Low Wages, Bad Service in the Airline Industry
At last someone connects the dots of screwed up flights and union-busting in the airline industry. And it comes from the Wall Street Journal ($) which highlights how low wages are undermining service, both by making recruitment of skilled workers harder and because existing workers don't have enough time for increased workloads:
That's not good news for passengers, as the combination of fewer and less experienced workers is causing more service problems. Planes sit on tarmacs because airlines are short on gate workers. Service on planes is slower because many airlines are flying with fewer flight attendants. When bad weather hits, tight staffing may mean more delays or canceled flights.
The New York Times similarly today highlights how experienced workers are beginning to leave the industry.
Many are looking to start their own businesses to escape the insecurity of the loss of job guarantees in the industry.
The reality is that the airline industry, with the collusion of the Bush administration, used the post-911 period to manipulate the bankruptcy courts to undermine wage standards and get rid of union workers. Service failures are the inevitable result as standards in the industry fall and workers themselves lose any sense of pride and ownership in an industry that has made clear that they have no future themselves.














Perhaps they should start thinking of privatizing the industry...oh wait, they are privatized...then it must be too much government regulation...no, that can't be it, they were deregulated years ago and they outsourced customer service and beat the unions into submission after 9-11. That leaves poor management and we know that can't be it, because a competitive, privatized industry always works...ask Chrysler.
May 16, 2007 5:15 AM | Reply | Permalink
New airline commercial:
"Fly with us and you'll feel like you never left the ground, because we treat you like dirt"
The airline industry is the canary in the coal mine for widespread management schemes that outsource jobs to prevent paying equitable wages while demanding a heavier work load.
If workers do not feel secure that employment with a company can be long term or that their work is valued, there is no reason for corporate loyalty.
If a worker fails to tighten some widgets on an assembly line, why should his/her co-workers care? As long as the stock market is doing well, there's no problem
May 16, 2007 5:50 AM | Reply | Permalink
I had to look for this about Southwest Airlines because they are one airlines that manages to be both the low cost leader and consistently has the fewest complaints and best safety record (at least that's what I've read). I don't want to advertise for them. I have no interest as except as a customer:
http://www.post-gazette.com/pg/05353/624857.stm
Low cost, high profit, best wages. Hmmm. I would make a wild guess that management isn't the best paid. Just a guess.
Best, Terry
May 16, 2007 7:00 AM | Reply | Permalink
Interesting that the WSJ notices the effect of underpaying employees when it means they can't get their complimentary martinis in First Class.
Normally the WSJ could be counted upon to use this situation to advocate for a guest worker program to match "a willing employer with a willing worker," and find people to do jobs that "Americans aren't willing to do."
May 16, 2007 7:27 AM | Reply | Permalink
This was a news story in WSJ, which is usually indepth research and not ideological, as opposed to the editorial page which is a crazy ideological.
May 16, 2007 7:52 AM | Reply | Permalink
Seems there's a combination of factors at work here. The first are 9-11 regs about security both on the plane and in the airport. Overblown threats have been met with a reactionary response and it's frankly ridiculous that I can't do things like bring a bottle of water through security.
Post 9-11 the airlines have struggled financially while, at the same time, flight crews have been given duel jobs in both customer service and security. The result has been more work for lower pay and, frankly, a lot of attitude on behalf of airline employees who view passengers less as customers than as people who can be ordered around and herded like cattle.
And, of course, they're understaffed and missing flights and are defensive about it. During a layover in St. Louis a pilot on break told me why they leave you on te tarmac during delays, instead of going back to the gate, letting people off and reboarding. First, they need the gates. Second, the pilot cxan only fly a certain amount of hours a week, whether they're in the air or on the tarmac. Waiting through a couple of hour delay when the doors are closed means they can do less work the rest of the week. Seriously.
thosethingswesay.blogspot.com
May 16, 2007 8:24 AM | Reply | Permalink
CNBC raised the question in a general way if good service was really good for business. The thesis being that the money spent on providing good service did not generate a sufficient return and that shareholders would be better serviced by saving the money.
There is no doubt that Wall Street has very short term goals, including fees for breaking-up, putting together and bring public companies. When companies announce layoffs their stocks almost always go up.
