Using passengers as pawns

by Charlie Leocha on October 5, 2012


Passengers are being used as pawns in negotiations between powerful forces in the aviation industry. Over the past half a decade, two giant issues have affected passengers dramatically — the battle between airlines and their distribution system and the battle between airline executives and their workers. Consumers are collateral damage.

When it comes to giant central reservation systems (GDSs or Global Distribution Systems) bargaining with the major airlines, the fight has been in the background and out of the public eye. The issues that airlines and GDSs are squabbling about are not minor — control of the passenger data for future marketing efforts and which sales channel will be permitted to sell various airline products.

Labor issues are being played out on the front pages of newspapers in hundreds, if not thousands, of blogs and on the evening news beamed into living rooms across the country. The effect on travelers is more direct than that caused by the airline/GDS battles.

In both “negotiations,” passengers are getting the brown end of the stick. Passengers suffer the consequences of having to purchase airline transportation with incomplete prices and, when traveling, being faced with delays and flight cancellations.

Airlines vs. GDSs
Ever wonder why you can’t find baggage fees and seat-reservation fees when using an online travel agency like Expedia, Orbitz, Travelocity, Priceline or others? Ever figure out why when you go to a travel agency on the corner or at your company, they can’t take your money for a special seat or allow you to pay for baggage up front?

It all has to do with the battles going on between GDSs and the airlines. In fact, when I was discussing this issue with the airline representative at the last Advisory Committee for Aviation Consumer Protection (ACACP) meeting in Washington earlier this week, he refers to my disclosure of the ancillary fee issue as the GDS issue. For the airlines, consumers and the effects on their passengers are secondary. They are focused on negotiations with these global central reservation behemoths.

The GDS side of the battle at least waves a flag of consumer protection. The central reservation systems and travel agents of all kinds have taken up the consumer mantra asking airlines to disclose the full cost of travel. But, according to airline representatives, the GDS’s consumer rights stance is simply a foil to gain the upper hand through DOT intervention in their contract negotiations.

In the short run, passengers are suffering, especially the almost 60 percent of passengers working through travel agents of some kind who have to compare airline tickets based on only “airfares,” which are a partial slice of the full cost of travel. Even airline websites make it difficult to figure out the full cost of travel.

Management vs. workers

Labor strife is nothing new to airlines. Internationally, passengers have been far more affected by strikes and slowdowns than those in the United States.

In early September, Deutsche Lufthansa AG flight attendants staged a 24-hour strike. Pilots at Spain’s Iberia have called 18 strike days so far this year. A March sickout by Air Canada AC.B.T +5.19% pilots left many travelers stranded. Qantas Airways Ltd. grounded its entire fleet for two days last fall because of employee strikes. Pilot unions at US Airways and United Airlines are both under court orders not to disrupt operations.

However, the normally meek airline unions in the U.S., especially the pilots, are for the first time beginning to hit back at executive greed. Pilots are in a good position to do that since they are the ones who make the final decision on whether flights take off on time and they are entering a period of pilot shortages, even with the cutbacks in U.S. flight schedules.

As anyone who has spent time in an airport operations center knows, there are plenty of mechanical issues that are hashed out prior to many departures regarding the fitness of aircraft to fly. Pilots have lots of discretion in fly or no-fly decisions. For the most part, pilots are just as interested in keeping schedules on time and keeping the airline flying, but in this case, management went too far in the opinion of pilots in their refusal to negotiate.

Added to the problems are new AA outsourcing agreements for maintenance and refusal to deal with other unions. Workers are staring into a no-win abyss where executives will find themselves handsomely rewarded should AA come out of bankruptcy or merge with a new partner. Employees will end up with sharp cuts to their pensions and salaries, plus changes in work rules.

Pilots are now making decisions strictly by the book and small maintenance problems that may have been overlooked in the past are being written up. According to the union (and the FAA) these are “serious maintenance-related issues.” The airline management is caught between their union and the FAA, with no real solution other than performing more maintenance or making peace with their pilots.

This pilot power is being flexed for the first time in contract negotiations here in the U.S. Finally, AA is crying, “Uncle.” Management asked for the pilots to return to the bargaining table rather than abrogating their contracts.

“American has delayed close to 2 million people in the last couple of weeks, and they’ve canceled flights for 150,000 people,” said Blake Fleetwood, president of CookTravel, an online travel agency. “That has an effect.”

Of course, all of this background is fascinating for airline watchers, but for the passengers, late and canceled flights and missed connections are major problems. Though AA has committed to figuring out how to make passengers whole, the perspective hassles are enough to make normal customers book away from American in order to insure some semblance of maintaining their business and vacation schedules.

