Aloha Airlines, RIP: Your Customers May Kill You

In the Hutong
Party Secretary on the piano
1056 hrs.

The death of Aloha Airlines can be used as an allegory for many things, but the lesson I take from it is that we as consumers need to rethink the role we play in the world.

It’s all fine and good to say “hey, I’m going to go over here and buy stuff because it is cheaper.” That’s the way we’ve been taught, and for many of us the need to save money is a matter of life and death.

But a large and growing number of consumers around the world aren’t going for “everyday low prices” because it means the difference between eating and not eating, or between having new clothes and going naked. For many, the issue is a matter of being able to buy what we need, and being able to buy a whole lot of things that we don’t really need.

When we were in Honolulu a month ago, we wandered over to the Wal-Mart behind Ala Moana Center, about two kilometers from our hotel in Waikiki. Prices were, frankly, really low, and when you walk into a place where decent quality is available at an irresistible price, a little gland in the back of your head fires and suddenly you are filling the cart with a ton of stuff that you don’t really need. Think impulse buying on a grand scale that continues right up to the checkout line.

The Party Secretary then did a triage on the cart, and we wound up “restocking” a significant chunk of the items that we had grabbed that we did not have on our list when we walked in the store. But we still bought stuff that frankly, we didn’t need.

And that is the upside to everyday low prices. We buy stuff we don’t need because it is cheap, and we not only institute the Wal-Mart Effect, we also bring about unintended consequences in the form of waste, environmental damage, questionable labor practices, and businesses of all types driven into hardship, bankruptcy, or dissolution.

So long, and thanks for the trips

And such was the case with Aloha Airlines. People saw the near term benefit of $29 interisland airfares that on the U.S. mainland would have undercut Southwest airlines by 65%. They ignored the long-term problem of destroying a business upon which much of the Hawaiian economy depends. And they were warned.

Oh, sure, there are still plenty of planes flying around Hawaii, but they are smaller (meaning more flights to carry the same number of people) and have no belly space (meaning the island lost critical cargo capacity to support not only its businesses, but that would drive up prices on everyday goods to everyone in the islands.)

Time for Consumerism 2.0?

And service quality will decline. How many Californians old enough to remember the days of Pacific Southwest Airlines and AirCal would love to have those two airlines back, instead of USAir and United Shuttle? And how many of us would be willing to pay an extra $30 on a round-trip to have it?

I’ve always been something of a Milton Friedman laissez-faire capitalist. I am all in favor of creative destruction wreaked by the market.

But I’m starting to realize that when we enable creative destruction, we have to use a little more foresight and understand exactly what it is we are destroying. The hidden hand will not ensure that creative destruction will not destroy something worth saving – we will, as consumers.

Consumers in Hawaii are learning this the hard way.

All of us had better. And soon.