Let's Start an Airline-Hypothetically

[TonyC]

DISINGENUOUS

First post on this thread, fourth paragraph:

The investors are adament about keeping their workforce non-union ...

Tony C,

I am not disingenous in any way. I have no dog in this race,

OK, then whose dog is antiunion? The "investors"?!?!?

As for putting the cart before the horse ...

Who said anything about "cart before the horse"? Did I miss that, or are you feeling guilty about something?

As for the other thread I didn't delete it, I just left because my inability to express my core ideas reaped non productive replies.

I didn't say you deleted it, I said you abandoned it. And you did. Because your anti-union, anti-reserve pilot ideas were not well-received. So you started this thread with the premise that your hypothetical airline will be staffed by non-union associates. But - - you "have no dog in the race." THAT, my friend, is what we call DISINGENUOUS.

If you want to be anti-union, fine. There's no law against such an opinion. But if you want to proclaim the idea, be prepared to answer the counterclaims. And don't pretend to hide behind the curtain of academia in an attempt to just learn. Admit your bias, and face the music.

 

[TonyC]

I can read !

I think bobbysamd was talking about the pups that may be interested in moving and living in a domicile where they can start their professional life in the industry.

If I am able to comprehend Bobby's post - - and I think I can, because he's quite literate and articulate - - he was talking about line pilots who would be pulled "off the line for periodic duty as flight instructors and TAC officers in [y]our flight academy" and would "have to move to [y]our school's domicile." Their "interest" was not a factor.

When they HAVE to be instructors, and they HAVE to move to the domicile to do it, they AIN'T all gonna be happy.

 

[Publishers]

real world

Bobby and Astra

What I was trying to do was throw some real world cold water into the mixture.

Let me assure you that if the incestor wants his son or his wife to be in their, unless they are dangerous or totally incompetant, they are in.

We could design the prefect world, or airline, but, the fact is that people are involved and they keep screwing it up, pretty much since Adam and Eve.

I have been the CEO of an airline and several charter companies, and, there is no way the mentoring system will work, and, no way if you ever have a flight academy that you are going to pull instructors from the line to teach.

I liked you idea of a hypothetical airline, just do it as one really would do it. Face the same factors that happen in real life. I did not make these things that I threw at you up, they actually happended and I saw them.

When I left another type business and got into aviation, I found that the number of managment decisions that I made versus ones forced on me changed dramatically. In aviation, many decisions are made by others and you have to live with them.

I would like brand new A 320's but what I can get are very used DC9 30's.

In effect, the FAA, the London insurers, the DOT, auditors, and local airport authorities make as many critical decisions as I do.

I would like to go into National but what I can get is Dulles.

I would like to train my pilots at Boeing Flight Safety, but what i can get is calssrooms after 10pm at AeroService and two hours of sim between 1am and 3am.

I would like to be able to take every credit card on earth but I cannot get a master account for phone sales unless I give up 1.645% of the sale to this shyster of a banker.

I would like to sign up with a major reseration system, the trouble is that my flight as a preference will be way down the list.

What I can get is my own system, of course, will not be able to interline.

You get the picture---- these things are created through compromise and to do your airline without taking that into account is like not doing it.

That is what business is, making the best out of the cards dealt. Any idiot can do it with unlimited amounts of money and time.

 

[Astra Guy]

Publishers,

Your points are well taken. I know there are a number of pitfalls associated with any endeavor, let alone something of this scope. I understand the realities of politics, training times, credit card and other charges.

I think that since you have gone through some of these experiences and you have offered a spreadsheet that you could be invaluable to help us make this as close to real world as possible. I am sure that I am not alone in saying that your input is valuable to us.

If you think this whole process is ludicrous then I am sorry. I thought that everyone could learn from each other in the many different areas of expertise that are prevalent here on this board.

 

[Markm1811]

Operating a New Airline..

I have followed this thread in silence for way too long. A friend and I are going down the same path looking at a startup airline working on a restricted yet lucrative route plan. We have gone though the considerations of Flight hours, Type of plane ( and even been to the desert to look around). We spoke to the aircraft manufacturers and got loads of information regarding GP, Air cost per mile and even fuel hedging ( not a great idea in the start up flow).

When you are ready for route planning please let me know. I have some information on flight flows, freight flows and even routes as yet not contained that the business world consider value for travel.

Astra - You are quite correct the 3 main keys we discovered so far is a, good solid investement with a rate of return understood to be 8 - 12% ROANA b, The key is HR and destroying the old boy network and c, dedicated pilots who understand that to get in on the initial is tough but the rewards for success makes the time bearable.

