Inefficiencies: Plane Tickets

Julie came to visit me this weekend. I hadn’t seen her since New Year’s so it was awesome!

What is funny about it is the cost of the plane ticket. We’d looked at prices a few weeks out and they were already in the $700 range. A week later, they were up to $1,200 for most flights. This is ridiculous under any situation.

It was a holiday weekend in Canada, with Victoria Day, but why do airlines drive up the price this much?

So I was scrolling down Travelocity’s search results and found a bizarre $600 flight. Even stranger, this was a direct flight both ways (usually flights between Montreal and Dallas prefer to stop in Chicago) and had times that were compatible with our plans. To top it off, the ticket included three nights at a hotel. Let me get this right. Not only was the ticket direct and cheap, but it included hotel and was still half as much as the going rate? Fuck yeah I’ll buy that!

If I traveled more, I’d hate airlines as much as I hate cell phone carriers. They operate shady, opaque businesses and rip off their customers as much as they can. And then they complain about maintaining profitability. There is no excuse for $1,200 tickets versus the package I got.

These businesses are stacked against individual consumers. It is the same in the hotel business, where you pay hundreds of dollars a night to stay in an empty room for less than 12 hours. They charge these prices because most of their customers use corporate expense accounts or bill it to their employers. Clearly anything business-related (mobiles, hotels, planes) are money-makers for such industries and they can get away with charging any price and not expecting business travelers to have any incentive to save their own companies money.

What happens though is that it leaves out individuals like you and me. We’re forced to pay premiums for anything we do. It increases barriers to entry for using these services. On a national level, fleecing companies’ expense accounts decreases competitiveness in providing the best, cheapest services. It makes those industries reliant on the teat of corporate waste.

And it hurts the bottom line of all corporations because they pay so much to ferry their employees around to stupid conferences and meetings that probably don’t contribute anything to the company’s image or profitability. Employees take their companies for a ride as much as they can, under the perceived notion that they might as well because their bosses do it too, and that no one is looking, and that they’re not getting paid enough or respected enough as it is.

One thing people don’t factor in when considering working in the government or the military is that everything is compensated for. This manifests itself in many abuses of the system as people will charge the government to ship their car to Australia if they get assigned there, or stay in really expensive hotels on the government dime, or max out food/laundry/gas expenses. The government’s coffers are limitless and everyone in an office works together to ensure they get the maximum pay-outs. Even the finance folks will offer tips on how to get more.

I’m very much a Buffett kind of guy when it comes to business operations. He’s one of those folks who will go visit a company’s headquarters and see how penny-pinching they are. Do they waste money on lavish, pointless accessories or do they conserve water and paper? It extends to coddling employees. Why do CEOs and executives earn so much more than employees? Why do you work less and earn more as you get promoted? Why are you sending employees on flights all the time when gasoline and inflation are jacking up prices?

What is the economic value wasted under this sort of worldwide scheme? What will happen if the world economies soften?