High Fuel Prices in Airline Industry is Causing Technology Innovation Advances
The goal of a business or corporation is to make a profit and to do so they must perform a desired service or make a needed or desired product that the customer or consumer is willing to impart a unit of trade for; a dollar or many dollars you see? When fuel prices go up in the transportation sector business must find ways to pass on these costs and streamline their operations to do more, carry more, more efficiently.
This subject came up recently when someone asked a moderator of an online think tank to explain. Here is the question; “Can we expect to see improvements in airline travel in regards to cost change or fuel-surcharges?”
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2009 Airline IT Trends Survey: Technology developments
Passengers using their mobile phones to check-in may be fairly thin on the ground today, but airlines are forecasting that people using this service will increase fivefold in the next three years and are gearing up to rapidly accelerate the availability of a whole range of mobile facilities, including check-in, to help their customers self-process their journey.
The growth and popularity of web and mobile services look set to overshadow kiosks as a check-in channel – indeed airlines in some regions that have yet to implement kiosks may simply leapfrog this evolutionary stage. However there is plenty of life left in the kiosk as a self-service channel, with an increasing number of airlines looking to evolve it further to provide other self-processing tools.
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What Would Yoda Say to the APFA?
Where I would typically use this space to talk about the fact that the rumor mill has United and Continental in serious merger talks, I am not going there. My feelings on a US Airways – United hookup are well documented in a number of posts. I will be most pleased if United and Continental are indeed in talks. Each carrier has aggressively pursued a path to the least exposure to the US domestic market, and that is a path resisted by US Airways.
I respect many people at US Airways, particularly those managerial types who have done yeoman’s work with a network that, in my opinion, holds little promise long-term. It is, as I say, presence everywhere and a dominant piece of meaningful real estate nowhere.
To me the biggest piece of news this past week was the fact that the National Mediation Board (NMB) did not release either the Association of Professional Flight Attendants (APFA) or the Transport Workers Union (TWU) into a 30-day cooling off period that each union sought in their negotiations with American Airlines.
At least until we see the rule drafted by the NMB on representation elections, all seems right at the Board. They did not release a case that is nowhere near exhausting the mediation process, even though I had feared that they might given the political winds in Washington.
So, the APFA is, for the time being, reduced to trying to convince the world of the numerous grievances its members carry. The union’s You Tube videos claim that AA flight attendants are oppressed. They talk of the past like somehow it will reappear, even when reality knows it is but a faint memory. And through it all, APFA’s reckless talk of a strike continues – reckless because the circumstances don’t justify the action as I have written before, most recently in Self-Help or Self Sacrifice or Self Fulfilling Prophecy? What Will This Accomplish?
I am reminded of a quote by Yoda in Star Wars: “Fear is the path to the dark side. Fear leads to anger, anger leads to hate, and hate leads to suffering.”
American’s Conundrum
Few people, if any, have been as critical of American’s union leaders as I have. The one union that has been left unscathed by swelblog has been the TWU because, as a leader, John Conley is typically careful in misusing power and rhetoric. But in this case even Conley has come close to the line.
Is the fear that a union working to address American’s productivity deficiencies in return for improved wages somehow collaborating with the “dark side”? I think it is. The fear of reprisals from a vocal minority of members toward a union’s leadership has led to a campaign based on anger toward the employer. The anger has become hate as unions try to tie everything wrong in the industry to executive compensation, particularly that part of their pay in at-risk company securities.
But without executive pay, what are the unions really protesting? Change? We’ve got plenty of that in the airline industry, which is all the more reason cooler heads should prevail in approaching negotiations in a way that promises the best long-term pay and job security for airline employees.
But that’s not how the flight attendants union is approaching it. The APFA is trying to stir up a lot of anger and hate with a strike vote that, if it eventually led to a strike, runs the risk of doing serious harm to wages and working conditions for their members.