HR- I am trying to break into the dispatch world still.. Please can I send my resume when the time is right. Decent support and ops staff are a major factor for day to day ops..

Mark M

 

[Publishers]

Astra

I do not think it is ludicrous, there are all kinds of simulations around for everything from running an airport to building a city, air traffic control, etc.

One thing that is obvious is that there tends to be a concentration on righting every wrong from a human resources point of vew.

First of all, there is a good old boy network almost from day one at every company. That good old boy network can be many things. You could call the Silver Bullets at Alaska good old boy networking. The Delta recommend letter.

It probably will not surprise you that I do not find anything wrong with it. The fact is that if I was made president of Delta tomorrow morning, there are a few folks I would call and invite over and in. One of the keys to running something is to find like minded individuals. I do not want to micro-manage the company, but I do want people that think like I do so inb given situations they will make like decisions. You would call that a good old boy group and yes it is.

Nex, if the investor has some friends he wants me to look at, we are going to look. It is his money. If they are not dangerous or brain dead, they are in.

The fact is that a good deal of our potential success is going to take place before we hire the first employee. If you play golf, you know a good many bets are won on the first tee not when the game is played.

You guys think you know how to handle people-- let me give you a question to answer.

You know that you are going to shutter a division and let all the people go in two months from now. Do you tell anyone?

You have someone you want to fire, you bring in his replacement for training and have him ready under the persons nose or do you terminate first and get the replacement.

As you consultant to the Board, just get me your start up budget and tell me when we will get the certificate.

 

[Astra Guy]

Publishers,

I understand what you are saying and actually don't disagree with much of what you have said.

I don't believe we can right every wrong from an HR view. I do believe we can correct some of the obvious things that lead to a company's demise if their core business is offering a service. I do think that the winners in the airline business will be the ones that add value to their customers. One snippet of value that can be improved upon in most day to day 121 operations is treating customers like they matter. Another bit of value is not cramming as many passengers into an airplane that was designed for 2X2 seating 20 years ago into a 3X2 coach seating arrangement, not to mention the knee busting experience of sitting behind someone. I do believe that a business model can be created by those with a different corporate culture than is the norm, can be successful. Lord, help us if this is not true.

Hiring like minded people to work and manage only makes good sense. Imagine taking over a company where everyone's response is that "Well we don't do things that way around here." Maybe that is why they are failing in the first place and the reason you were called in to take over.

As for your questions. Neither is easy to answer, which is probably why you asked. My personal method of handling number one would be to let people know that due to some business difficulties that a review would be taking place to see which divisions are not effective. That would atleast give some a heads up that something is coming. In most businesses that I have had contact with there are always changes along the life of the business. Only the blind would allow a model to remain that doesn't work anymore. Question #2. One factor affecting this decision is how critical is this person to your operation? Another would be is there anyone else in the organization that could fill the gap temporarily until a full time replacement is found. I think hiring and training his replacement under his nose would be the least attractive method of the choices.

As soon as we settle on the marketable route structure and airplane we will let you know.

Thanks for your input.

 

[bobbysamd]

Big Brotherism

[N]ot every line pilot is qualified (other than in the technical sense of holding an ATP) to instruct. You know that there are a number of personality traits, whether inherent or developed, that are required to be an effective instructor. One of the most important traits is a desire to teach . . . . Volunteers only.

No. Part of the idea is to give back to the company. I agree; not everyone wants to be an instructor, which is why we will make it attractive. Instructors at our academy will be revered individuals, just as they are in Europe. They will not be regarded as the bottommost step in the aviation food chain, as so many flight instructors are in this country.

We would use line pilots who are CFIs to instruct through Commercial-Multi-Instrument. Line pilots without CFIs or with lapsed CFIs who are interested can come to me, and I will either get them their CFI or send them for reinstatement practicals on the company's nickel. I will work with our school's POI to ensure that CFI expiration is never a problem.

[O]ffering to help find schools for kids and employment for spouses smacks of "big brother"ism.

The intent of offering assistance is to reduce the trauma of moving. While I know that a great number of people here have moved more than I, it doesn't make it any less difficult or traumatic. It would have been nice if I, as a newcomer to a new city, would have had someone who could have turned me on to decent housing and had provided other relocation assistance. Not to mention that a couple of times in my life I had relocated just before holiday periods and spent the holidays alone. It would have been nice if someone had cared.

The last element of the package - - "assistance i[n] finding ... employment for spouses.... " is offensive to many. It assumes that the spouse is a subserviant portable device that can be plugged into the local economy in some sort of employment capacity at the whims of the airline and the pilot.

