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    Doctor Cleveland's picture

    Economy, Ecology, Efficiency, Catastrophe

    Flying during the winter months has become an increasingly dicey proposition in 21st-century America. I make a handful of work-related plane trips a year, but the ones I do make tend to be for things that can't be rescheduled easily and often can't be rescheduled at all. I'm sure this is true for travelers in other kinds of business, but it's certainly true for academics: if you don't get there on the right day, the thing you were traveling to do may simply never happen. And American airlines can't quite promise to get you where you need to go any more, for reasons that have both to do with changing weather patterns and with a set of catastrophically-shortsighted business strategies that have become accepted as normal.

    I'm not talking about the occasional weather-related delays. Sometimes, Mother Nature doesn't want you flying any planes for a while, and that will always be true. What I'm talking about is the cascading delays that turn bad weather in one place into system-wide disruption and strand travelers for two or three days, and sometimes even longer, after the weather has returned to normal. And we now have such system-wide delays just about every winter.

    The annual MLA conference was held in Chicago this year just after the end of the first "polar vortex" event in January, which closed the Chicago airports and tied up airline travel across the country. The MLA is a massive academic conference involving up to ten thousand literature and foreign-language teachers. More importantly, the convention is key place for job interviews; young lit scholars looking for a job need to go to MLA as part of their job search. And of course, nobody trying to find a first job in the terrible academic job market wants to miss a job interview; even the interviews are hard to come by.

    But of course, some people didn't make it to MLA this year, because the airlines couldn't or wouldn't get them there. The extreme cold was the official reason. But in fact the cold had begun to relent, and flights had started again BEFORE the conference began. The problem was the airlines could not move the passengers who had been scheduled to fly over the previous two days.

    I flew to Chicago the day before I needed to be there, building in extra time to my travel schedule because, hey: Chicago in January. And I got there without trouble. But if I had left earlier, I would have arrived later, or not at all. I flew after the airports had reopened; people who were scheduled to fly before that had to wait for open seats on later flights, but the airlines are intensely focused on not having any empty seats, so those waits stretched for days. Someone I was supposed to meet in Chicago never arrived; that person had scheduled a flight a couple days ahead of the conference, couldn't get rebooked until two days after the conference started, and decided that there was no longer any point in going. All of this person's crucial appointments were going to be broken anyway. Why fly someplace for business if you can't get there on time to do your business?

    There are two important lessons here. The first is that the words ecology and economy share the same root for a reason. The ecology is the foundation that any economy is built on, and if you disrupt one you disrupt the other. If you're having extreme weather events every year, they will damage your economy. Crops get damaged. Supply lines break. Basic economic activity, like shipping, gets interrupted. You can't neglect the Earth for the sake of business. It's the only place business can happen.

    The second lesson is that our basic American business model is ill-suited for an environment that has to cope with so many challenges. Our current business doctrine is obsessed with efficiency, which means low operating costs. Efficiency sounds great, in itself, but in effect it means a focus on doing away with "excess" capacity. An "efficient" business is one set up to operate smoothly on a normal day, but to completely fall apart in the face of unforeseen demand.

    The goal of "efficiency" is not to have any more capacity than you need. Businesspeople are taught not to have any more inventory, equipment, or employees than they need to meet immediate demand. They are taught to employ the absolute minimum number of people they can get away with, and view the damage caused by being shorthanded when things are busy as less than the economic "loss" caused by employing a slightly larger staff. And businesspeople are taught the just-in-time inventory approach, pioneered by Toyota, which teaches that stocking inventory in advance is financially wasteful because it ties up money that could be used for something else in the meantime. Never have three spare parts in the back room when you could have just one, or better still have none and have it delivered the day you need it. If you're selling hamburgers, you should have enough burgers in the freezer to get you to the next delivery; stockpiling an extra week of frozen burgers is seen as an unnecessary cost.

    One of the problems with this model is that minimizing spending minimizes the business's stimulus on the rest of the economy. Fewer employees get paid. Vendors make money later, which slows down their own purchasing. (The financial return you go by holding onto cash for a few extra weeks is exactly the same return that your vendors would have gotten from getting the cash a few weeks earlier.)  So when everybody follows this strategy, it creates recessionary pressure.

