Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

In Defense of the Airlines


Would you really rather sacrifice your safety for your time?

"You now are not free to move about the cabin -- but get over it!"

High fares. Long security lines. Delays, cancellations, and horrible customer service.

It's easy to blame the airlines for all your travel woes, but in reality, they're the biggest losers as terror grips the skies once again. They must guarantee passengers' security while retaining customer satisfaction and pleasing shareholders with profits. Accomplishing all three simultaneously is no easy task.

One day after Umar Farouk Abdulmutallab's Christmas Day attempt to detonate an explosive device on a Northwest Airlines (DAL) flight to Detroit, President Barack Obama administered further security precautions for air travel to and within the United States.

Now passengers are being put through the ringer. Airlines are preventing them from holding personal items on their laps during flight, requiring that they remain seated for portions of it, and shrinking permissible carry-on luggage dimensions.

And then there's the most controversial proposal of all: Full body x-ray scans and aggressive luggage search for all passengers.

Passengers are finding plenty to be upset about, but it bears reminding that they hold the airline responsible for guaranteeing the safe and secure arrival to their destination. So if they deem these precautions appropriate, customers should feel satisfied with the protection they're receiving.

However, as seems to be the common trend post-9/11, air passengers have presented arguments against the newly established airport security regulations and they continue to place blame on both the airlines and the government.

The "enhanced screening" and other aforementioned security rules raised scrutiny on the grounds of three major issues:

Travel delays
2. Economic impact, both financially and socially
3. Privacy concerns

These are all inconveniences, sure, but a small price to pay for avoiding potential devastation if these measures are not employed and administered properly. If the airlines fail to exhibit a thorough and effective screening process, then the people will hold them responsible if any misfortunes come about as a result. So what are major airlines to do?

Continental Airlines (CAL) took its recent security breach on the chin. After an apparent security violation at Newark International Airport on January 3, flights experienced long delays and even cancellations after passengers had to be "evacuated, inconveniencing thousands."

The result?

Continental reimbursed some passengers and waived fees for others who were affected during the lockdown. It was the airline's problem to solve, and it came at a cost. But customers will be dissatisfied with either situation -- they will be upset that their flight is delayed or canceled due to security issues, but if the issue isn't resolved in their favor, they'll be even angrier.

You can't have your cake and eat it too.

Flight delays have progressively reduced throughout the last decade, and now with advanced security, it's inevitable that they will occasionally rise.

In November 2009, US airlines set an on-time record with 88.6% flights arriving as originally scheduled. As seen here, United Airlines (UAUA) had the highest of all US airlines with an on-time rate of 92.6%. The 88.6% on-time rate for all US flights is the highest since September of 2002, as reported by the Bureau of Transportation Statistics.

And then there's the recession.

As passengers become more and more irate with delays caused by "over-security," airlines will be forced to absorb the losses from vacation cancellations.

"A 1% drop in demand would be equal to a revenue hit of more than $1 billion, and because airlines are so highly leveraged, nearly all of that would come off their profit bottom lines," analyst Vaughn Cordle at AirlineForecasts told USA Today.

Airlines are faced with another dilemma: Relax security measures in order to please the client, but risk another terrorist attack? Or they increase security, protecting the client base, but risk losing them due to delays and various "inconveniences"?

The American Civil Liberties Union confronts the new safety measures by claiming that it's an invasion of privacy, acting as a "virtual strip search". They argue that terrorists will "easily" evade these body scanners and that "security is never absolute and never will be."

So basically we should just give up?

Michael Chertoff, secretary of homeland security from 2005 to 2009, responds to the argument:

In deploying the machines, the TSA has strictly limited the number of officers who see the images; separates the officers looking at images from the passengers being screened (so the officers do not know which passengers the images belong to); and uses software to blur the faces on the images -- further protecting the anonymity of passengers. Moreover, the machines are configured to prevent TSA officers from storing or retaining any images. As an additional measure, passengers can choose not to walk through one of the machines and receive a physical examination instead.

The fact is, airlines must take precaution to guarantee the safety of their passengers no matter what the cost.

But as arguments have been made in the past over cell phones and computers, people have questioned whether the exposure to radiation in airport scanners can cause cancer and other harmful effects.

A study by the American College of Radiology concluded it can't.

According to the researchers, one regular chest X-ray at the doctor's office is equivalent to more than 1,000 airport scans in a single year. The study explains that "the backscatter X-ray technology only exposes a traveler to an amount of radiation that is comparable to two short minutes of being on an airplane at 30,000 feet."

So anyone willing to fly should be physically willing to take the X-ray on topic of radiation, unless they're hiding something.

If you're still upset, ask yourself this: As a passenger would you rather sacrifice your safety for your time or your time for your safety? It seems the latter would be the wiser choice.

No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos