The problems with the Airline Industry

[Boeingman]

Order in which things affect an airline


1.yeild(directly connected to ATF prices)
2.over capacity
3.poor mgmt.
4.unions(not really)

You forgot #5. Mgmts. corporate vision extending only as far as lining their pockets with the next quarterly bonus checks.

 

[46Driver]

46Driver,

Did U ALPA tell UAL to fix their staffing and not count on pilots picking up over time?

Is that kind of staffing model sound management...counting on individual pilots to fly extra. Gee..piss them off and still expect them to fly extra.

Then managmeent and the media spin to make it all labors fault...

And gee....piss the passengers off and still expect them to fly your company? The airlines are a service industry......

Regardless of who you blame, the entire company lost when the passengers had had enough. Then you can blame ALPA for not doing enough public relations in the media to counter management's spin. How would you describe it to the customers, especially when on time dropped to what, less than 50%?

 

[VADriver]

And gee....piss the passengers off and still expect them to fly your company? The airlines are a service industry......

Regardless of who you blame, the entire company lost when the passengers had had enough. Then you can blame ALPA for not doing enough public relations in the media to counter management's spin. How would you describe it to the customers, especially when on time dropped to what, less than 50%?

Tough Love? How long to take it on your back before you are willing to sacrifice a few to make a point.

It is the pilots responsibility to fly the airplane safely. It's managements repsonsibility to make customers happy. If pilots want to make customers happy then don't write anything up and keep on flying....although there is that safety thing....

Yup the entire compnay did lose, but who is repsonsibile? You can't be serious if you think it is the pilots...

 

[46Driver]

I disagree. It is a service industry and is the responsibility of every employee to make the customer happy.

Now when the articles appeared (and I was reading them after a google search) that the United pilots flew the least amount of hours and in return received a 28% raise to be the highest in the industry, how do you answer that? On top of that, there was the quote from Dubinsky, "We are not going to kill the golden goose but we are going to strangle it until it gives us every last egg."

How do you answer the media when presented with the above statements that appeared in various newspapers? How do you answer the customers who wonder why UAL's on time dropped to less than 50%? Why would a customer want to fly your airline again?

 

[VADriver]

I disagree. It is a service industry and is the responsibility of every employee to make the customer happy.

Do you think that managment would ever use your attitude and dedication to customer service against you and your employee group?

 

[FMR_RGNL_PLT]

I just read the post about the UAL guys getting a big raise and doing less flying some time ago..........

It sounds like some of you blame unions for negotiating the best contracts they can, and thus it's the fault of unions that the industry is in the shape its in.

Back to industial/labor relations 101, unions try to obtain the best deal for their people, and management tries to pay as little as possible to its employees for the services they provide.

Now if management agrees to a contract which it knows it can't afford it is MANAGEMENTS fault!

Its pretty much common sense, when business is good and companies are growing and making money, and unemployment is low, labor is going to have an advantage in negotiations, when unemployment is up and companies are losing money labor is going to feel the heat to make concessions, etc.

Now in response to some earlier comments about my previous post,,,,,,,,,,,,,,,,,,,,,,

Corporations and big business are a crucial part of our American system, but people have to remember businesses exist to make money: not to help their employees, not to be fair, not to be concerned about the environment, and not to be concerned about social justice..........

That is why, in a civilized society, you need unions and government regulations to serve as checks and balances to corportate power.

 

[Dizel8]

I'll agree with that post. Unions wants a Million, companies wants to pay a dollar. That is just how the cookie crumbles.

But what to do, when factors change. The UAL raise was essentially a bribe to allow the merger with U, secondly, it was also a raise long in the coming. But conditions changed rather badly. Unions would be mostly unwilling to give up hard fought raises, while the company needs to lower cost, this due to the fact, thatv very few companies, when things are going exceedingly well, will open contracts or award employees more money.

Contracts are written and agreed to, based on assumptions which may or may not hold true in the future, ie earnings, profits. It would be beneficial to both the company and the employees, if there were provisions, that would benefit both, in case thing worked out better or worse than anticipated, ie profitsharing.

 

[Publishers]

hit on the head

You hit it on the head.

Fronm both a capital and labor perspective, decisions are made at the time that they are made using the best guess formula. The aircraft that you buy is estimated to fly for you for some 30 years, so if you make a bad decision, it is going to stay with you for some time forward. Same with labor agreements.

Unfortunately unions (and Lessors as well) tend to not want to renegotiate the deal based on what is happening now.

Frankly if unions were any good at all, they would look independantly at the situation, walk in to the companies and sya let us make a change to our contract.

As it is, they wait til the company proves it is in distress. Sort of a stupid concept if you think about it. Let's wait til our healthy patient is on the death bed rather than fix him when we see the first sign trouble is coming. Let's wait til the dike breaks rather than fix that little leak.

Air Tran is an example of what you can do proactive rather than waiting for the other foot to drop.

 

[FMR_RGNL_PLT]

I think if management would be willing to come to unions when things are going great and say, " hey your doing such a good job you deserve more pay", then unions would be far more willing to accept concessions.

