AIRLINES, RED TAPE AND UNIONS; A RECIPIE FOR FINANCIAL DISASTER

AIRLINES, RED TAPE AND UNIONS; A RECIPIE FOR FINANCIAL DISASTER
MARK A SITY
8/13/02

For decades the airline industry has been struggling. Doing well in that industry means loosing less money than your competitors do. In fact, I can't remember ever seeing profits for any of the major carriers for 2 consecutive quarters. On those rare occasions that one might make a profit, it is so miniscule compared to the amount of money spent and the past loses as to be laughable. Usually the "profit" is a result of an influx of tax dollars.

Why is this the case? Even though the airlines have been "de-regulated", they have not really been. They are under the iron fist of the FAA. The FAA, being a bureaucracy, has two primary missions; making their job easy and staying in "business". Safety only lands high on their priority list because it helps them stay in control. Customer satisfaction and keeping their charges in business are at the bottom of their priority list.

The current hub system cannot be made profitable, yet innovation and new ideas are not allowed by the FAA. Imagine if United proposed a different business model to the FAA (who would have to approve it). Their first thought would be, "Oh no! What if another airline wants to do something different too? What kind of nightmare would that be? We'd have three different business models to look at! We can't allow that! Gezz, we might have to work for a living then!" To the bureaucrat, change is an abhorrent and unthinkable concept.

Yet, this is exactly what needs to happen. Personally, I'd like to see the convenience of the FAA (or any other government agency that has been empowered well beyond what the Constitution allows) take a back seat for a change. This would allow the market to work. There is a solution that will improve convenience for travelers and allow the airlines to make a profit. Perhaps this would be as simple as the regional airlines bringing the passengers to and from the major hubs. Perhaps a more major overhaul is needed. However; with the FAA micro-managing each airline, experimentation is impossible and new ideas are blocked. Yet, experimenting with new ideas is the only way to keep private airlines in operation. The idea of public airlines is abhorrent to me; as it is the air travel industry is inconvenient enough, I don't want to see them get to the level of the DOT.

The airlines have another road block to profitability also; the unions. I have been a member of 3 unions, and have lost jobs because of 2 of them (one was a really good job too!). This is why I choose to work non-union. Let's look at the one in the news, United. United is close to bankruptcy. The pilot's want to keep flying, and are willing to take concessions to keep the company in business. However, the mechanics and stewardesses want even more money from a company that is loosing money. All three are separate unions, which complicates things even more. If any one strikes, the other two will honor the strike; even if it puts the company out of business. The unions don't care. Another company will take up the slack and provide those much needed union dues. The union bosses' don't care if their members loose pensions or benefits; their jobs are safe. Their incentive is to extract as much in dues from a company as possible before it goes belly up.

I can't even feel sorry for union members whose company goes out of business as a result of a strike. I keep seeing visions of the UPS strike a few years ago. The one that really sticks in my mind is the sign that said "Uses People Severely". These guys make over $20/hr, and they are advertising this in front of their customers? Is this the way to ensure your job will be there?

This is the dumbest article I have ever read. First of all Soutwest is unionized.The only major carrier that isn't is Delta.Only Delta's pilots are.Delta a non-union airlines is losing big.Secondly Delta airlines used to make hugh profits year after year and the hub and spoke system was hailed to be one of the reasons for their profitability.Another stupid point is; The airlines don't have to present a business plan to the FAA.They can do whatever they want to.They just have to be careful about anti-trust laws and monopolies etc.

If a concerted effort were being mounted to force the major passenger airlines out of existence, they could not have done a better job. Unions killed transcontinental passenger rail service, and they are doing the same for the air passenger carriers. Apparently air freight is doing well, and it may well be that within a few years, the majority of air traffic will be freight only.

Short interurban and even long-distance travel for passengers who are taking vacation time or other leisure travel is overwhelmingly privately-owned vehicle, partly because of the relative difficulty of boarding an airplane, made even more so by the ineffectual rules put into place since 9/11. The airlines are forced to rely ever more on the business traveler, or some sort of government subsidy, to get a berth at the terminal. As the telecommunication by broadband gets ever more developed, the need for face-to-face encounters by business people to transact even high-level exchanges will become less and less. The passenger airlines are in a relentless bind, one that may spell the total doom of the large-capacity passenger plane. There will always be a need for swift transportation, and the parties willing to pay for the privilege, but United, US Air, and American Airlines may well go the way of Eastern, Braniff, TWA, and Pan-American. Southwestern does still seem to be profitable, but that is because they are filling a niche not covered by the majority of other airlines.

Why does it not have unions?