If you have ever tried to raise investor money it would be obvious that investors have very shortterm outlooks or if you are Warren Buffet very high standards before you put your money to work. This is the issue unless you want an illiquid economy, and make it a lot harder for investors to move their money in and out of investments labor will be increasingly in big trouble. This in term will result in poorer service or in some industires the end of service.
Daniel A. Greenbaum
May 16, 2007 8:27 AM | Reply | Permalink
the airlines are in transistion. wages don't translate into better service especially if you're like me and enjoy putting gas into your own car or ringing up and bagging your own groceries.
the differentiating factor of airlines is simply cost. cities like Las Vegas and companies like Disney World depend on "low cost" airlines, not "high service" airlines.
as I've noted before, computers fly the space shuttle even though pilots sit in the cockpit and i'm not even sure that pilots could bring a space shuttle home without computer support.
the saftey of flight, in my mind, is highly correlated to computers and not humans these days because computers can predict when various parts break down and also consider sensor readings when determining when a particular part should be serviced.
in the old days, mechanics did indeed do this but, in the modern world, computers are more important and the repair process is probably designed to be done by less skilled people and work like universal health care since prevention is cheaper than triage.
I'm happy to buy my own meals at the airport because, even in the good 'ol days, nobody raved about airplane food-- so airlines were smart to often get rid of it.
and, if patience is the price of a cheap ticket, that's fine with me!
To boldly go...
May 16, 2007 9:34 AM | Reply | Permalink
please note:
By contrast, profitable low-cost airlines such as Southwest Airlines Co. and JetBlue Airways Corp. have defined contribution plans, such as 401(k)s, meaning they don't have pension funding gaps.
thus, Southwest doesn't have the overhead that other airlines have.
I honestly think that 401k's are ultimately better since businesses with pension plans perhaps get distracted by them. that's why I support social security and universal health care since they let busineses focus on what do best.
To boldly go...
May 16, 2007 9:37 AM | Reply | Permalink
I don't know that this can be blamed on 9-11 or the Bush administration (though both did no good certinly). These trends date back much further. Anyone remember the fate of Eastern Airlines? And up in Michigan Northwest gained it nickname of Northworst well before we'd even heard of George W Bush.
May 16, 2007 10:53 AM | Reply | Permalink
DanG: "Investors have very shortterm outlooks." Yup, but as we know from our bubbly friends, all market decisions are wise and lead to good things.
John
http://www.haberarts.com/
May 16, 2007 11:14 AM | Reply | Permalink
or if you are Warren Buffet very high standards..
Warren would want airlines to come up with an airplane that didn't suck down so much.
GM and Ford are croaking because they have gas guzzlers that require expensive resources to operate.
Less resource consumption can translate into lower prices, higher profits and more liquidity since air travel would be more widely affordable.
To boldly go...
May 16, 2007 12:30 PM | Reply | Permalink
Agreed. That was an unfair swipe at the worker bees at WSJ. Besides newspaper reporters are lucky if they get to stow away in a wheel well, while the fat cat editorial board enjoys thir shrimp cocktails in business and first class.
May 16, 2007 1:36 PM | Reply | Permalink
I'll throw this one out there, although I have no expertise or depth of knowledge for the airline industry, but my mother was a stewardess with American Airlines in the late fifties and early sixties. Her take on air travel is that when she flew flying was for the rich and business people. Volumes were low, the business was glamorous, and people actually dressed up to travel by plane. She thinks that the current air travel situation is the result of cost competition, or put a different way, the democratization of the skies.
Again, no expert, but if the industry margins cannot grow purely by volumes (i.e. lower fairs more passengers), then it may not be a viable business model. One other observation, in the 1980's I flew Virgin a lot to England. It was cheap and bare bones, but with a good sense of humor. As we have both grown up I've noticed they are no longer the cheapest in the skies. I got this sense as I was being comp'd drinks in the upperclass lounge. Not the cheap seat it once was.
May 16, 2007 1:46 PM | Reply | Permalink
Sic 'em Bev.
All I know is that if one is much larger than a munchkin air travel has become a form of masochism. The Incredible Shrinking Seats. And the last flurry of travel I had I discovered that the airlines are now charging a premium for the few rows which have a wee bit more leg room. Want a bulkhead seat so you can stare at corduroy in a color designed to abolish any aesthetic sense one has? Said seat was $28.00 more on one airline, $15.00 more on another.