Concessions should be linked to company performance, once company performance turns around concessions should start to be reversed.

Its a 2 way street

 

[MLBWINGBORN]

Hmmm...

Ive been both non union as well as union and a former member of ALPA..I am currently a member of SWAPA..

IMHO the factors that have led to the current situation in the industry are endless..I dont think you can blame 911 or the current administration..

To be very honest the industry was well on its way to tanking well prior to 911...

The two biggest and obvious factors were the down turn in business travel due to a weak economy and the advent of the internet...Things that only a travel agent could do for you just a short while ago can now be done from any wireless device or laptop..And the high priced business ticket was something the companies just werent going to pay for anymore..

In addition to these factors were several unions pushing for and getting large pay increases at a time when the airlines couldnt afford the costs of a strike
..When faced with a strike possibility and a pay package that they couldnt afford they took the cheapest way out knowing full well that they couldnt afford it and would get consessions later on..

The end result was operating costs at an all time high while income was being greatly reduced..

This was a no brainer..Not enough cash or income to cover the bills..This was happening at a time when airlines were spending money like theres no economic tomorrow..

Remember the USAIR UAL deal..?

How many millions or even billions did that no starter cost both companies at a time when both were bleeding money...

Remember the STAR Aliance?How much did that cost?

Or how about UALs attempt at starting a business charter airline..Avolar i think it was..Several hundread million later..Poof!!All gone..

The list of economic missteps over the last several years or even decade is very long and the record is very clear..

There were and still are people running airlines that have no clue as to how...

There are still unions pricing themselves out of jobs and then want to blame everyone else for their short sighted approach to labor relations..
This while proclaiming to the world that they entend to get every last golden egg all the while ignoring the health of the goose..

Well..Ladies and gentleman..

I think that both parties are standing over a goose that has nearly gasped its last breath and are still arguing over whos job it is to save it..
Whats the point?If both partys dont pitch in and try to save the goose then KNOWBODY will get ANY MORE eggs..

In short..IMHO the biggest reason for the current condition of the industry is the long history of poor labor/managment practices that have resulted in hostile/failed relationships between labor and managment..

And as they say..The rest is now history..

Speaking of history..
Some years ago i spent a long time at the Boeing Company..In the lobby of the training center they have a display case..
In this case are the wings and cap badges of every airline that Boeing has ever sold a plane to..

The sad part is that over 90 +% of those airlines are no longer around..

And im sure that every single one of them thought they had it all figured out ...


Mike

 

[Publishers]

they do

Actually history says that they do--- at the next contract. Now I would agree when the fall off is subtle and management does not respond, OK.

The thing about 9/11 was that it was obvious that this was an event ouside the box and it needed some outside the box thinking. This is where things should have happened immediately not like the prolonged mess at United.

 

[yaks]

Publishers

Frankly if unions were any good at all, they would look independantly at the situation, walk in to the companies and sya let us make a change to our contract.

As it is, they wait til the company proves it is in distress. Sort of a stupid concept if you think about it. Let's wait til our healthy patient is on the death bed rather than fix him when we see the first sign trouble is coming. Let's wait til the dike breaks rather than fix that little leak.

Funny you should mention it. For as many years as I can remember pilots have been asking management for access to the companies books so as to make an informed contract proposal. Without exception the pilots have been turned down until the company was either in bankruptcy court (in which case they are now opened up to the relevant parties) or on the verge of bankruptcy as in our (AA) recently negotiated deal. Please don't think this us the unions fault. If management had any intention of dealing with us on the up and up it would never get that far.

 

[General Lee]

Publishers,

Can we not prosper in the good times too? At Delta in '96 all of the employees gave 5% of their pay back to help the airline. Then management, led by Ron Allen, decided that everyone except the pilots should get their 5% back. When Leo Mullin came onboard, in reality to smooth over labor relations after Ron Allen, the pilots asked Leo if we also could have our 5% back since we were now turning profits. He said, "A contract is a contract." If you don't think that something like that would spook us again---you're drinking too much management kool-aid.

46drvr,

Everyone likes to use that percentage with regards to the United pilots and the amount of hours they fly on "average." It is flawed because United has a lot of different types of planes, and there are always a lot of pilots in training. Those guys will spend 6-8 weeks in training--averaging zero hours in those months. When you add that to the normal flying of line pilots, your "average" is a lot lower. There really aren't that many pilots just sitting around doing nothing. Sitting on short call reserve isn't very relaxing either.

Bye Bye--General Lee

 

[46Driver]

General Lee,
I know its an average and you know its an average - but the results are still the same. How do you explain to the public why you have a system where so many pilots are in training - especially when these are the taxpayers footing your bailout?

 

[Publishers]

right

I am not saying your wrong. The fact is that Delta had the thinking that it was never going to do better by unions than they did by thier non union employees. I came from a comapny with that same philosophy.

That said, the fact is that Delta is not the one we are talking about here. It si the show me the books bull. I do not believe personally that they owe anyone to show you the books anymore than any shareholder.

