Unpacking the Premises of the Aviation Industry

Sometimes air travel is difficult to understand. Some thunderous practices or announcements
generate misunderstandings, at least as far as I am concerned. Here are a few examples.

The price of the planes
Recently, following his visit to the Middle East, he and Donald Trump’s team may have announced a
massive order for Boeing aircraft from Qatar: 160 long-haul aircraft divided between B787
Dreamliner’s and the latest B777X for a total of 200 billion dollars. I accept that the price of planes
has risen enormously recently, but I don’t see how we can reach such amounts. Let’s take the largest
aircraft, the B777X with 400 to 430 seats depending on the version, the price displayed, before
discounts, is 440 million dollars. This is a far cry from the $1.250 billion average cost of the devices
displayed by the White House press releases. In fact, we would be closer to a total of $120 billion if
we count the letters of intent for half of the number of aircraft announced. Why these
announcements that are not based on any economic reality?

This is all the more curious since Boeing is still unable to predict the date of the first deliveries of the
B777X for the good reason that the aircraft is not yet certified. I am always amazed at the effects of
announcements during which astronomical sums are lined up at leisure, no doubt to make more of
an impact than those of the competitors. In the end, no one really knows the true selling price of the
devices, even approximately. For this to happen, the accounts of manufacturers and buyers, whether
airlines or leasing companies, would have to be a little more detailed. But apparently, no one is
interested in this.

Yield management
This is a very good idea, at least on paper. It is a question of maximizing the revenue of each flight. To
do this, it is advisable not to leave any space empty because it costs as much as those occupied
without bringing in anything. Except that the equipment of the aircraft is not very flexible and it is
impossible to adapt the seats according to their potential revenue, which is unknown. And advances
in computer science have brought their capacity for complexification. In short, the rates evolve
according to the “Yield Managers” who, behind their screens, are responsible for ensuring that the
flight for which they are responsible brings in as much revenue as possible. This is quite normal,
except that customers no longer understand anything and that they have simply noticed that either
they manage to benefit from such cheap rates that they do not cover the costs, or they have the
enormous frustration of having had to pay much more for their journey than their neighbours, all for
exactly the same service. Basically, to fill the last empty seat, airlines have had to accept load factors
often above 90% of the capacity of the aircraft, which causes real discomfort both for passengers and
for crew members who have to deal with the annoyances of their customers.

It would perhaps be simpler to display clear and simple rules by accepting to lose a few points in the
occupancy rate, but keeping an equivalent revenue After all, air transport developed well before the
famous “yield management” was led to such excesses that one can find up to 100 different fares on
the same long-haul flight in the same class of service. A little common sense wouldn’t hurt.

Passenger protection in the event of bankruptcy.
Air Belgium recently filed for bankruptcy, leaving customers who had bought their tickets in advance
in the lurch, pushed to do so by fare rules. They are creditors of 8 million euros and will never see their money.

How is it that air transport officials do not oblige airlines to create a guarantee fund to
compensate for their possible failures? Carriers who are the first to demand this provision from their
distributors should have the decency to do the same on their side vis-à-vis their consumers. By
always wanting to postpone this necessary provision, they expose themselves to the fact that
European and American legislators will take measures infinitely more restrictive than they could
agree. Never asking others what you don’t want to do yourself is very understandable.