Read my comments above. The company is there only to offer assistance. A formalized way of the old "I have a friend who has a friend who knows someone who could use your talents" kind of thing.

You're reading far too much into what I propose. No one intends to set up a company town and force employees to trade at the company store, nor will anyone owe his/her soul to the company store.

Too many companies want you to relocate. They may pay for your move, but they really don't care beyond that. We will be different. We do and will care.

SO, what do you think about volunteer instructors, who can commute if they so desire?

I feel that training our pilots to our procedures and our culture is a very important part of our company. Commuting is fine as long as instructors are available to their students and don't miss any shifts.

 

[bobbysamd]

A flight academy of our own . . . .

I think bobbysamd was talking about the pups that may be interested in moving and living in a domicile where they can start their professional life in the industry.

That's essentially where I'm coming from, and it would be a long-term project. Instructing interest would be very much a part of the interview process. I feel that if you bring in the right type of people they would love to be mentors, especially to highly-motivated students.

Even the most dedicated and conscientious flight instructor hates going to work when his students arrive unprepared for flights, do not apply themselves, and must be spoon-fed. It is a pleasure to come to work when you have students who are motivated and prepared.

 

[enigma]

After getting caught up from the weekend, I just have to say that some of you are focusing on the wrong target. If you truly desire to build yourself an airline, you need to stop focusing on 5% of your people and start talking about the 95% that will do everything from throw bags to arrange non-rev travel. Those people are the ones who will make or brake you. I firmly believe that I could use a random number generator to pick pilots from a pool of qualified applicants and achieve success. Not so for customer service people like FA's, gate agents, res agents, etc. For those jobs you need more than just the willingness to work for an airline. Customer service, and your middle managers will have more to do with your success or failure than will your pilots.

I say this because it is self evident that pilots are highly reliable to get the job done. We may piss and moan, but when it comes down to brass tacks, we do our job. Airlines fail because managers fail to do their job, not the pilots. Expansion planning, marketing, fuel planning, equipment choices, etc. are hugely more important to an airlines success than how the pilots are trained.

There is an unseen reality here for both sides. Pilots are not as vital to success as we would like to believe, and pilots are not as responsible for failure as management would like to believe.

One more thought. Pilot pay. Why come SWA can pay a fluf driver $200K and make money, yet AAA loses money with highly paid pilots. If pilot pay was the problem, SWA would be in the same boat as is AAA. Seems to this country boy that management is responsible, not pilots. Try spending your time looking for superb CS and middle managers.

enigma

 

[Astra Guy]

enigma,

You raise some good points. There is no doubt that the "front line" folks are the ones that can make huge differences in success or failure. Concentration of hiring the right type in these positions would surely be a challenge but it is doable. I believe there are enough caring folks out there who would provide the level of service we expect. I agree that the middle mgrs can play a huge part in overall mission completion. Bad apples need to be identified and kept out. If one sneaks through then we would have to deal with that appropriately.

Quality people from top to bottom makes the difference. As for the SWA and AA situation I don't know the difference in work rules but I would suspect that the working environment is much more positive at SWA.

There are so many complex issues in each company that can determine the attitudes of their folks. Management surely has been the weak link in most failing airlines. The same is true in most any industry. It is not pie in the sky type thinking that if the corporate culture is where it should be, then many of the problems can be stopped before they arise. A lack of ethics, morality and effeciency has created this monster. Everyone in the organization should know that whatever they do that their efforts do make a difference. Communication from top to bottom and from bottom to top has to be fluid. No one in the dark means that even if the company falls into lean times that it is a shared experience. No unfair bonuses paid to the top folks when their efforts don't result in profitability.

Thanks for bringing these things up.

 

[Astra Guy]

Markm,

Thanks for your post. We surely would be interested in routes that you have uncovered in your study. Someone with dispatching skills can lend a lot to the overall mix of decisions on the front end. Once we determine the route structure, which really come first, and then the airplane, plus knowing what our associate levels should be helps answer many of the unanswered questions so far.

Don't be a lurker....give us more of your ideas and the stats you have uncovered.

Thanks again.

 

[Publishers]

Enigma

Enigma,

You ought to be running that airline.

Who are the most important people-- if we are trying to grade at all. The ones who deal one on one with the customer and who are often dealing with them when things go bad.

Reservations and customer service positions.

It also is where tremendous cost and productivity issues reside.

One of the things I am always pointing out in these threads on unions and why regionals do not get integrated-- well it is the other 95%. Often companies where the pilots have tough union contracts have unions in other positions. Even when they do not, they tend to have a higher employee cost than ones who do not.

