It would be nice to believe that the people running U.S. airlines are super smart and capable executives. The expectation seems reasonable enough: CEOs of the 11 publicly traded large U.S. airlines took home a combined $53 million in compensation in 2021, admittedly a bad year for all of them. The federal CARES Act and payroll program, effectively a taxpayer bailout of the airline industry, put limits on how much compensation loot the CEOs could haul in until April 1, 2023.
But I question the HR intelligence of an executive at a major airline where employees are in short supply issuing a directive to his bruised and battered flight attendants notifying them of random uniform inspections to promote compliance and professional image.
“For those who are not in compliance, base leadership will ask you to address the concern and provide a reference to our uniform standards as a resource. For the first 30 days, our leaders will not document the conversation as long as you can correct the non-compliance issue prior to your flight,” read a recent directive sent to United’s flight attendants by John Slater, the airline’s Senior Vice President of Inflight Services.
To which United’s union, in a deftly written FU, responded:
Might it not be put to better use having management help resolve real-time and immediate issues we’ve more than clearly identified. Just to name a few, have local base management:
- Help find hotels for crews stuck in an airport waiting for information
- Work with catering to be sure we have the supplies we need ahead of departure time
- Making real-time decisions in the moment to release Flight Attendants who have been on hold an excessive amount of time with the crew desk
As management recognizes our hard work, Flight Attendants look forward to the time when we can be excited by management’s hard work on resolving our immediate issues while allowing us to be rested, respected, and well-dressed!
Delta‘s Revenue Pie
Meanwhile, Delta CEO Ed Bastian admitted his airline got caught “off guard” and “stretched ourselves to try and grab and secure as much of the revenue pie as we could,” which has resulted in the airline becoming the industry leader for flight cancellations. One industry source told me that among travel professionals Delta has become an acronym for “Doesn’t Ever Leave the Airport.”
Maybe if Bastian hadn’t spent so much time last year protesting Georgia’s election law, he wouldn’t have been caught off guard.
Then there’s American Airlines, the lost luggage industry leader, including mishandling one out of every 140 bags in April. American’s baggage handling is so pathetic that when a passenger in North Carolina tracked his lost luggage at Heathrow airport, he was advised to go fetch it himself.
A Broken Industry
The airline industry is broken and has been for decades. Although the pandemic has made things worse, the deterioration has been ongoing and will undoubtedly continue, with conditions possibly getting worse. While passengers might not like it, most only have themselves to blame.
That’s because Americans have come to accept an airline system where four airlines — Southwest, Delta, American, and United – control more than 60 percent of the domestic passenger market. These airlines have a lock on most of their routes, and managements aren’t beholden to passengers who fly them. Airline CEOs are incentivized to enrich their Wall Street shareholders, who care not one iota if passengers are inconvenienced by frequent delays and cancellations and poor in-flight experiences.
Airline CEOs are mostly rewarded in stock options, and the value of their options is determined by the value of their companies’ shares. Delta’s Bastian knows full well that if you live in Atlanta, Detroit, or Minneapolis and are looking to fly commercial, he runs pretty much the only game in town. Bastian can cancel flights out of these and many other cities to his heart’s content without risk of losing any customers.
That’s why on any given day, Bastian and his rival CEOs let thousands of hapless passengers head out to the airport for flights the airlines don’t have sufficient crews to fly. As Bastian admitted, airline CEOs want to grab as much of the “revenue pie” as they can, which means waiting until the last minute to determine just how much crew capacity is available.
The U.S. airline business model is to over promise and under deliver, and it’s been serving the carriers well for quite some time. The media appears to take notice of the issue in five-year cycles.
In April 2017, Vox published this story explaining why “Flying in America Keeps Getting More Miserable.” In March 2012, Washington Monthly published this story headlined, “Terminal Sickness” chronicling the decline of the U.S. airline industry until that period. The Washington Monthly story was a brilliant piece of journalism, especially noteworthy since it was co-authored by Lina Khan, who now heads the Federal Trade Commission.
U.S. airlines once were forced to compete on service as much as on price. They were savvy marketers and advertised aggressively utilizing some of the most brilliant ad copy ever written. Eastern Airlines’ tag line was sheer genius: “The Wings of Man.” Other memorable slogans included, “The Friendly Skies of United,” “Good People Make Our Airline Great” (North Central), “Being the Best isn’t Everything, It’s the Only Thing” (TWA), “Doing What We Do Best” (American), and “The Company Plane is on call – Be There” (Southwest).
Hard to believe but Delta’s slogan was once, “Delta is Ready When You Are.” LHOL
The airline industry was once filled with colorful CEOs who loved their employees and their employees loved them. The most famous was Herb Kelleher, the co-founder of Southwest Airlines, who the Washington Post reported was known to show up at company parties dressed as Elvis Presley, invited employees to a weekly cookout, handled baggage during the Thanksgiving rush and brought doughnuts to a hangar at 4.a.m. to schmooze with his airline’s mechanics.
The Turning Point
The airline industry was once heavily regulated by a government body known as the Civil Aeronautics Board, which was formed by Congress in 1938 on the belief in a “public right of transit” that ensured Americans enjoyed a reliable aviation system designed to meet their business and safety needs.
The CAB protected the U.S. airline industry against predatory fare wars while guaranteeing they provided reliable service to mid-sized and smaller cities as well as the major urban centers. The CAB was disbanded in 1985 because of accusations from liberals like Ted Kennedy and Ralph Nader that the agency was stifling competition.
Initially, deregulation did result in heightened competition and lower fares, but over time the industry began consolidating, leading to the near monopolistic system currently in place. It’s virtually impossible for a start-up to compete against the Big Four airlines.
The only hope of achieving any meaningful change would be for the FAA to begin imposing crippling fines when airlines fail to deliver, say perhaps a $5,000 penalty for every flight cancelled not because of weather conditions and a $500 fine for every day a passenger’s luggage was lost. These penalties would harm airline stock prices and require more capable and imaginative CEOs to run more efficient and reliable airlines.
Unfortunately, the impetus for change would only come if the U.S. public demanded it, and Americans have shown an acceptance for all the abuse U.S. airlines can dish out. At the end of the day, the people responsible for the dismal state of the U.S. airline industry are the majority of Americans willing to tolerate it.