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The Private Equity for Families Blog

A Greyhound In Your Future?

A return to normal travel protocols is creating some surprising twists. Based on my family’s experience with airline travel this spring here are four new rules for domestic airline travel:

1. An airline reservation is simply a highly profitable call option exercisable only by the airline in its absolute discretion. You have no recourse if the airline decides not to fly.
2. If you don’t have a back-up plan, don’t travel.
3. Ask yourself if you can get a train, bus or car if the airline cancels.
4. The face value of the ticket is just the starting point of your financial commitment to the travel experience.

This Is Not A Normal Return To Travel

Normally, a return to travel after an economic recession like 2008 or a terrorist attack like 9/11 is slow and incremental and usually highly competitive. The consumer must be convinced to spend discretionary funds on travel and he has the upper hand in the bargaining relationship.

This time the rebound has occurred fast. There is no indication of any hesitancy in the travel rebound after two years of abstinence. The consumer is expecting 2019 service and reliability, but the domestic airline industry is broken. Here are a few stories from the last week of travel in and out of southwest Florida:

Where Is My Captain?

WINK news Ft. Myers reported that a flight from Ft. Myers to Buffalo boarded on time. Once the passengers were on the plane, the flight attendant made an announcement that the pilot was delayed. The passengers waited for 15 min and then there was another announcement that the pilot had just hopped in a cab in Miami, and he should be in Ft. Myers in about 3 hours. Four hours later the pilot arrived. The flight that was scheduled to leave at 8:08am departed at 12:14. Some passengers received a $50 voucher as compensation for being stranded on the plane for four hours.

I Am Paying Twice For The Same Seat

My daughter’s flight from Ft. Myers to Boston was cancelled due to weather. I looked out the window and the weather was fine. I checked the radar and there was no weather I could see. She had to return to renew her role as a mom and employee. Her husband was leaving children at home with 3 beagles. She was supposed to depart on Saturday afternoon. She actually departed Tuesday morning. Guess what—she had to pay $100 to get a new seat assignment. The collateral damage is several Uber charges, an extra seat payment, and having to arrange for care of her family and dogs.

My Ticket Is A Fraud

My brother-in-law went online to search for tickets from Cleveland to Ft. Myers and ended up on what he thought was Spirit Airlines’ website. He purchased an expensive roundtrip seat and was quite surprised when he presented it in Cleveland only to find it was a fraud.

I Think I Am Going To Drive

A couple of friends got bumped off a flight to Cleveland last weekend. They had to get back for personal reasons, so they jumped in their car and drove 19 hours straight through. If this is your back up plan, you better be able to sit in a car seat for almost 24 hours. I know how this would have ended for me—I still would be sitting in my car molded to my seat for eternity. Jaws of life would have been needed to extract me.

After A Middle Seat Experience You Will Pay Up

I have no excuse for the rookie moves I made traveling back from a Salt Lake City ski trip last week. Their new airport is spectacular as long as you can walk ½ mile to get to a non-Delta gate. The $5.00 coffees and the endless Starbucks lines were all tolerable.

Seat selection, on the other hand, was like trying to solve a multi-variable equation. You were not permitted to just choose an open economy seat with either a window or an aisle. You were able to buy a seat with leg room, more leg room and extra leg room all at prices that changed every time you logged in.

I got distracted by the skiing, and never selected any seats after reassuring myself I would be afforded the courtesy of my elite travel status on United. Little did I know that United had upgraded customer profiles and in the process my known traveler number was deleted. On top of that United had no record of my flight because I made another rookie mistake in booking through Expedia.

Forty years of having help with travel bookings left me clueless about booking through consolidators like Travelocity and Expedia. Here’s a hint–your purchase does not register in the trip itineraries of the chosen airline.

I guess I wasn’t surprised to learn I had seat 32B in an old Embraer traveling on my second leg from Houston to Ft Myers. I was surprised, however, there were only 33 rows and there was a 32 A and 32C. Surprise turned to self-pity when I had to make room on either side of me for 300lb males whose knees did not fit in their space. They borrowed mine.

We made great time and landed early in the “weather” that was going to cancel flights for 2 days in Ft Meyers. Unfortunately, we sat on the tarmac for more than an hour. The plane that was supposed to vacate our gate had pushed back on time, but hysterical passengers demanded a return to the terminal for an unplanned deplaning. Maybe they had just heard from their bank that they were out of cash?

I now am paying up to avoid a “back of the bus” middle seat experience. I also am skeptical about whether my flights will fly at all and I am budgeting $2x as the real price. With the price of premium gas nearing $5.00 per gallon the cost of driving straight home is $250 just for gas. If you want to eat and sleep it is probably $400.

I am channeling Milton Friedman every day I hear the Modern Monetary Theorists spin the fairy tale about inflation being under control. Mr. Friedman is right: “Inflation is first and always a monetary problem” and “if you pay people not to work and then tax them when they do, you will have unemployment.” The once dependable airline industry is the latest example of MMT’s good intentions gone awry.

The above commentary is for informational purposes only. Not intended as legal or investment advice or a recommendation of any particular security or strategy. Information prepared from third-party sources is believed to be reliable though its accuracy is not guaranteed. Opinions expressed in this commentary reflect subjective judgments based on conditions at the time of writing and are subject to change without notice.

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Rob McCreary

Rob McCreary has more than 40 years of transactional experience as an attorney, investment banker and private equity fund manager, and has spent his career in building entrepreneurial organizations with successful track records. Founder and chairman of CW Industrial Partners (originally CapitalWorks, LLC), he is responsible for developing and maintaining senior relationships with investors and portfolio governance.

This blog represents the views of Rob McCreary and do not reflect those of CW Industrial Partners or its employees. This blog is not intended as investment advice. Any discussion of a specific security is for illustrative purposes only and should not be relied upon as indicative of such security’s current or future value. Readers should consult with their own financial advisors before making an investment decision.