Misery at 35,000 Feet

by CARL FINAMORE

It’s been a dizzying season of hookups and breakups for airlines. Everyone said they were single and ready to mingle. But, as it turned out, players found the game was not as easy as it first appeared.

The plan was simple enough. Coupling up would decrease expenses. But ultimately, the various living arrangements did not fly.

Opposition began to surface once it became clear the real business objective was to stuff more passengers into smaller aircraft, to reduce domestic service and to lay off workers.

As a result, major consumer and labor groups loudly protested. Especially since most carriers were fresh from receiving substantial bankruptcy relief from employees and debtors.

In particular, the two airlines most interested in cuddling, NWA and Delta, just emerged from bankruptcy court with huge savings less than a year ago.

The largest union in transportation, the Machinists Union, stated "that none of the mergers currently being proposed will benefit employees, passengers or the cities that these airlines serve." The AFL-CIO made a similar statement. Both heavily lobbied Congress.

Rep. James L. Oberstar, influential chair of the House Committee on Transportation and Infrastructure, reacted coldly to merger fever with a flat "Hell No!"

Forty seven other members of Congress were less direct but still emphatic in their letter to the US Attorney General that "we are strongly concerned that future mergers could result in diminished service to small and medium size cities, job losses, less competition, higher fares and fewer options for consumers."

But any chance of a honeymoon for the carriers really failed to take off once the historically troublesome pilot seniority issue appeared on the radar.

Air Line Pilots Association (ALPA) members at Delta and Northwest (NWA) never agreed on how the two pilot groups would combine into one carrier. This is a huge concern. Senior pilots at NWA are still angry about being bypassed by junior Republic pilots in a merger over twenty years ago.

A dispute with 12,000 pilots, along with the growing list of other opponents of consolidation, was too much baggage for skeptical investors already nervous about rising oil prices and a recession. The romance between NWA and Delta cooled.

Today, there is little talk of airlines combining. Instead, mothballed business plans to reduce service are back on the table.

Increasing Revenue or Reduce Service

Except at Southwest Airlines, which consistently expands into locations vacated by other airlines, industry executives have accurately been accused of lacking imagination and growth innovation.

Instead of making their operation more efficient and attractive, they cut back. Instead of increasing customer service and building up the business, their predictable, lame inclinations are to fly less and charge more.

Each airline looks across the aisle to see if competitors follow suit. So far, most carriers are on the same page.

Fares have been raised six times by the majors since January 2008 according to FareCompare.com. Predictions are that it will continue.

At the same time, US capacity is being dramatically reduced by shifting routes to much more profitable international destinations. Delta, for example, plans to reserve 41% of its seats for international routes by the summer.

So, where do we stand after the merger craze seems to have subsided?

Airlines are raising fares, cutting back domestic service and threatening layoffs. These were the precise objections to consolidation in the first place.

But just as their pursuit of mergers failed to stabilize the industry, so too will these latest policies. Reducing the operation is a discredited shortcut that utterly fails to increase revenue and therein lies the problem.

"Cutting its fleet of airplanes does not address the larger cost problems that continue to beleaguer this airline," said United Airlines ALPA chairman Captain Steve Wallach. "Instead of doling out hundreds of millions of dollars to shareholders and pocketing millions of dollars in bonuses and salary increases, perhaps management should reinvest that money into our operation."

Simply put, when airlines cut back, earnings generally fall more rapidly than costs. Therefore, insufficient income is generated to cover expenses such as excessive fuel costs which alone increased an astounding 75% in 2008.

But despite these outrageous fuel charges, the majors were still profitable in 2007 without clipping their wings. In fact, they are estimated to collectively have stashed away $25 billion in savings.

Yet, management continues to squander these savings. Much of the income generated by employee concessions is being spent on executive bonuses and stock dividends rather than on enhancing customer service and offering attractive fares capable of expanding markets.

The latter, ultimately, is the only business plan consumers will find attractive.

