NBC Trashes American Airlines with Faulty Comparison

 

 

     “NBC Nightly News” attacked one airline on August 20 with a “summer travel nightmare” story and a comparison between airlines that ignored key differences.

     NBC correspondent Tom Costello criticized the world’s largest air carrier American Airlines – which had a passenger count of nearly 100 million in 2006 according to the International Air Transport Association – for flight delays.

     Costello cited arrival rates for American Airlines and Southwest Airlines to build a case against American: “So far this summer, flightstats.com reports American Airlines has had the lowest on-time arrival rate at 65 percent. But yet another Dallas-based carrier, Southwest, has had the highest on-time rate at 78 percent.”

 

     But Costello’s comparison ignored differences between the two airlines.

 

     In Dallas – Southwest Airlines (NYSE:LUV) operates out of Dallas-Love Field (DAL), an airport that is much less congested than the much larger American Airlines hub, Dallas-Fort Worth International (DFW). In 2006, the slightly-smaller Southwest Airlines had roughly 96 million passengers.

 

     American Airlines (NYSE:AMR) also has a different business model. They operate on a hub-and-spoke network and have several hub airports – Dallas-Fort Worth International Airport (DFW), Chicago-O’Hare International Airport (ORD), Miami International Airport (MIA), Lambert-St. Louis International Airport (STL) and San Juan-Luis Muñoz MarĂ­n International Airport (SJU). Those hub cities make it possible for American Airlines to serve 158 destinations.

 

     On the other hand, Southwest Airlines serves only 64 destinations and offers mainly point-to-point service to mostly larger metropolitan areas. American Airlines is able to offer service to more places, but its hub-and-spoke system is more susceptible to the delays according to Todd Sinai, a Wharton School of the University of Pennsylvania real estate professor.

 

     “What we’re experiencing this summer is a reflection of a structural feature of how air travel works in the United States. It is all predicated on driving traffic to and from key airports and doing it at a particular time,” Sinai was quoted in a July 25 “Strategic Management” article. “That makes the system very sensitive to hiccups.”

 

     A connecting flight (plane change) is required to reach a passenger’s ultimate destination. And, if a series of flights are delayed at one of American’s hubs, it could set off a domino-effect of other delays.

 

     NBC’s Costello concluded that when it comes to flying, passengers should “hope for the best and expect the worst.”

 

     Former House Majority Leader Dick Armey offered one solution to flight problems in the August 20 Wall Street Journal. Armey advocated a system called “NextGen.”

 

     “[I]t would triple the system’s capacity – without tripling the workforce. NextGen would do this by harnessing precise information from GPS satellites, advanced communications and sophisticated automation, to shift from air traffic control to air traffic management,” wrote Armey.

 

     But rather than fix the government’s antiquated air traffic control system, some have suggested placing the burden on the airlines like "CBS Evening News” did on August 12.

 

     “[A]irline analysts say [the airlines] can afford it,” said CBS correspondent Randall Pinkston as he discussed a possible “designated parking area” with water and food for delaying passengers. He pointed to Northwest Airlines’ $2 billion profit, but neglected to mention the company’s 2005 bankruptcy.