The fact is that the pilots often separate themselves from the rest of the company by attitude and job description. The rest fo th ecompany feels that the pilots are prima donna's and do not relate to them.

Astra

The answer is that you do not tell them a thing in the first question.

The second one depends more on the situation. In a smaller operation, you might have to have the replacement right under the nose of who you are going to terminate.

My wife, one of those retired professional flight attendant used to tell me all the time, you ought fire so and so. Great dear, but who will work his shift today, you.

In our hypothetical airline, we need to understand our first obligation is to the investors, not to the people we hire.

 

[Astra Guy]

Publishers,

I respectfully disagree about question 1. Allow me to give you a little background in my real world situation, which I believe I have shared with enigma. I work for a privately held company. I created the flight department over 13 years ago. This company has been in business since 1956. The founding father passed away. His wife became the Chariman of the Board. His first born son was appointed President. There were six children in all, five of which worked directly for the company until an unfortunate chartered plane crash in Kenya this past summer took the lives of one of the sons, his wife, his eldest child and nine others who were all in-laws.

When we created the flight department the gross sales were !$250M. Today it is ~$1B. Along the way because the company, led by the family continued to acquire other like, but somewhat disimilar companies which allowed them to basically increase their customer base. The family that runs the company could easily walk away after going public for more than $100M each and that is a conservative estimate. They do not. Why? Simply because they are driven to continue to make this company viable, in part due to their dedication and love for the founder. Other motivations are that they want to make this company a meaningful place for their associates. Have their been lean times? Sure. Never to the point of not making a profit, however.

Along the way, since I have been here there have been four reorganizations. It was determined that our corporate overhead was way out of skew. This is due in part to many old timers who continued to get above average increases while their individual productivity and efficiency went down. Some were severed and given generous packages as a result.

How does this relate to question 1? Well the owners of this company made it clear to everyone ahead of time that things had to change and outlined in general terms, the problems. For the most part the ones that were severed understood which was eased by their severance packages.

Blind-siding people who have the impression they are doing an adequate job is not fair. Everyone should be given the opportunity to change their focus and hopefully keep their jobs. The President and his Lieutenants have to make tough decisions which affect everyone who's life will change.

There is no doubt that the owning family wants to make a profit. Included in that profit making is above average scale salaries and benefits, annual and Christmas bonuses, which are above scale, etc, for our associates. Is this extraordinary? Sure! Is it possible to treat people fairly, pay them a decent salary and benefits package and still make a profit? Absolutely! It all depends upon the culture which is driven from the top.

This same family is philanthropic donating their time and money to many needy charities, many times in the background which they gain no publicity from. Are we proud and happy campers in this company? You bet! Many of our associates have "like minds" as you put it.

This company has grown through acquisition, as I mentioned earlier, I believe. Some locations were non-union and some were union. It is about a 50-50 mix. The non-union locations are the most productive from a value added/associate standpoint. They are paid a higher wage than union workers. We have had several locations that have decided upon their own to vote the unions out. I guess the word got around.

So the answer to question two is patterned around how my company would handle such a situation. I realize there are many variables to this so it is difficult to answer without having more data.

Are we fortunate? Of course! Is this the standard? Of course not! But then again who says we need to just rise to the standard?

If the founders of a company have a real purpose besides maximum profits for establishing the company then they might be more motivated to offer some of the things that have been brought up on this thread. I know people are greedy. Some are more greedy than others. Some realize there is something above money that counts...like doing a good job, having peace of mind in their workplace, being a member of a team and if the team wins or loses they have given it their best shot, etc. These are core character issues and the core character in each prospective associate needs to be evaluated.

This is not pie in the sky. It is real world, even if it is rare.

By the way, this company is the technological leader in their industry. After reading back through some of my descriptions, they lead in other ways as well.

After all of the reorganizations why was the flight department spared? It boils down to value added. The relatively small cost to run our operation was outweighed by the time spent relying on airline transportation. We are a time machine...we help save it, for many in our organization.

I know I am very fortunate. I work hard to be worthy of my company's praise and benefits. Can you imagine a better situation? I can't. Does this mean that another endeavor can't be started with the same founding ideas? Absolutely not.

Ok, I am off the box now. I write this only to help people realize that there are several ways to start and run a profitable company. I prefer the method our founders have chosen....and so does everyone else who are associates here.

And no, unfortunately there are no openings in my department. But there might be in the future....when someone retires, dies or we expand our fleet.

 

[RegionalFA]

Non-union can work, but it'd be difficult. JetBlue seems pretty successful. Focus more on jobs done well and QOL. Though, there has to be an official forum for addressing issues as they arise.