CARL FINAMORE is former President (ret), Air Transport Employees, Local Lodge 1781, IAMAW. He can be awakened from his frequent naps at local1781@yahoo.com

 


 

Like What You’ve Read? Support CounterPunch
Weekend Edition
September 4-6, 2015
Vijay Prashad
Regime Change Refugees: On the Shores of Europe
Lawrence Ware
No Refuge: the Specter of White Supremacy Still Haunts Black America
Paul Street
Bi-Polar Disorder: Obama’s Bait-and-Switch Environmental Politics
Kali Akuno
Until We Win: Black Labor and Liberation in the Disposable Era
Arun Gupta
Field Notes to Life During the Apocalypse
Steve Hendricks
Come Again? Second Thoughts on My Ashley Madison Affair
Paul Craig Roberts
Whither the Economy?
Ron Jacobs
Bernie Sanders’ Vision: As Myopic as Every Other Candidate or Not?
Rob Urie
Capitalism and Crisis
Jeffrey St. Clair
Arkansas Bloodsuckers: the Clintons, Prisoners and the Blood Trade
Richard W. Behan
Republican Fail, Advantage Sanders: the Indefensible Budget for Defense
Ted Rall
Call It By Its Name: Censorship
Susan Babbitt
“Swarms” Entering the UK? What We Can Still Learn About the Migrant Crisis From Che Guevara
Andrew Levine
Compassionate Conservatism: a Reconsideration and an Appreciation
John Wight
Adrift Without Sanctuary: a Sick and Twisted Morality
Binoy Kampmark
Sieges in an Age of Austerity: Monitoring Julian Assange
Colin Todhunter
Europe’s Refugee Crisis and the Depraved Morality of David Cameron
JP Sottile
Chinese Military Parade Freak-Out
Kathleen Wallace
The Child Has a Name, They All Do
David Rosen
Why So Few Riots?
Norm Kent
The Rent Boy Raid: Homeland Security Should Monitor Our Borders Not Our Bedrooms
Michael Welton
Canada’s Arrogant Autocrat: the Rogue Politics of Stephen Harper
Ramzy Baroud
Palestine’s Crisis of Leadership: Did Abbas Destroy Palestinian Democracy?
Jim Connolly
Sniping at the Sandernistas: Left Perfectionism in the Belly of the Beast
Pepe Escobar
Say Hello to China’s New Toys
Sylvia C. Frain
Tiny Guam, Huge US Marine Base Expansions
Pete Dolack
Turning National Parks into Corporate Profit Centers
Ann Garrison
Africa’s Problem From Hell: Samantha Power
Dan Glazebrook
British Home Secretary Theresa May: Savior or Slaughterer of Black People?
Christopher Brauchli
Poor, Poor, Pitiful Citigroup
Norman Pollack
Paradigm of a Fascist Mindset: Nicholas Burns on Iran
Barry Lando
Standing at the Bar of History: Could the i-Phone Really Have Prevented the Holocaust?
Linn Washington Jr.
Critics of BlackLivesMatter# Practice Defiant Denial
Roger Annis
Canada’s Web of Lies Over Syrian Refugee Crisis
Chris Zinda
Constitutional Crisis in the Heart of Dixie
Rannie Amiri
Everything Stinks: Beirut Protests and Garbage Politics
Graham Peebles
Criminalizing Refugees
Missy Comley Beattie
In Order To Breathe
James McEnteer
Blast From the Past in Buenos Aires
Patrick Higgins
A Response to the “Cruise Missile Left”
Tom H. Hastings
Too Broke to Pay Attention
Edward Leer
Love, Betrayal, and Donuts
Louis Proyect
Migrating Through Hell: Quemada-Diez’s “La Jaula de Oro”
Charles R. Larson
Class and Colonialism in British Cairo
David Yearsley
Michael Sarin: Drumming Like Summer Fireworks Over a Choppy Lake