The APFA has been speaking out of both sides its mouth in urging members to support a strike a vote. On one side it encourages flight attendants to send a message to management and channel their anger by threatening a work stoppage that would bring the carrier to its knees. On other other it tries to calm flight attendants with reassurances that they themselves would not be hurt by going out on strike.
And that’s just wrong. APFA President Laura Glading should be careful what she asks for.
What good did the strike do the BA flight attendants and their union Unite? Zero. Nothing. Nada. It did entice a management to put into place a plan to fly through the “three strikes.” Three strikes and you are out right? Glading’s plea to her members is pathetic. All the while she reminisces about 1993 and 2001, she mentions that a “yes vote” does not mean that they will strike. She talks about the power of yes. But she does not once mention the potential risks of a strike to her members.
Glading also does not mention that her flight attendants are the highest paid among her network peers according to MIT’s Airline Data Project; the least productive in terms of hours flow per month; generally lagging in terms of in terms of passengers served per flight attendant equivalent; and the beneficiary of a relatively costly benefit package. It makes the negotiations between American and its flight attendants very complex and difficult to conclude – even for the most skilled negotiator and/or mediator. American is asking for increased productivity for one simple reason: whereas American’s salary per flight attendant is comparable to that received by flight attendants at Continental, if American achieved the same flight attendant productivity as Continental the carrier would require 1,254 fewer flight attendants. And the carrier has offered to grow into the productivity over time rather than lay off even more flight attendants.
If I am an American flight attendant, I would carefully consider these facts. Negotiations are now data driven – just like a Presidential Emergency Board (PEB) would be. APFA likes to talk to the world about labor cost per available seat mile (CASM). But that metric is fraught with potential error as the calculation is influenced by a wide number of items which are not in the control or purview of the flight attendant collective bargaining agreement.
In fact, as CASM is influenced by factors as varied as seat configurations, stage length, aircraft utilization and network design to name a few, even analysts and economists would be hard pressed to make the kind of bold analytical statements and sweeping conclusions that the APFA is making. Pay and productivity are expressed in hourly rates and hours worked and that is why the MIT Airline Data Project examines pay and productivity against an hourly foundation. The APFA refers to staffing as the culprit in American’s high flight attendant unit cost. The problem is that the 3-class fleet is a very small portion of the fleet. Can 3-classes really be responsible for the highest flight attendant costs in the industry among the legacy carriers? Warning to United: the same argument is coming your way.
American does have a conundrum in that it is the first major case in front of the NMB and it has the highest costs among its peer group, particularly with its flight attendants who, as a group, are highly paid relative to their low productivity. In a recent Dallas Morning News, I was quoted by author Terry Maxon suggesting that there will be an airline strike. Inside of my comment was a challenge to management: Is the airline ready to take a strike? If American caves in its position, the industry suffers. The American Airlines flight attendants suffer because American will have agreed to pay more than it can afford. Even the best heeled US airline cannot afford what American’s employees are asking from their management.
American’s unions constantly point to management compensation as unfair but, as is typical, they use only the parts that serve their purpose. Conveniently, forgotten is the fact that there have been years in which management got well below their target pay (and well below their industry peers) because the system of pay linked to performance actually works. Yes, management pay is higher than pay on the front lines.
That’s pretty much the way it works in every industry. That’s because the market for management labor is different than the market for flight attendant labor. That’s a reality. And in a market-based economy, no one is entitled to more for their labor than what the market will pay. The NMB got it right at this point. Exposing the company to the destructive threat of a strike doesn’t serve anyone’s interest.