    The other problem is that this approach is fragile. Just-in-time inventory demands that the delivery network always work seamlessly. If the part you ordered doesn't come, you're stuck. If the delivery truck doesn't show up with the next load of burgers, you're closed until it does. The more "efficient" the business, the less it can cope with disruptions.

    The airlines have been pursuing the just-enough, just-in-time approach hard for years now. Their ideal goal would be to fill every plane, every time. That's efficient, in that it gets the most out of their planes and their people. Extra planes and extra pilots are, from the airline's point of view, just a drain on the bottom line.

    The problem is that when, all-too-predictably, operations get disrupted, there is no slack in the system to deal with the problem. This is because the airlines have worked hard to take all the slack out of the system. Air travel in this country is designed to make the airlines maximum profit on a good-to-normal day. But this means not being to cope at all on the bad days. When your flight gets cancelled, the airline doesn't have seats on the next flight or the one after because they deliberately set out not to have open seats on any flights. When your flight can't take off because of a malfunctioning part, there isn't always a spare part handy, because stocking spare parts is considered thriftless. There certainly isn't an extra plane that can replace yours. And, once the delays start piling up, there aren't any extra pilots, because the airlines employ as few pilots as possible and schedule them for nearly as many hours as they're legally allowed to fly. Once the delays start piling up, the pilots start to hit their maximum hours and there's no one to fly your plane. This is "efficiency" in action. "Just in time" means everyone is delayed.

    The economy in the 1950s and 1960s operated differently; thinking was still shaped by the Depression, where people got too much experience of scarcity, and World War II, where there was no such thing as too much material at the front. The idea of having backups and reserves was not seen as inefficient, but as prudent. The point was to be ready for an emergencies. Our current business wisdom is NOT to be ready for unforeseen emergencies, because it's too expensive. So we just have to wait out each catastrophe, long after we they have stopped being unexpected.

    Comments

    I agree about the wisdom of backups and being ready for emergencies, but who in their right mind schedules a conference in Chicago in January??

    I don't mean to be flip, because what you say has merit, but I got stuck on the scheduling and the location and couldn't get away from it.  Sorry.


    Let me give you a two-part answer, because there are two questions: Why January? and Why Chicago?

    January because it's more or less between semesters, or at the beginning of the second semester, and is a relatively workable time of year for almost everybody. (Until a few years ago, the conference was always December 27 to December 29, the one time of year that no one could claim to be in session. You can imagine the complaints.) It's a normal time of year for very large, all-discipline conferences. The American History Association meets around the same time every year. So do the economists.

    Why Chicago? Because there are only so many cities where you can have this conference. You need hotel rooms, at discounted conference rates, for a conference with between seven thousand and ten thousand registered attendees. That means making a deal with a dozen or more large hotels and a convention center all clustered within a square mile or so. (Some of the registered members will stay elsewhere, but others will bring unregistered guests, like spouses and children.) Hotel rooms for 8000 within walking distance of each other narrows down the number of eligible cities pretty fast.

    It also has to be a city that has a lot of direct flights, because you need to keep members' travel costs reasonable (remember, some of these people are graduate students looking for jobs), so you need a very heavy-duty airport. Chicago is a major airline hub, so in that sense it's perfect. (In fact, the closure of the Chicago airports helped screw up the system in part because it IS a major hub.)

    Also, out of fairness to travelers, the organizers rotate the conference between Eastern, Midwestern, and Western cities, so people have their turns taking longer or shorter flights. Last year the conference was in Boston (my home town, but no traveler's delight in the winter). The year before that it was Seattle.

    The truth is, when it's the Midwest's turn to host the conference it's usually Chicago.  This is the third time I've been to MLA in Chicago in just under 15 years of going. There really aren't many other cities that can handle a meeting this big.


    Ah, it all makes sense now.  The weather will always be an issue, however, and if you've been lucky enough to get there in winter without those issues, well, you've been lucky.

    But, yes, as long as the airlines keep shutting down unprofitable routes, air travel will continue to be a nightmare.  We may have to go back to rail travel.  That'll show 'em.

     


    Oh, I've been delayed on my way to MLA before. Goodness, yes. It's air travel in the middle of winter. (And if we didn't do it in mid-winter, the job-interviewing part of the conference would just end. These decisions have to get made over the winter.)