Passengers find themselves as pawns in these power struggles, whether between airline management and GDSs or between management and pilots, mechanics, flight attendants and gate agents. While airline management negotiates with unions and GDSs, passengers are the ultimate losers in the short run, as they lack full price information with which to compare the complete cost of travel across airlines and find themselves faced with delays and cancellations.

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  • Anonymous

    “Executive greed”???

    Executive greed for an airline in bankruptcy with a Federal judge overseeing all labor contracts? Let’s have some semblance of fair play. Journalism dictates looking at both sides of the issue, but not necessarily reporting them with equal weight or depth.

    On the other hand, propaganda is defined as: ideas, facts, or allegations spread deliberately to further one’s cause or to damage an opposing cause.

    I guess the columnist is smarter than all the experts who testified and submitted data to the U.S. Federal Courts, including the labor unions. This column’s propaganda hurts the overall purpose espoused in the name of the web site.

  • Ron

    Just what here IS propaganda, Sparky? You accuse the writer of using it without specifying what it is. There is a name for that distortion, Sparky, and it’s more serious than “propaganda.” Are you perhaps a VP 3rd grade for one of these fine airlines?

  • Anonymous

    Haven’t you covered this before….many, many times?

  • Anonymous

    1. Propaganda is as defined above, and clearly in my post refers to the section titled, Management vs. workers.

    2. This sentence encapsulates my assertion of propaganda: “However, the normally meek airline unions in the U.S., especially the pilots, are for the first time beginning to hit back at executive greed.” The only specific example, going from the generalization to the specific, is American Airlines.

    No where is this reported balanced by the types of flight delays or the findings of the Federal Bankruptcy Court. No proof of any executive greed is cited. All financial dealings are subject to court review by the Unsecured Creditors Committee, among others.

    One of my AA flights this week was held up by the pilot announcing replacement of an allegedly wet seat cushion in coach while all coach seats were not filled. An AA maintenance worker carried the offending cushion (nothing dripping from it, mind you) down the aisle and held it very high in his hand so all passengers could witness his removal of the offending seat cushion. Meanwhile some 150+ people were waiting for a late departure and anticipating missed connections.

    Other well reported flight delays in the national press have been caused by cracked coffee pots and a single malfunctioning seat reading light. The FAA has AA under special scrutiny. “This surveillance is focused on frivolous maintenance discrepancy reports,” says the FAA.

    There are two sides to this story, and propaganda results when the author makes no attempt to consider well-known and significant factors, such as Federal Courts, the FAA and well-reported incidents in the national press.

    3. Accusing the OP to be a “VP 3rd grade” reflects poorly on this response. Name calling does not further a discussion. Ideas, concepts and facts do.

  • http://www.tripso.com/author/leocha Charlie Leocha

    FACT: When more than 50 percent of AA’s flights are either canceled or late, I don’t think there is a need to be flight specific. There is a big problem. That is a fact, not propaganda.
    FACT: Unions have been meek in the face of having their way of life stripped from them and having reduced salaries and new work rules rammed down their throats.
    FACT: Airline CEOs get giant pay compared to pilots and any other airline worker. See this story.
    Jeff Smisek (CEO United) — The Associated Press reports his compensation jumped to $13.4 million in 2011, up from the $4.4 million listed for him in 2010.
    Anderson’s (CEO Delta) pay package was valued at $8.9 million, up from $8 million in 2010, according to an Associated Press review of a securities filing made Friday.
    Horton received a salary of $618,135 in 2011
    The AA salary doesn’t include stock benefits since the stock is worthless now. But, a betting man would be safe saying that Horton will be paid handsomely should he manage a merger or emergence from bankruptcy with lower employee costs.

    GREED is a relative term. However, to me, the workers at AA began their protests when they gave up pay and executives were awarded bonuses with the money they gave up. GREED, to this writer, is when the highest paid pilot at United and Delta gets paid less than $200,000 per year and the CEO is raking in more than $13 million and $8 million.

    I’ll stand by my statement of GREED. It just isn’t right. And that is coming from an avowed capitalist.

  • Anonymous

    Oh, Charlie, Charlie, Charlie. You once again spread false and misleading information while shilling for the GDSs and Big Labor. Fact is, and we’ve been over this before, is that if the GDSs really wanted to, they could update their systems to display fee information in real time. They choose not to. Why is anyone’s guess.