Yoda was right to focus on fear as a path to the dark side. In this case, the dark side is not so much a strike but, rather, the fear, anger and hate churned up by union leaders that could lead to a disastrous outcome for the members they represent
An Encounter With A Microburst
It was a beautiful pre-summer afternoon as we took off from Bangalore for Coimbatore in our Dornier-228. We were required to position at Coimbatore for a routine charter flight. The weather forecast for the route was seasonal pre-monsoon weather with likely Cumulonimbus buildup during late afternoon. The enroute weather was generally good, except for a large cell visible on the weather radar slightly north of Coimbatore. Our track was fortunately clear and we expected no problems but for the northerly winds, which were pushing the cell slowly towards our destination. However, we expected to be on ground well before the CB could affect our destination. As we approached Coimbatore, the tower cleared a scheduled Boeing-737 flight to descend behind us and join the ILS final approach path directly ad told us to report overhead for a procedure ILS, as requested by us. However, as we reported overhead, the mighty CB had reached within 10 NM of the airfield and moving in fast. Winds were slowly picking up and we were anxious to be on ground as early as possible. In the meanwhile, the B-737 reported as having been established on ILS for R/W 23. As we joined the hold for the ILS, the jet reported some turbulence on finals. However, as the jet landed, the captain informed us that he had experienced severe turbulence on finals and advised us to approach the airfield from the other end, I e R/W 05.
Sensing an abnormal situation developing, we became adequately alert and decided to follow his advice. The CB was now within 5 NM from the airfield.
As we decided to join a southerly visual circuit, the winds too were veering and becoming favorable for our newly selected approach path. Consequently, we joined a descending circuit and were asked to report finals for R/W 05. By the time we turned base-leg, we had reached circuit altitude and began adjusting configuration for the final approach. We also noticed slight turbulence at this stage.
Further, one important variation was the requirement of higher power setting for the existing aircraft configuration and altitude. As we turned finals, the power setting requirement steadily increased. During descent, the power requirement increased uncomfortably and reached an abnormally high setting of 65% torque by the time we were 500 feet on short finals. The normal setting under the circumstances would have been 35% torque on finals and steadily decreasing during the final descent. In addition, there was a steady increase in turbulence level and situation had become uncomfortable at 500 feet. We were now in a full-fledged Microburst and slowly getting into a worse situation. The captain, on RHS who was silently monitoring the approach finally decided to takeover the controls and commenced a go around at about 400-500 feet. As he opened power, he found that the aircraft was barely maintaining height with even maximum power and turbulence was now severe,lightning at night especially for a light aircraft like Dornier. At this crucial stage, the Captain decided to leave current flight path and commenced a right turn away from the direction of winds and the approaching CB, which by now was very close to the far end of the runway. To his great relief the effect of strong winds of microburst began to fade away, the aircraft started to respond to power, and finally started a gradual climb at about 200 feet above ground level. With further change in direction, the aircraft comfortably climbed out and we decided to divert to the nearby airfield.
Aware that we had had a real close shave, the following points emerged during the mutual debrief:
* The caution from the Boeing was indeed a timely one regarding the oncoming situation.
* We had inadvertently entered a microburst and recovered just short of a sure disaster.
* There is no known equipment to accurately warn the pilots about an impending microburst, which can be present in clear weather in the vicinity of a CB.
* Within a microburst, the turbulence can drastically increase from an acceptable level to a dangerous one within a short descent of 200-300 feet.
The wind situation for us while in microburst changed sequentially from strong headwinds to strong updraft and then to a severe downdraft, the last condition being responsible for many aviation disasters where even maximum power from all the engines may be insufficient to climb out safely. Fortunately, we avoided getting into this last situation, as we decided to turn without waiting for the aircraft to initiate climb at fairly low altitude. Incidentally, the Captain vaguely remembers this action being recommended on a TV program on aviation disasters as a likely course of action for an airliner, which crashed due to a microburst some years ago. You never know which direction the help can eventually come from!
The decision to divert could have been taken right away. Although we did not expect to encounter a microburst, yet avoiding this situation altogether would have been a desirable course of action. However, we would have been deprived of this once in a lifetime experience of encountering a microburst first-hand, and coming out alive and safe. The encounter will never fade away from our memory. And of course, I have absolutely no desire to get into a similar situation in future.
