"As pay and benefits fall, airlines struggle to fill jobs"

Thursday, May 17, 2007

As pay and benefits fall, airlines struggle to fill jobs
By Melanie Trottman and Susan Carey
The Wall Street Journal
 

Wrestling suitcases on and off planes got so grueling late last year for
Southwest Airlines Co.'s 350 ramp workers in Chicago that by Christmas
season one-fourth of them were reporting on-the-job injuries. Starting pay
for the position: $8.75 an hour.

Airlines used to offer prestigious jobs with good wages and coveted flight
benefits. Now, in the aftermath of aggressive cutbacks, a growing number of
airline jobs are more akin to those at a fast-food restaurant. The pay is
low, the work is tough and, in a new twist, airlines are having trouble
hanging onto workers and finding new ones.

"What once was a glamorous job ... doesn't look so good any more," says Andy
Roberts, executive vice president of operations for Northwest Airlines Corp.
Mr. Roberts says Northwest and its peers used to have a list of applicants
"as long as your arm." Now, "we have to go seek them out, even pilots." 

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.

Conditions here to stay 

The situation isn't likely to improve anytime soon. Although airlines were
able to raise fares the last two years as travel surged, customers have
begun to resist fare increases, domestic demand is softening, and jet-fuel
prices have started rising again. These are the same pressures that
contributed to more than $50 billion in net losses from 2001 through 2005.

The U.S. airline industry is profitable today in part because big network
carriers shed more than 170,000 workers, or 38 percent of the total, between
August 2001 and October 2006, according to the Air Transport Association.
That happened even as the number of passengers flying has returned to
pre-9/11 levels. Pay has fallen, sometimes substantially.

Capt. Gene Malone, a 56-year-old pilot for AMR Corp.'s American Airlines,
says his annual pay dropped to $140,000 from $175,000 after the airline won
concessions to stay out of bankruptcy. He's flying more overnight "red-eye"
flights from his base in Los Angeles. He plans to retire early in about 18
months. "An airline career is not worth it anymore," says Capt. Malone.
"It's a very different profession than it was 23 years ago when I started."

When UAL Corp.'s United Airlines decided recently to bring back pilots who
were furloughed during the downturn, most didn't want to come back, says
Capt. Steve Derebey, a spokesman for the pilots union. 

Staffing close to the bone 

American Airlines now staffs full MD-80s with three flight attendants, the
minimum under federal regulations, down from four. The plane carries around
130 passengers. Though airlines say they can get by with the minimum because
meals have largely disappeared from planes, one fewer worker increases the
likelihood of a flight being canceled if a crew member calls in sick.

Pamela Lopez-Lewis, a Northwest flight attendant for 28 years, says she
started working a second job as a bartender 18 months ago to make up for
what she estimates is a $15,000 drop in pay imposed by the airline in
bankruptcy. "Everybody is reaching their breaking point," she says of her
colleagues. "Morale is so low. You've been insulted by the pay you're
getting. You're not feeling happy. I absolutely think it affects service.
Apathy prevails."

American Airlines passenger Leana Hill had her holidays upended by
short-staffing last Christmas Day, when she and her family had two of their
flights canceled due to lack of crews. The Hills missed spending Christmas
in St. Louis with her in-laws, eventually arriving around midnight. American
called her experience "unfortunate" and said staffing is difficult for all
industries during the holidays.

Advances in technology account for some of the declining need for workers.
Many passengers book their tickets on the Internet and check in via
self-service kiosks. Also, airlines need fewer gate agents because
passengers are now generally required to check in at the main terminal
before undergoing security screening.

Service growing worse 

Nonetheless, by many measures, service is growing worse. Last year, 22.6
percent of flights were late, the highest percentage since 2000, according
to the U.S. Department of Transportation. That isn't all the fault of
airlines; the outdated U.S. air-traffic-control system also plays a role. In
March of this year, passenger complaints about U.S. airlines nearly doubled
from the same month a year earlier, with big increases in gripes about
cancellations, delays, and missed connections. That same month, the rate of
mishandled baggage rose nearly 33 percent from a year earlier at the largest
20 carriers, says the department.

