Thursday, November 1, 2012

United versus Southwest

My wife is about to take a short trip up to Denver. She is flying up on Southwest Airlines and back home on United Air Lines. Because she is taking our five-month old, she needs to arrange with the airline that she has an infant lap child.

She called Southwest first. She immediately spoke with a person, was never put on hold, and quickly relayed the information. The agent of Southwest said it was taken care of and thanked her. Easy as that.

She then called United. She was greeted by a recording: (I paraphrase) "Thank you for calling United Air Lines. We are currently experiencing extreme telephone congestion due to the recent events from Hurricane Sandy. We are unable at this time to take any additional calls or to place you on hold. Good bye." And with that they hung up.

The story reminded me of this post from Bryan Caplan re: John Cochrane's recent essay, "After the ACA: Freeing the Market for Health Care"

This passage has the direct point (emphasis added):
The fact that so much cost reduction comes from new entrants, not reform at the old companies, is testament to the painfulness of this process, and the ability of incumbents to protect the status quo. The big 3 still take 40 hours to build a car relative to Toyota's 30. And two of them went bankrupt, while Toyota sits on a cash reserve. American and United are still struggling to match Southwest's efficiencies, after 30 years. The parts of Kodak invested in film simply couldn't let the company exploit its technical knowledge in optics and electronics. Chicago's teacher unions are fighting charter schools tooth and nail. And a quick look at a modern hospital, and its suppliers, suggests just how wrenching the same transformations will be.


  1. I had a similarly dichotomous experience this weekend. On Sunday, I went to three separate Little Caesars Pizzerias to get free Crazy Bread for Veterans Day as was advertised on their website. Two of the three places (66%) had never heard of this promotion and simply looked at me like I was an escaped mental patient (when we all know that I was discharged with the full endorsement of the facility). I got my Crazy Bread from each one, but it was quite an ordeal. Today I went to five Arby’s restaurants to get a free roast beef sandwich for Veterans Day. It was the total opposite of my Little Caesar’s experience. All five Arby’s (100%) had a flyer on their door welcoming veterans in for the free sandwich and each cashier knew exactly what I was talking about. And they didn’t even try to guilt me into spending money in their establishment. I think Caplan would agree that this is yet another example of how hard it is to get progress in dealing with Big Pizza.

  2. Big Pizza has had its thumb on the consumer vis-a-via bait and switch ever since the 30-minute delivery guarantee. I think Caplan's colleague Kling would offer the best explanation in that this coordination problem relates to a breakdown in PSST. It reveals just how deeply rooted the structural problem goes. But is this a knock as well against Caplan's immigration stance at least as it concerns Italians?