With its distinctive droop snoot, the supersonic Concorde was commercially launched during January 1976 and grounded in 2003. At 60,000 feet and 1,500 MPH, its London to New York trip was just 3.5 hours. Although the Concorde never made money, it remained aloft for 27 years.
To understand why a money-losing airplane kept flying, we just need to look at our long waits on hold.
The airlines have confirmed that their phone services have huge wait times. One Lufthansa passenger reported a three day ordeal. Attempting to book an earlier flight, at first, after an hour, he was disconnected. Then, on a second and third day, he hung up after another hour’s wait. With JetBlue, the caller was told the wait would be 280 minutes–enough time to partially binge on Netflix, cook some waffles, and do a wash. Another rather patient individual said she was on hold for a whopping nine hours with Delta.
Our Bottom Line: Sunk Costs
We can compare these fliers to the Concorde’s long life because both involved a massive investment. Just developing the Concorde (and its droop snoot) cost billions of dollars as did maintaining its flight schedule. Similarly, simply waiting for an airline to pick up the phone cost fliers many hours.
And yet, the Concorde remained in the air and callers stayed on the phone.
An economist would say that they were responding to their sunk costs. Unrecoverable, the cost of the planes and of the waits had already been paid. But still, it influenced future decisions. People who are disciplined rational thinkers would look ahead at the cost and benefit of continuing to fly a supersonic plane. They would say it makes no sense to stay on the phone for 280 minutes. For many of us, though, it is tough to ignore the sunk costs. Instead of just looking ahead, our decision is influenced by our (past) sunk costs. Whether it’s a supersonic plane or wait times, lost theater tickets or a poorly performing pricey athlete, a past investment can skew our judgment about the future.
My sources and more: Yesterday’s WSJ article on wait times was the perfect sunk cost example. Also, thanks to James Surowieeki for an excellent New Yorker column on sunk costs that took me to the story of the Concorde in The Atlantic. Our featured image is from a Concorde blog.