    Meanwhile, you pillory airline management (who are far from blameless, I might add), but conveniently fail to mention the union excesses that have contributed to this mess, and that the FAA currently has AA under surveillance for the filing of frivolous maintenance reports. And what some – but, I might add, not all – pilots are doing now at AA is nothing short of despicable. The pilot on my flight from DFW to ATL yesterday held up our flight because of a wet seat belt. Yes, a wet seat belt. There were empty seats on the plane, so there was no reason to delay that flight, other than the pilot wanting too send a message to management. THEY are the ones holding passengers hostage so their union bosses can get their pound of flesh. Guess what, unionistas – even with the delays, the passengers aren’t going to call up Tom Horton and demand that he give the APA what it wants. They’re going to quit flying the airline and take their business elsewhere instead. Where do you think that’s going to leave you at the end of the day?

  • http://www.tripso.com/author/leocha Charlie Leocha

    Dear MeanMeosh
    You are so wrong about what GDSs can or can’t do. Or, you are smarter than all the GDS CEOs and airline CEOs and DOT together. If there was no problem would this be an issue? Don’t be foolish.

    There may have been union excesses, once upon a time, but I challenge you to find one pilot, mechanic or FA action as excessive as the UA CEO being paid more than $13 million. Please. This wet seat belt or variations of it are making the rounds on the Web. I understand all delay mechanicals are backed by FAA rules.

    Doesn’t it seem strange to you that Southwest can fly profitably with the most unionized workforce in American aviation while AA is going down the drain. Responsibility rests squarely on the shoulders of management.

  • Anonymous

    Hey Meosh,
    Looks like you just proved Charlie’s point. Passengers in AA flights have become pawns in the fight between management and labor (i.e. Pilots).

  • Anonymous

    Hey Meosh,
    Looks like you just proved Charlie’s point. Passengers in AA flights have become pawns in the fight between management and labor (i.e. Pilots).

  • Anonymous

    I have to agree with several of the comments, Charlie is being one sided here. Sadly he should be more objective in his assessment but that wouldn’t make as interesting reading.

    On the GDS issue I would encourage – if you have time – to wade through the AA vs Sabre and Travelport legal docs. There is a wealth of information in there. In my view on reading through them – the Judge: Terry Means made the case very straight forward. if AA can provide proof then the GDSs (Sabre and Travelport) are guilty “per se” of contravening Articles 1 and 2 of the Sherman Act.

    What most commentators have failed to realize and acknowledge is that Full Content is actually bad for the marketplace. After more than 6 years of the concept – the battle of control between the airlines and the GDSs has resulted in a hidden tax to the consumer. Full Content Agreements In MOO it is actually anti competitive and consumer damaging.

    However if we do actually take Charlie’s premise (consumers as pawns) then there is another player in the mix that has probably caused more damage to the consumer than any of the players named here. That is the US Dept of Transportation. By allowing the mergers and “mergers in all but name” aka Joint Ventures to be created we have seen a very clear rise in the consumer cost of the airline product and a reduction in the capacity in the marketplace. Domestic air travel has fallen for the past 4 years as capacity has been withdrawn. Why? Because the DoT allowed this to occur.

    And yes… the DoT who is supposed to protect the consumer has instead become the lackey of Big Airlines and the consumer suffers. The economic cost to the country of this policy and the restraint on economic growth has yet to be calculated.

    I am not advocating re-regulation – but I abhor the protectionism afforded to the market by successive administrations DoT. Now we have “blackmail” as the elephant in the room. Airlines dont have to be efficient of consumer focused because they are now all too big to fail. Think about that.

  • http://www.tripso.com/author/leocha Charlie Leocha

    Why is full content anti-consumer?
    I agree that DOT/DOJ permission for code-shares, joint ventures, antitrust immunity, airline alliances, etc. has been anti-consumer. That is a battle we are continuing to fight.

  • Anonymous

    Add all that is going on in the background (which includes delayed/cancelled flights, huge unexpected fees and incomplete travel information) to the unpleasant experience of dealing with the TSA once one gets to the airport and you begin to understand why many people try to avoid flying whenever possible. From the consumer standpoint, the air travel experience has degraded to the point where it has all the glamour and excitement of being trapped on a broken down New York subway train at rush hour.

  • Anonymous

    Add all that is going on in the background (which includes delayed/cancelled flights, huge unexpected fees and incomplete travel information) to the unpleasant experience of dealing with the TSA once one gets to the airport and you begin to understand why many people try to avoid flying whenever possible. From the consumer standpoint, the air travel experience has degraded to the point where it has all the glamour and excitement of being trapped on a broken down New York subway train at rush hour.

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