Thursday, November 15, 2007

Lying to Customers-Airlines and PEU's

Two news stories show the extent corporations are willing to lie to customers to get their business. Airlines had the worst on time record in history this past year. The Bush approach to voluntary regulation has airlines craming the most popular departure times with flights, such that they have no realistic expectation of leaving on time. That throws arrival times off.

Add too many planes landing in a short window and gate access for deplaning becomes a problem. So why haven't airlines solved the problem for themselves, in voluntary free market fashion? Because none want to give up the juicy flight times.

The co-founder of The Carlyle Group, David Rubenstein just confessed to a similar practice. Instead of being honest about future returns as he competes head to head with other private equity underwriters for investment capital, he fudges.

"Clearly, when I'm fundraising I probably emphasise that we can probably do as well as we've done in the past, but the truth is it's probably unlikely." This PEU doesn't want to slow his firm's huge capital inflow. Greed isn't pretty in the air or on the ground. But in the future more ka-ching will get you the preferred departure time, at least that's what Transportation Secretary Mary Peters said when she referred to "pricing people out of the peak periods."