    I just haven't been delayed three or four days on my way to MLA. That's what's new here: the inability to recover from a weather event, especially when you can count on at least one intense event every winter.)

    And making a strong rail system part of our transportation mix is a great idea. I would love to take more trains.


    Orlando comes to mind.  One of the big issues with Rick Scott is the fact that he turned down the high speed rail.  It was very close to being shovel ready and was needed to connect Tampa, Orlando and Miami for expanded hotel space for all the large conferences that wanted to use Florida in the winter.  It will keep us out of the Summer Olympics. His re-election has been doomed ever since he did that.  The hospitality business community has been eager to make sure he don't get elected again.  


    Part of the problem is that the deregulated airline contract has become so skewed in favor of the carriers.  They aren't responsible for the weather, they say.  Fine.  But that seems to absolve them of all responsibility to get you to your destination within a reasonable amount of time following the disruption.  We just got caught in Chicago and the sense of "nothing we can do about it," on the part of American Airlines employees was palpably annoying.  Partly, this is because the employees can't do much.  But the employees can't do much because the airlines know the customers have no recourse.

    Because, here's the thing about the weather -- it's largely predicted in advance.  American could, if it wanted, double its flights the day after most blizzards.  It could even contact customers booked during effected dates and try to get them on earlier flights.  But all of this would involve spending money on customer service and that is not the way at all for contemporary American Airlines where now even the right to board first is for sale.


    Absolutely. And of course, the airlines tried to blame "too much" regulation, meaning safety regulations. As if putting sleep-deprived pilots in the cockpits would solve everything.

    If it weren't for the existing regulations, they would likely become even more dysfunctional. And of course, their focus is on *barely* meeting the regulatory minima.

    Of course, changing the rules about weather delays would change the behavior.


    "American could, if it wanted, double its flights the day after most blizzards. "

    Not necessarily.

    First, for the same reasons that there aren't extra seats on flights, airlines may not have enough extra planes handy.

    But, independent of the airlines, the airPORTS may not have the capacity to add many extra flights. Takeoff and landing slots are sold well in advance and, I think, pretty much all taken.

    Thinking aloud here...wouldn't you either have to set additional flights at crazy times like 2 a.m.? (Bothering neighbors under the flight path) Or bump small flights from their slots for larger planes? (Maybe going just to other major hubs, where people would catch other connectors)


    I'm sure those are all problems and that there aren't perfect solutions.  But, things can be better, I think, than they are now.


    I think this comes back to the question of excess capacity in non-emergency times. To put on extra flights during a week of weather disruptions, airlines would have to lease more gates at airports and buy (although they technically lease) more planes. They would need to carry *excess* capacity during every day operations.

    You can't really ramp up your carrying capacity when things hit the fan, in the same way a freeway that's gotten choked in an unexpected emergency (hello, Atlanta), can suddenly add three extra lanes. Airlines could plan to deal with the bad times, but that would require spending more during the good times. They're willing to let their whole enterprise foul up a few times a year in order to improve the bottom line during the rest of the year.

    I was once told that the Postal Service devised its delivery routes so that the mail carrier could do them on the WORST possible day. The mail carrier has a route that s/he can manage in a howling blizzard. On normal days, they simply have an easier job. If the worker gets done at 2 pm on a beautiful spring day, that's the price for knowing that the worker will get things done by 5 on the ugliest day of the winter.

    This, of course, is socialist and inefficient. If private enterprise ran the US mail, they would hire just enough carriers and buy just enough trucks so that all the mail would just barely get delivered by five on the good days. And on the bad days, the mail just wouldn't get delivered. "Efficiency."


    Dr. Deming developed the "just in time" to help Toyota with the fact that they didn't have the space or the cash flow to stock pile parts. At the time Japan's banking industry was having serious liquidly problems that came to a crises in the "Lost Decade." Japan is small compared to USA.  The more area you have to move product the more that can go wrong. It has also become very costly with the now high oil prices.  This mind set has to change in this country in order for manufacturing to return to full capacity. The Dr. Deming model was pushed as a manufacturing profit solution by Dr. Reich in the 1980's because I remember going to a lecture where Dr. Reich was a guess speaker on this topic.  Later he became part of Clinton's administration. I was taking a business class at the time. 


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