Southwest does deal with multiple unions. There may be flight attendants somewhere that are non-union, but pilots (SAPA) and mechanics (IBT) are unionized. And they do have at least one union representing flight attendants (TWU – I think the IBT too in some places).

Only Delta's pilots are.

I know I remember the AFA claiming to represent Delta flight attendants – maybe they’re just involved in an organizing drive - the pilots, like you say, are unionized for sure. I am almost positive that the AMFA and/or TWU represented their mechanics…

Like it or not, unions have transports locked up. Whether it be air, rail, water, or road. Well, road less than the others but they still have a pretty good chunk of that.

As usual, the government (FAA and liability laws) needs to get the heck out of the way.

But not just for airlines. I mean for private aircraft.

The certification hastles for new aircraft are unnessarily huge. If private aircraft were produced in large quantities, they would cost very little more than your high end SUV. Without FAA hastles, it would cost little to put electronics in them that would allow the most untalented pilot to navigate and avoid traffic along "highways in the sky". A few orders of magnitude greater numbers of traffic could be routed in the air, if such modern "air highways" (imagine many layers of interstate highways on top of one another) designed, where the FAA didn't activly control every aircraft with "clearances" (you don't need these on roads, and the only reason aircraft have clearances now is that was the only way traffic avoidance was possible with 1930's technology).

In such a system, it would be cheap to own your own airplane (or rent for less money than airline tickets) with 300mph cruise that would get you anywhere in the nation faster than the airlines. By eliminating the time for waits in terminals, changing planes at hubs, riding busses from long term parking, and being able to go to smaller airports closer to your final destination, a slower private airplane can get you there quicker than a fast airliner.

Southwest Airlines is not unionized and is the most profitable airline in the business. 1. Why does it not have unions? 2. Why can not the other airlines do what SW is doing?

Not knowing whether SWA is unionized or not (as other posters have commented on), I will add my $0.02. From my observations of SWA, they know that their planes don't earn money sitting on the ground. On one layover in Tampa, I was impressed with the rapid turnaround SWA had on their aircraft. 20 minutes at the gate. SWA knows their target customer (people who would otherwise drive given the cost/time equation), and is agressive about meeting their needs.

Why don't other airlines emulate SWA? Who knows? Corporate culture. Corporate identity. Not wanting to give up the revenue from first class and business class. Union resistance. Executive resistance.

"Short interurban and even long-distance travel for passengers who are taking vacation time or other leisure travel is overwhelmingly privately-owned vehicle, partly because of the relative difficulty of boarding an airplane, made even more so by the ineffectual rules put into place since 9/11."

And the news media is in complete denial about this. They're still stuck in the "afraid-to-fly mode" - partly because they can go to an airport and keep asking people questions until they find some white-knuckler to put on the air, but they have a much harder time finding people not flying - because those people are NOT at airports. Plus, the media love to report emotions, and fear is a good one to start with. Someone who says they're not going to put up with airport BS and mindless searches and delays is not going to get on the news because it's "not as good TV" as the woman who's "a-skeered."

Michael

As usual, the government (FAA and liability laws) needs to get the heck out of the way.

FLYING magazine recently had an article about working at the NTSB. The sub-title to the article had the following rhetorical question (quoted to the best of my memory):

"There are two federal agencies that regulate the aviation industry: the FAA and the NTSB. Which would you rather work for?"

I'm not familiar with the relationship between FAA and NTSB. I believe that NTSB oversees the FAA. It's the FAA that writes regulations on certification rules, and runs the air traffic control system.

The system we have today (ATC) was derived from what individual airlines and the military built using only two-way radios and non-precicse aircraft navigation with 1930's technology. Since that time, aircraft can now be navigated within literally inches. But the ATC has only added radar in the 1950's to their technology.

A truly modern system would ELIMINATE ATC as we know it. Replacing it with aircraft-to-aircraft collision avoidance hardware, and specific "traffic lanes" to navigate in terminal areas. This would dramatically increase traffic capability, increase safety (each aircraft monitoring their own traffic situation with technology, rather than a human at a radar screen monitoring multiple aircraft with only delayed verbal radio communication).

And by increasing the numbers of new aircraft, they will dramatically come down in price, allowing many more people to afford private aircraft transportation.

All this is possible, but improbable, because the feds will hang on to their power as long as the grass grows, and the water flows.

Odd that Southwest is unionized and makes money.It might have something to do with management.They are competent. Southwest has one type of aircraft which simplifies repairs,parts and costs.Soutwest checks their baggage point to point for fewer lost bags. They have one service in the cabin.Southwest hasn't grown too rapidly like other airlines.

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