My point was that this is obvious that a major thing was going on and that it was going to have a negative effect. If you need to see the books then, you are part of the problem not the solution.

 

[General Lee]

Publisher,

I agree with you, and I wish it was like it used to be, "a handshake would solve everything." There used to be trust, and that is obviously lacking now. I understand the problems we are having, and would love to contribute to make sure I still have a job in the future. But, I fear that when good times eventually return, we won't get any of it back, and the management types will get it back, in the form of bonuses.

46drvr,

Do you expect United to furlough people off of the 777 if they are getting rid of some of them? No. They will be bumped, and that means a lot of training involved for a lot of people down the list. That is not how this industry works, and United and the other airlines do not have to show the tax payers what they use the money for---otherwise we wouldn't be able to by peanuts, pretzels, etc--because the public would say, "Don't use our money for that...." The reason I responded to you was to show you that an airline like Southwest, with one aircraft type and one or two total "long schools", cannot be compared to an airline with more than one aircraft type with respect to productivity. People in school are not productive in terms of flying hours---because they don't fly any during training. That brings down the average for all of the pilots in that airline. Delta has many types of aircraft, and I know some guys that have been bumped 2-3 times in one year, going to new 6 week schools each time. That might not be productive, but it is called seniority and following the contract.

Bye Bye--General Lee

 

[46Driver]

General,
You don't have to explain it to me - believe it or not, I kind of figured it out on my own.... However, this is the public relations problem pilots and ALPA have with the public. "United and the others don't have to show the tax payers what they use the money for??????" Try telling that to the taxpayer who is bailing out a bankrupt company..... He will say fine, I'll keep my money and you figure out how to do it without me.

Maybe the taxpayers will say your system is screwed up and inefficient - use a system like UPS or Alaska - pilots get paid according to seat and longevity - and thus reduce the number of pilots moving up and down. Don't like it, too bad, you are in bankruptcy. Once again, this argument is what I hear non-aviation types say (as well as what I hear from the other pilots at my squadron) - they do have a point.

 

[FDJ2]

46driver, pardon me for jumping in on your discussion with General Lee, but perhaps this might help the tax payer understand why you can't compare UAL to SWA.

After over thirty years of existance, SWA now serves approximately 58 cities. That's it. With a single aircraft type, the SWA model is only effective in about 25% of the domestic market. The hub spoke system is the most efficient means of connecting the other 75% of the country to the world. For a hub-spoke system to be effective you need to connect large markets to small markets and long haul flights to short haul flights. That necessitates several different aircraft types with different capacities and capabilities. If every airline were to be a point to point operation with only one aircraft type, 75% of the country would have no air service and you could not get from Flint Michigan to Narita, Japan on SWA.

When a pilot is sitting in a hub for two hours waiting for his next turn he isn't flying, but he's still at work, meanwhile the SWA pilot has bagged an extra 1 to 1.5 hours. A UAL pilot logging 40 hours a month may have actually been at work the same amount of time as a SWA pilot who flew 80 hours. In general, a hub-spoke pilot might get 5 hours of flying in a 10 hour duty day, while the SWA pilot might have flown 8 hours in that same duty day.

At the end of the day, if 75% of the country wants affordable air service, the only operation that can supply it is the hub-spoke system.

 

[46Driver]

FDJ2,
No worries. I understand the difference. One of the problems is ALPA is not getting this out to the general public.

Another factor is that moving up and down on different equipment is inefficient. If you are making money, who cares - but if you are in bankruptcy, you best be looking at a paradigm change. Having had United use the BAIN corporation against us in a brutal but highly effective manner, I am surprised they haven't come down on mainline with something similiar.

Also, how many "hub and spoke" carriers can this nation support - what do we have now? Delta, United, USAir, Northwest, Continental, and American - that might be too many. Also, who says an LCC can't be hub and spoke - look at AirTran.

Finally, Southwest would only have to get you to a west coast gateway - they hand you off to a foreign carrier ala "Skyteam" or "Star Alliance" to handle the overseas stuff - as if the majors didn't have enough to worry about......

 

[FDJ2]

Originally posted by Splert
"Isn't that all about to change?

I have heard that SWA plans on doubling the fleet within the next 8 years. That will be somewhere in the 'hood of 700 aircraft."

They can double their fleet, but not necessarily double destinations. SWA will undoubtedly serve a few more cities, but probably most of the growth will go into increased frequency between the same city pairs or different city pairs between cities they already serve.


"Who is a better long-term buy UALAQ.OB @ 106 pennies or LUV @ 1770 pennies?"

That depends on your risk tolerance, certainly investing in a company in or near bankruptcy is risky, but you also stand a better chance of doubling, trippling or quadrupling your money. If you think UAL will emerge from bankruptcy they would be a better short term investment. In the last few months, AMR has been a much better investment than any airline. Long term airline investments are a huge crap shoot. All airlines, including SWA, are only one bad management team away from potential bankruptcy.