Heathrow letter: Sir, I was also at LHR on Monday. And Saturday. And because I paid for the privilege of a good place to sleep and had priority on the next flight to Chicago, I had a chance to sit it out for the weekend and wax philosophic like you (“Heathrow chaos could be eased by demand management”, December 21).
You describe the “market” situation at Heathrow well: Demand is fragmented, uncoordinated, every man for himself. It’s not an efficient market by a long shot — characterised by asymmetric information, incorrect information, and misplaced confidence in the quality of information. Flights that have no chance of getting out still appear to be “on time” long after they should be cancelled. Airlines have incorrect information about partner airlines’ flight status. Passengers may hold multiple confirmed bookings, preventing other people from getting a seat.
This changed Heathrow from a utility to a casino. Some lucky “players” (passengers) were blissfully successful (those booked on flights that were only marginally affected had no idea what the fuss was about), some lost taking what appeared to be safe bets on flawed information (rescheduling from Saturday to Monday or even Tuesday would have been a losing proposition for many). Some would chase flight after flight on standby lists and eventually get a payoff.
But transportation isn’t meant to be a casino, which makes this episode a prime example supporting Nassim Taleb’s arguments about robustness: Optimised systems are fragile and extremely vulnerable to catastrophic failure. Airports and airlines run optimised businesses, driven by models that dictate everything from how many snow-ploughs to buy to where they should hedge fuel prices. When it works, it works marginally well (air travel isn’t wildly profitable). When it fails, it does so in grand style.
The European weather has been called “exceptional”. That implies this was a Black Swan event, but that’s disingenuous. It’s not a Black Swan event just because the operators didn’t see it coming. The weather in London was not exceptional. It snows like that all the time in other parts of the world. It snows like that no further away than Aberdeen. “Exceptional” here is a euphemism for “beyond what we decided we were willing to pay for”. A lack of preparedness made this into an exceptional event. This has exposed the lack of resiliency in business operations of BAA and the airlines.
If anything, the vulnerability to catastrophic failure means we would be better served by demanding and rewarding robustness over optimisation, especially from utilities.
I hope you got to wherever you are travelling.
Best regards,
Ross J Pettit
