How to fix the airline industry

Many readers say they'd tolerate higher fares if it meant better service. Are you listening airline execs?

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By Paul R. La Monica, editor at large

This Memorial Day weekend, I plan to travel by...
  • Car
  • Plane
  • Train
  • I am staying home

NEW YORK ( -- You get what you pay for. And that means you don't get much anytime you fly these days.

In yesterday's Buzz, I criticized companies like American Airlines (AMR, Fortune 500), which just announced a $15 baggage-check charge, for finding new ways to annoy customers.

I sympathize with the plight of the airlines. Even when jet fuel was much cheaper, it was a tough business. Now, it's nearly impossible for airlines to make money.

But instead of infuriating passengers with clever new fees for basic services, I suggested that the airline industry should end its decades-long practice of price wars and raise fares dramatically.

I figured consumers would be willing to pay higher ticket prices if it helped keep more airlines in business and also led to a better flying experience. Many of you agreed. Here's a sampling of what some readers had to say about the airline industry on our Talkback page.

Interestingly, many readers felt that big fare increases were not just long overdue, but would actually be welcomed...especially by airline workers.

"This is 2008, not 1968. And airline fares have remained basically the same for 40 years," wrote Clint from Palm Springs, Calif. "To do that, airline executives have cut all frills and forced drastic pay cuts on employees to subsidize cheap fares. Finally there is nothing left to cut and airline employees have endured so much, they are ready to riot. Fares MUST GO UP."

It just isn't logical that ticket prices have been relatively immune to inflation. And passengers seem savvy enough to realize that prices should head higher over the long haul.

Catherine, a reader from Arlington, Va., wrote that she's paid the same price for a flight from Washington, D.C. to Denver for the past 10 years.

"Tell me, how much sense does that make? I will still fly at double the fare," she said.

Do you hear that, airline execs? It seems that passengers just want good customer service. And if that comes at a higher price, so be it.

"Give me back the meal, take my luggage at no additional charge, give me my window or aisle seat without an upcharge, and increase the price of a ticket," wrote Norm from Haddonfield, NJ. "I use and need the airlines and am willing to pay my share to keep them alive and well. Charge what you need to charge. We'll get used to it....just like $4 gas. Stop beating me to death with these ridiculous additional charges."

Still, not everyone was convinced that higher prices would be a good thing. One reader pointed out, as I did in yesterday's column, that the only top airline expected to make a profit this year is also one most well-known for discounted fares: Southwest (LUV, Fortune 500).

"If the only airline that is turning a profit is the lowest cost airline of them all, then how is hiking prices going to make a difference?" wrote Sterling from Denver. "People put up with poor service on Southwest flights because they are cheap."

Some think that there are still too many airlines facing too few customers. So maybe more consolidation, ala Delta (DAL, Fortune 500)-Northwest (NWA, Fortune 500), and even more airline shutdowns, are needed.

"Raising prices is such a simplistic concept. Except for this: Every time it happens economy minded travelers head for Southwest and other discounters," wrote Paddy of Naples, Fla. "NEW discount airlines spring up to siphon off the bottom feeders; and CFOs send down orders to reduce corporate travel by 30%. So, yes, raising fares sounds like a simple solution but there's too much competition about to make it stick."

It's a good point. But I still think that airlines should at least try to raise fares and see how that works. It seems a better alternative than American's baggage plan, a proposal that several readers think is doomed to backfire and make things even worse for passengers and airlines.

Readers are worried that if other airlines follow American's lead and start charging to check a bag, passengers will try and bring more carry-on bags, leading to even longer security lines as well as a longer wait to get everyone boarded on a flight.

"It seems simpler to just raise prices accordingly to inflation and gas prices than to cause all this commotion and confusion that will be associated with charging for checking luggage," wrote Chad from New York.

And that would not be good.

After all, a Congressional committee released a survey yesterday which showed that airline delays cost the industry and passengers a whopping $41 billion last year.

"It seems simpler to just raise prices accordingly to inflation and gas prices than to cause all this commotion and confusion that will be associated with charging for checking luggage," wrote Chad from New York.

Sadly, the airlines don't appear to have their customers' best interests at heart. I think reader Mark from Chicago sums it up best.

"These delays will increase the stress of everyone involved. The increased stress will lower passenger satisfaction levels, which are already pretty low. Charge a fair price to keep your airline profitable," he wrote. "Some services should remain part of the cost of the ticket, such as checked bags. Remember, solid business models are about value of the service, not necessarily the cost."

With that in mind, I hope that all of you have a wonderful Memorial Day weekend...and that for the sake of your sanity, you aren't spending most of it stuck in an airport.

Issue #1 - America's Money: All this week at noon ET, CNN explains how the weakening economy affects you. Full coverage.

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