Prior to deregulation in 1978, the government told airlines what routes they could fly and what prices they could charge. They weren’t allowed to compete on the basis of price.
In the two years leads up to deregulation, the Civil Aeronautics Board “experimented” with price competition. I vaguely recall Southwest becoming the largest liquor distributor in the state of Texas as a result — they were a purely intra-Texas airline and not subject to Federal regulation, their prices were not set by the Feds. But with these ‘experiments’ their prices could be matched and even undercut by competitors. So they began offering two tiers of pricing, discount fares and then full fares which were valid for the same seat but came with liquor.
While the government could control pricing they couldn’t actually stop competition. That’s why you used to get such over the top meals, with pricing set high airlines needed to induce passengers to choose them and were willing to up the investment to attract those purchases. Which led to the absurdity of the CAB actually considering regulation at one point which would limit the thickness of sandwiches.
Via Megan McArdle, Glen Whitman thinks this phenomena also explains the declining attractiveness of airline flight attendants. (Some may object to Glen’s characterization, but surely simply calling out “Deltalina” points to the exception that proves the rule.)
For an economist, the most fascinating aspect of Pan Am is the highly attractive flight attendants — or rather, stewardesses, since the show is set in the early 1960s. If you’re young enough, you might think that’s just TV. But I’m just old enough to remember flying in the 1970s, and I recall stewardesses who really were, in fact, hot. Okay, I was too young to understand the concept of “hot” — but I was definitely aware that I was being attended by some very pretty young women.
Not so anymore. Flight attendants aren’t necessarily unattractive now, but they’re no more fetching than people in any other service profession that doesn’t get tips. And what’s changed? In a word, deregulation.
Glen contends that attractive stewardesses was one way that airlines competed when they couldn’t compete on price, but in a post-deregulation world it’s clear that customers won’t pay more for attractive flight attendants to airlines don’t invest in them.
That “hot stewardesses” aren’t necessarily more expensive. Sure, all things equal there’s probably research that says attractiveness influences compensation though the effects I’ve seen have tended to be small. And that would make the opportunity costs for those women higher, raising the price they could command.
If that were a driving factor, though, you would expect foreign airlines not to advertise the ‘hotness’ of their flight attendants, and in fact they don’t just build a reputation on it but even advertise it to U.S. consumers. How many of you have seen this Korean AIrlines ad?
Instead, a supposed higher cost to employ attractive flight attendants doesn’t seem to be a driver here.
Glen is certainly right that on the whole customers won’t pay for comely service in the sky, Hooters Air is no longer operating. But they will pay not to have surly service, at least in premium cabins. And though there are certainly fantastic crew on US airlines, there’s no consistency to it, and there are also very bad flight attendants from a customer service (not just attractiveness) standpoint, including up front. And airlines do very little to control this, independent of customers’ willingness to pay some increment. Which suggests to me that it’s a significant increment, and not just in terms of the wage that would be demanded by flight attendants who would provide better service… just as there’s a barrier which makes the increment significant were airlines to hire more attractive flight attendants.
In fact, airlines make huge investments to compensate for poor service delivery. While US airlines tend to be behind on many premium cabin amenities, United and even Continental and Delta have been ahead of many world carriers in investing in their hard product (better seats). And yet they have a difficult time competing with the better international carriers, even when those carriers offer an inferior hard product. Because customers don’t like paying $5,000, $10,000, or $20,000 and not being well-treated.
Certainly there are changes in demographics and the female workforce as Megan observes, but the driver here really does seem to be unionization and labor laws. And I don’t make a judgment in this post when I say this, I’m genuinely looking for the explanation.
Airlines in the U.S. can’t have weigh-ins. They can specify uniform, but even Delta’s introduction of “the red dress” (as an option) generated much union teeth gnashing. And a campaign to produce the red dress in plus sizes for employees who were very much not-RDQ.
Who flies what route is determined by seniority, pay high business class fares on the longest flights to say Sydney and Hong Kong, and since these are also the most desirable flights for flight attendants to work, you get the oldest flight attendants.
With unionization, and when times are tough and airlines shed staff, you get last hired, first fired, this biases towards older flight attendants. And with flight attendants furloughed, airlines have to offer spots when they expand to now even older than they were before flight attendants who haven’t been working.
Further, pay is based on seniority, older flight attendants make more. The job would be more attractive for younger flight attendants if they were paid even as much as an average flight attendant, instead the income distribution is skewed to make the job increasingly attractive as the employee gets more senior. Which also makes it harder for older employees to leave.
Since it’s generally hard to get fired from a union position, service standards are very difficult to enforce.
Of course, even if union contract provisions weren’t in place, airlines would have a difficult time enforcing old standards due to changes in law, such as the Age Discrimination in Employment Act.
Now, there was unionization in the 60’s to be sure. But there weren’t as many older flight attendants then, and those that were there tended to be younger… until they weren’t. It’s only when a large portion of union members begin to “age out” that age becomes a significant issue for the unions.
Meanwhile, Megan points out that there are plenty of international carriers who do see it worthwhile to hire for attractiveness, and advertise attractiveness.
Glen Whitman could say, and he would be right, that all of these things — union costs, legal costs — raise the cost of airlines hiring on average more attractive flight attendants. It isn’t that consumers don’t value attractiveness, it’s that they don’t value it enough to outweigh the costs. Airlines which do not face these union and legal costs find it a worthwhile marketing strategy to hire more attractive flight attendants.
That’s a little bit different of an argument than what Glen was making, it’s closer to Megan’s point that it’s institutions rather than consumer preferences which drive the outcome, but it would be a more economic way of saying it.
Update: An email from D.B. points to this Google book excerpt referencing the Love Airlines case which found that hiring flight attendants based on looks is illegal sex discrimination. So as I suggested above, there are legal constraints to individual hiring choices, and as I separately contend the average age in particular is boosted by union contract rules.