Tempe-based US Airways Group Inc. recently acknowledged the cuts have gone
too far. After slashing its work force and keeping its ranks lean during two
trips through Chapter 11 and a merger with America West Airlines, the
carrier is now profitable. But in March, the airline ranked last among its
peers in punctuality, at just 55.5 percent. US Airways also admits its
baggage handling has suffered, particularly at its hub in Philadelphia, with
long waits and too few "runners" to transfer bags of passengers making
flight connections.

The airline last month said it will hire more than 1,000 airport workers to
help it manage the busy summer travel season. US Airways has already hired
more runners in Philadelphia, and started deploying "virtual agents" with
cellphones to airports to assist passengers waiting on long lines.

United is also adding back some staff. The airline says it hired 2,000
flight attendants last year and plans to add 1,700 this year. Sara Nelson, a
spokeswoman for the Association of Flight Attendants branch at United, says
one reason for the extensive outside hiring is that the airline had trouble
calling back its own attendants. United says a majority of those recalled
came back, and it was overwhelmed by applications for the new jobs it
created.

US Airways chief: Airlines have little choice 

Despite the additions, US Airways Chief Executive Doug Parker says the
market leaves airlines with little choice but to operate lean staffs. "You
can't get the passengers to pay more so the airlines can staff another
flight attendant. It's the reality of the business and what the consumer has
told us they want," he said in an interview.

For decades, airline jobs were coveted, and many of the largest carriers
attracted multiple generations of the same families drawn to the glamour of
aviation. The pay was better than comparable jobs in other fields, the
benefits were generous, and travel passes allowed workers to fly for little
or no money.

Now, snarling passengers and trimmed pay have taken away much of the
industry's allure. And airline workers have a harder time taking an
inexpensive vacation: With planes full of paying passengers, they're often
unable to grab a free seat for themselves.

JetBlue Airways Corp. got a huge black eye when it mishandled a Valentine's
Day ice storm in New York, stranding customers in airports and on planes for
hours at a time. David Neeleman, the founder and chief executive officer,
days later admitted there "are some areas of the company ... that needed to
be beefed up and didn't keep pace with the growth" of the discount airline.
Last week Mr. Neeleman stepped down as CEO.

Unions unhappy 

While unions criticize what they call excessive staffing cuts, they're not
happy about one response to the problem: outsourcing work. A few years ago,
Northwest hired lower-wage "skycaps" to help check in passengers inside the
terminal, but it had to halt the practice after the union argued
successfully that the skycaps violated contract terms governing
customer-service agents.

Last month the union representing United's mechanics filed a grievance
saying the airline is outsourcing a higher percentage of maintenance
spending than the union's contract allows. United says it is within the
contractual limit.

Carefully negotiated union pay scales also can make it difficult to raise
wages for hard-to-fill jobs. Stephen Gordon, president of the International
Association of Machinists district that represents Northwest ground workers,
says Northwest was having trouble recruiting ramp workers and wanted to
raise starting pay to $10 an hour from $9. The union's reply: If you do
that, you need to give everyone a $1-an-hour raise. The wages stayed the
same.

Overall, airline and government officials say tighter staffing doesn't
represent a threat to passenger safety. A spokeswoman for the Federal
Aviation Administration says air travel "has never been safer."

On Tuesday, the University of Michigan released its American Customer
Satisfaction Index. U.S. airlines scored 63 out of a possible 100, their
lowest score in seven years and two points lower than last year. Airlines
fared worse, by nine points, than the federal government and even lagged by
two points the Internal Revenue Service.

American's vice president of customer-services planning, Marilyn DeVoe, says
the airline's overall staffing is adequate. "Would we like to have more
manpower?" she asks. "I would. But it just isn't prudent as a business."

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