American Airlines Exposes Public Choice Theory

by | Feb 23, 2022 |

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There is a field of economics called Public Choice Theory that explains precisely why the government does a poor job with everything it tries to do. In a nutshell, elected officials and government bureaucrats have every incentive to value themselves and their own needs, even as they (hopefully) seek to serve the public.

This is, of course, is true in private business too – each employee from the CEO on down seeks to (hopefully) do the best they possibly can for their employer, but in the process, they also desire the best pay,  benefits, and working conditions they can get for themselves.

People are motivated by self-interest. Most people are also motivated by other things, such as the desire to perform at a high level, but self-interest never goes away.

Private businesses only succeed if they do better than others who provide the same goods or services. In this way, Amazon tries not only to offer products at the best price possible, but also to make the process of buying products as simple as possible. To this end, Amazon invented one-click checkout.

You will not find one-click checkout at the Department of Motor Vehicles. Unlike when buying something on Amazon, the public has no choice but to go through the Department of Motor Vehicles when registering their cars. Not only that, but the Department of Motor Vehicles does not even provide a service the public wants – we are ordered to register our cars and would not do so were it not a legal requirement. Because we have to go through the Department of Motor Vehicles to register our cars, the Department of Motor Vehicles has no incentive to make the process of registering vehicles easy. Either we figure out how to register our vehicles, we pay hefty fines, or we do not drive – we are a captive audience.

Airlines used to compete to attract passengers. Part of competing meant trying to offer competitive fares, but another part of competing meant trying to make the customer experience as pleasant as possible. Some airlines, like Spirit, focus almost entirely on price, but many people are afraid to fly, so most airlines worry about comfort as well.

I have traveled all over the world, and though I have never been to a communist country, I have been to countries that had recently been communist, such as Albania and Poland. 

I have only been to Albania once (in 1995), but my wife grew up in communist Poland, and we have been traveling to Poland every couple of years for the past 12 years.

Poland left the Warsaw Pact and regained its status as a truly free nation in 1991 – 19 years earlier than the first time I visited – but even when I first went, much of Poland still reflected Poland’s communist past, and it has been fascinating to watch Poland emerge into the modern world.

I remember the first time I flew out of Poland. There was no concern for the passenger. My wife and I got to the airport three hours before our flight only to find that the check-in was not open (there was no kiosk or online check-in). Check-in opened one hour before our flight, and a single person checked in all the passengers one at a time, weighing every bag and even carry-on item to ensure that nothing was so much as a gram overweight.

Security was laboriously slow as well. It did not appear that anyone other than the passengers cared whether or not anyone made the flight.

The train system was similar 12 years ago. Train cars were old with no creature comforts. I have never been to Poland in the winter, but I can tell you that in the summer the trains are very hot – there is no air conditioning. There was also no beverage car – the only food or drinks were whatever you brought with you.

Busses, trains, and planes tended to run on time, but everything was done for the benefit of the people running the busses, trains, and planes. Passengers were an afterthought.

Over the past decade, travel in Poland has improved a great deal, reflecting the continued gradual privatization of the industry and of the Polish economy in general.

My wife and I are in Cabo presently, and the flight over reminded me of what travel was like in Poland, eleven years ago. Whereas travel in Poland has improved immeasurably in terms of how passengers are treated, travel in the United States in the era of Covid is beginning to resemble travel in a communist country.

We have all heard horror stories about canceled flights. My wife and I flew from Detroit to Dallas, and then from Dallas to Cabo, with about an hour and a half layover.

Maintenance was called over just before boarding began for the flight from Detroit to Dallas. The flight ended up an hour late, which would have made getting to our connecting flight difficult at best.

Luckily, the flight took 20 minutes, less than expected. There were 23 people on the flight with the same connection we had to Cabo, and we all ran as fast as possible to the connecting gate, arriving during normal boarding.

We were all told that American Airlines had taken on stand-by travelers, and that none of us still had tickets. We had been booked out on the first flight to Cabo the following morning.

For my wife and I, this meant missing a day we had already paid for in a five-star resort, with a five-star dinner, staying instead in a Fairfield Inn, with a 12 dollar dinner certificate, good only at the Dallas Airport. The next morning we got up at 4:30 to make our flight.

What happened to us is, of course, fairly trivial. That it happened to 23 other travelers makes it only slightly less so. We still made it to Cabo the next day and are having a very nice vacation.

In Cabo, we met another couple that the same thing happened to, except that their delay was long enough that they truly could not make their connection. It was even the same airline – American Airlines. That other couple told us they suspected that American Airlines gave them (and us) a maintenance delay on purpose in order to sell tickets at a premium to passengers on standby.

I don’t know what American Airlines’ motivation was. I only know two things for sure:  that I have never heard of someone making a connection only to find that they no longer had a ticket, and that American Airlines made me feel, for the first time in my life, like I lived in a communist country.

American Airlines is still a private company, but they no longer seem to care about losing customers. American Airlines is instead teaching a master class on Public Choice Theory.

American Airlines sucks.

Wallace Garneau

Wallace Garneau is a two-service military veteran, with four years in the United States Marine Corps Reserve, and four years in the US Army. He has twenty-three years of experience in process improvement roles, having served as the E-Commerce Manager, IT Manager, and Director of Business Systems for a variety of medium to large manufacturing companies. Wallace holds a Bachelors of Science from the University of Phoenix, and an MBA in Lean Manufacturing from the University of Michigan. Wallace is currently finishing a Masters of Science in Lean Manufacturing, at Kettering University.

Wallace is a published poet and essayist, and recently finished his first book - The Way Forward: Lean Leadership and Systems Thinking for Large and Small Businesses.

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