Airlines Turn Bad Service Into Big Profits

The Skinny is Keach Hagey's take on the top news of the day and the best of the Internet.

Rarely a day passed this summer without some news of airlines hitting a new low for service - stranding passengers for hours on the tarmac, losing a record percentage of baggage, thinking up new ways to charge fliers for even the tiniest morsel of food after they're belted in and airborne.

Analysts scratched their heads. Newspapers tried to explain the spike in delays and cancellations with long stories that amounted to "it's complicated." The country's air traffic control system was outdated, they said, and it's going to take many years to fix.

Finally, this morning, the Los Angeles Times shines some light on the situation.

"The nation's airlines were late more often this summer, lost more baggage and bumped more passengers off flights than in any summer this decade. They also made more money. Despite the worst summer ever for air travelers, major airlines posted huge profits as they packed more passengers onto fewer and smaller airplanes."

Profits at American Airlines, the nation's largest carrier, jumped more than tenfold - tenfold! - to $175 million in the third quarter. Delta Airlines said net income quadrupled to $220 million. Profits would have been higher if not for rising fuel costs.

"It was the best quarter since 9/11," said Ray Neidl, an industry analyst. "They loaded up the planes and had better seat management."

Predictably, the LA Times does some head scratching and explaining how "it's complicated" why flying is such a deeply unpleasant experience today. In short, consumers demand low fares (blame JetBlue and its peers), so at the end of the day, they're going to get what they pay for.

Kansas, Of All Places, Fires First Shot In States' War On Warming

What's the matter with Kansas? Is it feeling alright? We ask because, according to the Washington Post, the longtime conservative Republican stronghold just fired the opening shot in what environmentalists hope will be an all-out war by the states against global warming.

Massachusetts, we would have expected. Or Oregon, perhaps. But Kansas?

Sure enough. The Kansas Department of Health and Environment yesterday became the first government agency in the U.S. to cite carbon dioxide emissions as the reason for rejecting an air permit for a proposed coal-fired electricity generating plant, saying that greenhouse gas threatens public health and environment.

The Supreme Court opened the door for such a decision in April, when it ruled that greenhouse gases such as carbon dioxide should be considered pollutants under the Clean Air Act. The Post says "it may be the first in a series of similar state actions." Or at least that's what environmental groups who are fighting proposals for new coal-fired plans across the country are hoping.

The rejected company, Sunflower Electric Power, wanted to built a 700-megawatt, coal-fired plant in Holcomb - the western Kansas town made famous in Truman Capote's "In Cold Blood" - that would have produced 11 million tons of carbon dioxide annually. That's almost as much as a group of eight Norhteastern states hope to save by 2020 through a mandatory cap-and-trade program.

The paper hints that Kansas' Democratic governor, Kathleen Sebelius, might harbor ambitions for federal office. The power company knew it was in was in trouble when Sibelius dropped this inconvenient truth in her state address this year: "The question of where we get our energy is ... no longer just an economic issue, nor solely an issue of national security. Quite simply, we have a moral obligation to be good stewards of the state."

Sunflower spokesman Steve Miller took offense. "That implies that we're not moral stewards of the land, which we don't appreciate one bit."

Google Gets In Trouble Trying To Shake Money Out Of Pandora's Box

Google made record profits yesterday. Again. But another story in the Wall Street Journal hints at the perils the future might hold for the search giant.

We of the Facebook and MySpace set may have never heard of it, but overseas Google runs a social networking site called Orkut that is huge. But lately in Brazil, the Internet powerhouse has gotten into hot water for its attempts to make money out of all that traffic.

When Google tried dropping ads into the site, critics in Brazil shot back with reports showing advertisements on Orkut alongside pictures of naken children and abused animals. Now the head of the company's Brazilian operation is facing criminal contempt charges for refusing to turn Orkut data over to police.

In the U.S., Google is beloved specifically because of its hardline stance on privacy issues. (Last year, the U.S. Justice Department took Google to court for refusing to hand over data about consumer Web searches that Yahoo Inc., Microsoft Corp. and Times warner Inc.'s AOL had supplied.) But the U.S. has fairly well-developed laws on Internet privacy and freedom of speech that other countries don't have.

Brazilian law, for example, does not offer Internet companies the immunity for defamation-related claims that they enjoy here. In India, nationalists have called for an Orkut ban, and the site is already bloked in some Arab countries.

So when Thiago Tavares Nunes de Olivera, a 28-year-old Brazilian law professor, wrote a graphic alleging that Google allowed Orkut to become a den of criminal activity including child pornography and racist speech, the company was vulnerable.

Google says it regularly removes illegal content from its services. But the head of the company's Brazil operation admits that it didn't have enough people on that job soon enough. "The product grew faster than the support," he said. "That is a fact."

For advertisers, the episode underscored that social networking sites are an unreliable advertising vehicle. As the vice president of one Brazilian advertising company said, "Orkut is Pandora's box."

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