Sometimes It’s Not About the Journey, It’s About the Destination
May 29th, 2008Flying is a topic that’s been on my mind a lot lately. And if you’ve been flying lately, you know delays and other travel-related woes have been getting worse. On top of that, the price of gasoline is raising fares at the same time service is being cut back, and airlines are charging for nearly everything. I think The Economist sums up the situation quite well in their aptly-titled article “Hurry Up and Wait”.
The worst indignity I have heard of to date is American Airlines’ new policy of charging you to check your first bag. (More on how bad American Airlines is later.) As they discuss in that article I linked, the perverse incentives that policy creates boggle my mind. Airlines already struggle to get people to check bags instead of lugging overstuffed suitcases on board. I can only imagine the lengths people will go to to avoid such fees.
All this means airlines actually made a profit in 2007, largely at the expense of us poor passengers. (Although even this looks shaky as the price of fuel goes up and fares do not.) Airlines present a fairly unique situation, where both demand and prices are rising while service is declining. Are airline tickets the first real example of an odd product type that economists call a “Giffen good”?
Giffen goods are a semi-mythical concept in economics. In contrast to what you may have learned in a course in basic economics, when the price of a Giffen good goes up, people buy more in response. This is counterintuitive, hence why they are so elusive. Many used to think the Irish potato famine of 1845-1849 was one example, but that was later shown to be false. Others think Giffen goods come from a much more ordinary source: rice in China.
I think they might be airline tickets, though. The first requirement for Giffen goods is that they be “inferior goods”. Inferior goods are goods you only buy if you can’t afford or don’t want to pay for “superior goods”. Think Taco Bell vs. a steak dinner (unless you REALLY like Taco Bell, I guess).
You might think airline tickets are superior goods, and in a way that’s probably true. There’s no (common) faster way to get somewhere, and generally people would rather fly someplace if they can help it. But lately, people have been talking about cutting back on flying and driving instead. If you’ve been on a plane lately, they certainly can seem inferior. Not everyone agrees, of course. But combined with the fear many people have of flying, I could maybe see a case being made that airline tickets are an inferior good (or at least a mediocre one) for some folks.
I’m being a bit tongue-in-cheek here, of course. It’s true that flying stinks lately, and that even as the price of tickets is going up, demand is too. But they’re no Giffien good. Giffen goods rely on the fact that, in response to price rises, you have to stop consuming a superior good in order to consume more of the inferior one. (i.e. You run out of money in your budget to buy the superior good, but you still want the same amount of goods of that type, so you buy more of the inferior one in response, like more rice vs. meat.) But I don’t see supersonic or space flights becoming common in the near future, so you won’t see superior goods to aviation anytime soon. Until then, it’s all whining.
Which made me wonder. Just how bad is flying? For me personally, it’s definitely been worse than usual. I’ve had two flights canceled in a month, countless delays (almost none of my recent flights were actually on time), and my luggage got delayed for a couple of days while I was coming back from China. I knew things were getting bad when I saw my first-ever fight in a terminal, in response to the second flight cancellation I spoke of (from Seoul, South Korea to Dalian, China). All this is mostly new to me, so I figure it’s a recent trend.
Still, it’s all anecdotal evidence. To get a more definitive answer, I decided to turn to the Bureau of Transportation Statistics (BTS), who publishes a wealth of data on the number and causes of flight delays.
A quick search of their press releases confirmed what many of us already know: delays and lots of other negative aspects of flying are on the rise. Checking out that link, you can see many other fun facts, like United Airlines flights arriving late over 45% of the time in 2007, and certain specific flights that nearly always arrive late (!). This is despite the fact that airlines are often allowing a lot more time than they used to for the same flights. (A 90-minute flight mentioned in that Economist article from earlier is now scheduled to take 2 hours, for example.)
The most up-to-date data I could find on the BTS site wasn’t much better. First off, they give you a pie chart, which, if you’ve read my past posts on data presentation, is usually not a good thing. (Thankfully, they have a link to a perfectly serviceable table of the same data.) Second, you can see that even in a lighter travel month like March, aircraft delays are still fairly high (71.56%), almost equivalent to what they were during the busy holiday season in previous years.
Whose fault is that? Well, you can blame the weather about 44% of the time these days. The rest of the time it’s usually due to the airlines involved. If you want to read more about how good specific airlines and airports are, there’s a really great report called the Air Travel Consumer Report with lots of great tables and relevant statistics. If you take the time to dig through the report, you can see stuff like the huge amount of delays at O’Hare (Chicago) and Laguardia (New York) airports, both of which are extremely busy and notoriously bad. (My other canceled flight was to O’Hare, which was not a surprise.)
You can also see that delays are strongly correlated with the time of day. Delays are extremely infrequent early in the day (probably largely due to the fact that the plane is already at the departure point and ready to go), and get more and more common as the day goes on. By the time you hit 4-9 PM, you face anywhere between a 10-40% greater chance your plane will be delayed. If you’re flying to a busy airport, with a bad airline, or on a tight schedule, flying very early in the day (before 8 AM) is your best bet.
But who should you fly with? As you might expect, Southwest is near the top of the list for on-time departures, and Northwest isn’t bad either. Delta, US Air, and United are just OK. But watch out for American. Not only are many of their flights late, but they also have lots of cancellations, lost baggage, complaints, and other such undesirable things. (Though everyone except Southwest fare poorly on at least some of these measures as well.)
So, even though flying is getting worse, hopefully some of this data will help make things better for you (and me). And if you decide to go ahead and fly on American Airlines from Laguardia to O’Hare at 9 PM the day before Thanksgiving, don’t blame me if you get an “inferior good”!
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May 30th, 2008 at 9:12 am
This was a great read. Lots of great links, too. Nice job.
Thanks Dan!
–Dave
July 5th, 2008 at 11:54 am
so true! since i’ve been flying back and forth to panama (using american airlines) i can tell you that all my flights have been delayed except for one flight from jamlando to miami. one night my plane was delayed from miami to tampa by 8 hours. i didn’t get back to tpa until after 2am which is when the airport closes :o(
Yeah, it’s too bad those later flights are so often delayed. Some notorious routes originate or fly into Miami too, so that doesn’t help. What can you do, though?
- Dave