nor that spent any money. Miller Park, which I visited several times during the 2003 season, is still the only major league stadium that I’ve been to where the fans were happy enough to be at the ballgame, but utterly indifferent as to whether the home team won. But the Seligs are easy enough to pick on, and there are other examples too. The Blue Jays might have sold the sabermetric community on the wisdom of J.P. Ricciardi’s ways as they radically reduced payroll between 2002 and 2004, but they didn’t take much interest in educating fans. The Marlins, obviously, have engaged in a couple of rounds of anti-marketing. And even a well run club like the Indians is finding it difficult to rebuild the trust that was eroded when it engaged in payroll purges several years ago. Baseball fans are generally a forgiving lot, but they can hold a grudge and be outright punitive if they don’t think they’ve been dealt with honestly.
I don’t have all the solutions to these problems; when a club decides that it’s going to punt on a season, either for the sake of its bottom line or to stockpile talent for its future, that’s inherently going to be a tough sell. But taking a cue from the airline industry and treating its customers with a higher degree of sophistication would be a good start.
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