I try to be very nice to airline personnel because I know it isn't their fault. I'd pay a reasonable fare for a seat which could accommodate my 6'7" frame, and a few bucks extra so that the personnel which interacts with me and other members of the public get living wages.
aMike
May 16, 2007 2:22 PM | Reply | Permalink
The public wanted lower air fares; they got them, so now they should stop whining about poor service, lost baggage, late flights, cancelled flights, long waits, long lines, mass confusion, etc.
If anyone thinks they're going to fly coast to coast, non stop, on time, and sup on foie gras, Cornish Game Hen L'orange Asparagus Spears Amandine, and Dom Perignon '63 for $120.00 round trip is nutty.
May 16, 2007 2:49 PM | Reply | Permalink
right but when you consider how much longer a car trip or horse-and-buggy trip takes, a lot of the pain goes away.
I'd personally like to see more trains around.
To boldly go...
May 16, 2007 3:46 PM | Reply | Permalink
Buffet owned U.S. Air for a time, he has called it one of his worst investments. Airlines tend to be ok trades and terrible investments. I has been asked if anyone since the Wright Brothers has made money investing in an airline.
Daniel A. Greenbaum
May 16, 2007 4:57 PM | Reply | Permalink
How do we explain how it is that other countries airlines are able to deliver better wages, better quality of service and comparable prices?
May 16, 2007 5:32 PM | Reply | Permalink
It may be an illusion. I had the bulkhead seat in an Air Canada dash-80, a very small turboprop. Rather than corduroy, I faced a set of emergency instructions.
The last line left me in Zen meditation from Toronto to Fredricton: "If you cannot read this, call a flight attendant."
--
Howard
*equal opportunity offense to both extremes*
"Those who cannot remember the past are condemned to repeat it" [George Santayana]
May 16, 2007 5:36 PM | Reply | Permalink
<GUFFAW, and also Chortle></Guffaw> (still chortling)
aMike
May 16, 2007 5:44 PM | Reply | Permalink
It's called government subsidy. Not that our own do not feed from a tax break trough, but many foreign airlines get better fixins to stay in the black: regulations, government ownership, national pride, etc.
May 16, 2007 7:23 PM | Reply | Permalink
I think FedEx, UPS and USPS have made some good money since airlines overnight humans for a few dollars a pound while mail carriers overnight mail at over $20 a pound.
To boldly go...
May 16, 2007 9:28 PM | Reply | Permalink
So the problem with American airlines is not enough regulation? Not enough government subsidies and tax breaks?
American airlines practically live at the public trough. But they've just about dispensed with regulation.
May 17, 2007 5:49 AM | Reply | Permalink
HAHAHAHAHHA
May 17, 2007 6:02 AM | Reply | Permalink
No, I am not saying that. The question was how do foreign airlines survive. Perhaps a better response might have been because they are not participating in the same business model as foreign airlines; meaning that for foreign airlines losses are acceptable as they are not expected to be independent profit making concerns. They are not businesses, so much as public services and national symbols.
Again, as I posted earlier, I am no expert on airlines. I have read about them in the business trades and newspapers, and at one time I worked for a re-insurance firm that underwrote policies for aircraft, but I have not worked for or written a disertation on air travel.
Also, I believe I referenced the tax breaks and subsidies. An interesting point to consider is that deregulation, which was meant to make air travel more of a free market, may be a major cause of the current industry woes.
Again, perhaps the business model is wrong.
May 17, 2007 8:18 AM | Reply | Permalink
Sorry, I meant for the above to be a response to Valdron's comment immediately before it.
mea culpa
May 17, 2007 8:23 AM | Reply | Permalink
they just are one way relationships: "pay us but don't expect anything in return."
that's the opposite of what business stands for: fair contracts.
To boldly go...
May 17, 2007 2:48 PM | Reply | Permalink
Shareholders have exactly nothing do with flying the airplane. But they are treated like royalty while the customers and pilots and mechanics and flight attendants get to take it or leave it.
These so-called investors are not investors at all. They are speculators. They traded their dollars for shares which they hope to sell for more dollars. The money went to some other speculator who was doing the same thing. Not a single flight was flown on account of it. It's ridiculous how speculators are worshipped as though they played any meaningful role in the process.
May 18, 2007 2:55 PM | Reply | Permalink
No problema...
They'll just have to hire some illegal immigrants to do the job that lazy spoiled Americans wont do...
Cafe, te, or de la leche, Senor ?
May 20, 2007 2:53 AM | Reply | Permalink