Treat your employees well, treat them fairly, and treat them flexibly. They’ll treat your customers well. Your customers will want to come back, and you’ll make more money. It’s not exactly that simple of course. An airline needs to operate a schedule customers want, reliably, and loyalty programs and corporate agreements factor. But it also isn’t not that simple either, and unhappy employees are going to chase away customers no matter how much you invest in planes and seats.
You can treat your employees well with or without unions. Unions can help or hurt employees. Airlines remain one of the most heavily unionized industries. Pilot unions have significant power, an airline cannot operate without its pilots and pilots cannot simply be replaced — their knowledge is unique and in high demand, and safety rules require significant certifications on an airline’s specific aircraft. Flight attendants are more easily replaced and so their unions do not nearly have as much power.
After American’s pilots staged a work slowdown during the carrier’s bankruptcy, it was clear that CEO Tom Horton was going to have to go. United’s pilots made it impossible for CEO Jim Goodwin to stay on 15 years ago.
United Boeing 757
Here’s the thing. It’s often not the wages that’ll kill a company. It’s the work rules. Take a hotel in New York that’s forced to change the services it offers. It may need to close down a restaurant entirely, for a year, in order to re-open it with a new concept. Or it may need to eliminate room service in order to bring room service back under a new labor agreement.
In writing about United’s 90th birthday I was reminded that it was Pat Patterson who advocated turning over crew scheduling to unions in the airline industry.
No matter what kind of story you tell about TWA’s demise, from Carl Icahn to flight 800, the airline had two fundamental problems:
- Revenue: St. Louis simply didn’t have the business travel anymore that competitor airline hubs did.
- Cost: Despite paying below average wages, they actually had above average labor costs.
Bringing in less revenue than your competitors, while having higher costs, is a recipe for failure even if customers become skittish about booking you for a short period and even if you have an agreement where your former major shareholder can buy your tickets at a 45% discount and resell them for a profit (what became ‘LowestFares.com’).
It’s easy to place the blame for TWA’s demise at the feet of Carl Icahn, that villain makes it easy to forget that after its 1992 and 1995 bankruptcies, after it stopped flying Boeing 747s, it still operated its 747 maintenance facility because its contract with mechanics required this.
American still needs to fully integrate its pilots into a single workforce, something the US Airways merger should finally permit but that US Airways and America West never managed.
United has still failed to integrate flight attendants from the Continental and United sides of the operation. And that has real world consequences.
United 747 in San Francisco
Brian Sumers writes about the strange phenomenon of a United Boeing 787 flying between Newark and Los Angeles starting in JUne.
It turns out that because the two airlines’ flight attendants are on different contracts, one of those 787s has to be assigned to legacy United airlines flight attendants. But since it’s ex-Continental flight attendants operating West Coast – Asia routes, they can’t put the plane on one of those routes operated by United flight attendants or else the plane would have to sit while the crew got sufficient rest to fly back (or they’d have to shuttle extra crew for the returns).
Since the merger, United has been assigning all 787s to the Continental side. Executives apparently did this good faith, believing all the planes would have gone to Continental had there been no merger. However, the AFA recently filed a grievance. The union suspected at least some of the 787s should have gone to the United side. This is important to flight attendants, because the 787s fly some of the cushiest routes, like trans-Pacific flights from San Francisco and Los Angeles to Asia.
United checked, and realized it had made a mistake – but only on one 787. So starting in June, it is transferring one 787 from the Continental side to the United side.
This is now an operational issue. United has 28 Boeing 787s, but one of them must be isolated from the rest. It can only be flown by United-side flight attendants.
United Airlines Boeing 787
Apparently in August there will be 2 more 787s assigned to be crewed by legacy United flight attendants and they’ll operate as a sub-fleet on San Francisco-Taipei.
An airline cannot operate assigning $180 million (list) aircraft to suboptimal routes, or inefficiently operating subfleets. That puts them in the position of a TWA, keeping open a 747 maintenance base without any 747s. Unions fight tooth and nail for these things but they don’t actually raise the wages of their members.
And this is one reason why it really matters for United to finally get a single contract with its flight attendants, six years into the merger of United and Continental.