Customer service is a big one. You can have a smashing financial setup... but, without customers, your airline will do nothing. Passengers are unlikely to be highly swayed by the "rotating captains" position and more likely will simply be confused. Confusion leads to uncertainty. Uncertainty to lack of Confidence... and so on and so forth.

What are you going to offer the person with the checkbook/credit card to make buying a ticket on your fictional Airline XYZ that is more than the legacy carrier that they have some recognition of (if little faith).

Personally, your details are limited and I certainly wouldn't sign on for something without knowing the details.
There's a lot more to any airline than making the pilots happy.

 

[bobbysamd]

CSAs and service

I, too, agree that customer service and public contact people are extremely important. An airline's commodity may be transportation, but the only thing really being offered is service. We must strive to offer better service than our competition. Once we get in customers (would "clients" be a better term?), we have to provide the best flight experience possible. That begins wtih the people we have on the other end of the reservations phone and behind the counters and podiums. We should choose them carefully for their experience and once we have them, train them on treating our clients as kings and queens.

We had discussed cross-utilizing other personnel, so pilots and other flight operations personnel should be chosen and trained accordingly.

One other aspect about service. I, as an air traveler, am sick of multiple aircraft changes and hubbing. Why can't we not apply the Southwest model and provide point-to-point service, with plane changes being the exception? That would go a long way toward providing service.

 

[Astra Guy]

bobby,

I personally like the point to point system, as well. Once we get more data on building our route structure then we can start working on the trip scenarios. My gut feeling is that we should serve the densely populated areas first. Of course we have to bounce that concept off of the competition and try not to pile on an already saturated market.

As for cross-utilization I think what is important here is to setup a system where each associate works for a short period in other areas of the operation so they can gain understanding of what others are going through daily. This will help develop unity and comraderie amongst our folks. It could greatly reduce the us vs. them mentality that comes with not understanding each other's role.

 

[Publishers]

Astra

I think you missed question one and what it was saying.

The example I am using (comes from a course on HR I took at Ohio State) is that a whole division or company is being shut down and at this point only the board knows that. The employees have not done anything wrong, just that division is not working out and is taking time from our core businesses.

Do we let the employees know we are shutting it down before we actually do?

One of your points relates to another question and one that is very appropo to aviation. That is when there are automatic raises and people can get to where with seniority they are receiving much more compensation than the jog should pay.

As an example, I had a switchboard operator/receptionist. She stayed with the company and was given raises pretty much just cost of living and performance. She stayed at that job for a period of years, had no desire to do anything else. Eventually she was being paid considerable more than I could get the job done for by a competant person.

There are a bunch of these type questions. They are not easy. People who were good employees who could not adjust to the new technology.

How about the person who does their job but somehow is always bothering others on the job site and hurting their productivity. A cultural misfit.

Am I saying that you do not want to treat your employees well, not at all. What I am saying is that it is a matter of understanding your priorities. It is also making tough choices.

One last point. You mention the owning family. The key word there is own. When you own it, you can be as benevolent or as dictoral as you like. The flight department was spared because the owner did not want it killed. Simple concept.

You should not confuse running an employee friendly ship with the issues that I bring up. Let me give you an reverse employee problem. The Limited Stores set up nice stock plans for their employees. The chairman's secretary was one of them. She also bought stock on her own. She became a millionaire and left the company sort of to the dismay of the chairman.

While you would never know it from this web site, there are a bunch of really good bosses out there. As a matter of fact, of the 40 years I have been in businesses, never once in a managment meeting did I hear managers talking about employees the way that I see management talked about on this site.

 

[Astra Guy]

Publishers,

Thanks for clearing up my confusion over what you posted. I agree with you about the mgt. bashing that seems to be prevalent here. Part of our problems as pilots is we have way too much idle time...atleast part of the time. It was the same way in the military flight organizations I was in. Pilots normally have above average aptitude and are easily bored. The boredom sometimes results in creating little things to talk about....this is just one of them.

You know, people are people, regardless of where they are or what position they are in. It is just best to know how to deal with the different types one runs across.

 

[enigma]

Pilots normally have above average aptitude and are easily bored. The boredom sometimes results in creating little things to talk about....this is just one of them.

Am I to believe that you think that Don Carty's golden parachute shenanigans were created by bored pilots? How about Leo Mullens similar malfeasance? I guess Frank Lorenzo didn't really cash in his employee's retirement funds to pay off his junk bonds, we just imagined that as well. Next you're going to try and convince me that the age 60 rule came about because of health related issues.

Astra, for someone who claims to be open minded and "just looking for inf.", you certainly seem prejudiced to me.

maybe more later, maybe not.
enigma