Consumer Complaints Are Up 300% at Airlines. What’s Going On? – Peter Jacobsen

It seems like if you talk about traveling with friends lately, at least one of them has a story about some recent nightmare of delayed or canceled flights. Anecdotes about airline mishaps abound.

But do the anecdotes reflect reality? Is airline quality as a whole decreasing? The data indicate yes.

The Department of Transportation just released another monthly Air Travel Consumer Report, and the results are surprising. Several indicators show a decline in quality. Let’s go through a few and discuss how this trend relates to one of our current economy’s biggest problems: inflation.

When looking at the data released this month, I’ll be comparing it to data from the same time in 2019 since flight numbers during the pandemic were so low that the data simply isn’t comparable to today.

On-time Arrivals Down

So post-Covid are you more likely to have your flight canceled? Absolutely. First, let’s look at the total number of flights. In the first quarter of 2022 there were 1,598,468 total records of scheduled flights in America. This is 8% less than the 1,749,234 flights in Q1 2019.

The percent of flights arriving on time fell by a little less than 2% from 2019 to 2022. This was driven by two categories–cancellations and air carrier delays.

Despite there being fewer flights in 2022, 63,734 flights were canceled in Q1 2022 compared to only 44,545 at the same time in 2019–a 43% increase in the number of cancellations.

Air carrier delays increased from 91,743 in Q1 2019 to 121,013 this year–a 32% increase. So all those anecdotes about a friend getting stuck on the runway because there’s no one to load bags? We can see it in the data.

Mishandled Baggage and Involuntary Bumping

It’s not just moving people from point A to B that’s gotten worse.

^{Table 1–Baggage Mishandled}

As you can see from the above table, the number of bags mishandled has increased by over 32,000, despite a decline in total bags handled of over 7 million.

The report defines mishandled baggage as, “the number of check bags that are lost, damaged, delayed, and pilfered, as reported by or on behalf of the passenger, that were in the airline’s custody for its reportable domestic nonstop scheduled passenger flights.”

This number is different from the number of complaints to the Department of Transportation about baggage, in that it includes reporting by airlines and others on behalf of customers.

A bright spot is that the percentage of mishandled wheelchairs and scooters has decreased by 0.4%, however given that the number of reports in this category is a little over 2,000, the change in absolute terms is very small (45 less mishandled scooters/wheelchairs).

There was also a slight increase (from 6,175 to 7,333) in passengers being involuntarily deboarded due to overbooked flights.

Complaints Soar

The most staggering finding in the report is the increase in the number of complaints. The complaints in the Air Travel Consumer Report are not complaints made to airlines. They’re complaints consumers officially file with the Department of Transportation. I (and I would guess I’m not alone among flyers) didn’t even know this complaint process existed until I started following these reports.

Complaints increased from 3,000 in Q1 2019 to 13,026 in Q1 2022. Relative to the total number of flights these numbers are small, but the change is anything but. Complaints are more than four times higher now than in 2019. But why?

The report actually gives some info here. Complaints are broken into categories.

Let’s start with the elephant in the room–refunds. While much of air travel has returned to normal since COVID-19, refunds have not. Obviously, passengers are expected not to fly with COVID, but airlines also don’t want to foot the bill for someone else getting sick.

As a result, most airlines offer some limited voucher refunds. There’s a good chance many with time-sensitive events complain about these vouchers which are often confusing to use and may expire before the next time it makes sense to fly.

Furthermore, it’s likely the uptick in cancellations and delays has led to circumstances where consumers want a refund airlines are reluctant to give when there is a gray area (such as consumers booking a very short layover which involves switching airlines).

Of the 13,026 complaints received in 2022, 5,684 were about refunds compared to 321 in 2019.

So refund concerns are driving a significant portion of the complaint uptick. But even if you remove all refund-based complaints, 2022 still has more complaints than 2019.

So what other categories of complaints increased? Almost every single category. And almost all of them by a lot. See for yourself.

_{Table 2– Airline Complaints}

Many of these make sense. Cancellation and delay complaints track based on the analysis above. Complaints about fares makes sense given prices rising in the industry.

But there is a little bit of a puzzle here. Some of these increases look disproportionate to say the least. I know we’re dealing with small numbers here, but complaints about baggage more than doubled, even though the number of mishandled bags only increased by 5%. Now, 5% more bags being mishandled is a large number, but would we expect it to lead to a more than 100% increase in complaints?

At least three possibilities stick out to me. First, as I alluded to before, I’m guessing most people don’t know this complaint system exists. My guess is disgruntled customers seeking refunds for their flights discovered it. This discovery has made it relatively easier to make future complaints about other issues through this system.

Second, things like mask-mandates on planes which persisted through Q1 2022 may have exacerbated irritability and drove some consumers to step up their complaints.

Another possibility is that with airline fares going higher, consumers have higher quality expectations than before, and are therefore more likely to complain when airlines fail to meet the quality standards.

In any case, the complaints do reflect a consistent theme in the report. Airline quality is down.

Shrinking Flight Quality?

So what’s going on? Well first, one bad quarter does not make a trend. Air travel is still much better for the average consumer than it was decades ago. No doom and gloom needed.

But what’s going on in the short term? It’s hard to say for sure. Perhaps there are still some post-COVID adjustments going on.

Alternatively, John Stossel argues increasing regulations are to blame. That’s a decent theory, but the recent nature of the problem contrasted with the older nature of the regulation Stossel points at makes me wonder whether this could explain why things have gotten worse recently. Though he isn’t wrong that removing these cumbersome regulations could improve the situation.

There is one explanation, however, that would account for the recency of this trend: shrinkflation.

Increases in consumer prices dominate much of the current discourse around inflation. Airline prices are also up in recent years, the highest since around 2015 by Consumer Price Index measure, but this measure doesn’t take into account the changes in quality.

When food producers face rising costs, for example, they look for ways to cut costs so they don’t have to raise prices as much. Sometimes that means sacrificing quality, such as packaging size (hence the name “shrink”flation) or customer service. When a company decreases the quantity or quality of a good, such that consumers receive less satisfaction, but the price remains the same, consumers are made worse off.

Essentially, a consumer would have to spend more to receive the same quantity or quality of a good.

Unlike price inflation, shrinkflation is not recorded by standard inflation measures like CPI. But it affects consumers nonetheless.

In the airline industry, airlines can charge the same amount of money for a ticket while decreasing the quality of a flight (perhaps by cutting back on baggage staff and increasing flight delays and mishandled baggage).

What this will ultimately mean is standard measures of inflation will underestimate the lower welfare of consumers in the airline industry. So not only have prices gone up in the airline industry–the quality of the good has fallen.

The good news is, market competition has a way of forcing improvements in the long run. In the meantime, however, we may have to wait on the runway a bit more.

This article was originally published on FEE.org. Read the original article.