New airlines give big carriers a run for your money
It's obviously a bargain. You can take the night flight from New York to Florida for just $49. Or fly during the day for $79. If you're headed for Ohio , the prices are even less -- $35 to Columbus on the evening flight, $55 on a day flight.
Those were the prices quoted in a recent ad for PEOPLExpress -- one of several new, budget airlines challenging United, Delta, Eastern, and the other giants for control of the American skies.
US travelers can just lean back in their seats and enjoy the ride. But for airlines -- and airline unions -- the cut- rate carriers are like an approaching thundercloud on their radar screens.
Major airlines have been forced by the smaller upstarts to slash fares on such runs as Detroit-Omaha and New York-Norfolk by more than 50 percent.
More important for unions, passanger business is being diverted to firms whose planes are loaded, serviced, ticketed, and flown by nonunion personnel.
One example: Unionized pilots with Texas International are paid an average $ 62,000 per year to fly 55 hours per month; nonunion pilots with its upstart affiliate, New York Air, are paid about $30,000 for a 75-hour month.
Nonunion airlines also use more part-time workers and switch employees, including pilots, to fill various ground jobs when needed.
"Productivity is a key to our low fares," said Robin Cohn, spokeswoman for Air Florida, a regional line which is turning a good profit. "One of the reasons [for high productivity] is that our employees on the whole are not unionized."
As they fight back, some established, unionized airlines are asking: Do union efforts strengthen air safety standards, or do they lower productivity and raise labor costs to uncompetitive levels?
The fact that some successful air lines are partly or wholly unionized shows that the issue of productivity goes deeper than whether or not a company has a union organization.
Nonethless, with many union contracts up for renegotiation this year, at least two airlines, Eastern and United, are requesting their employees to accept more flexible work rules aimed at raising productivity.
The unions counter that productivity problems are caused more by poor management and economic conditions than by restrictive work rules.
Robert Joedicke, vice-president of Lehman Brothers, Kuhn, Loeb investment counselors, compared the low labor productivity of established airlines to the old fable of "The Goose that Laid Golden Eggs."
"You know what greed will do," Mr. Joedicke said. "that's the moral of that fable. The problem is greed."
Joedicke said that both labor and management in airlines had contributed to the killing of their "golden goose" by taking advantage of uncompetitive federal regulation to pass on the cost of their inefficiency to consumers.
Howard Putnam, president of Southwest Airlines, labeled the problem of productivity in the new competitive market of labor-intensive airlines as "the No. 1 thing in importance for the airline industry for the future."
Southwest, a Dallas-based success story now celebrating its 10th anniversary, pioneered the low-cost, hig-frequency shuttle flights adopted by newer, nununion lines.
Industry officials agree that flexible work rules, profit-sharing plans, and good employee-management relations contribute to increased worker efficiency -- giving these companies a competitive edge.
But it is not only new and small companies that use such methods with success. The management of Delta Airlines, which earned more profit than any other airline in 1980 (large airlines such as American suffered major losses), attributes Delta's success largely to longstanding efforts to improve worker productivity through employee-management involvement.
These include an extensive "open door" policy to hear worker suggestions and grievances, and a program of "promotion from within."
"We have had an enviable history . . . of labor relations that has permitted some of the flexibility that higher [union-] organized companies have not enjoyed," said Delta spokesman Richard Jones.
But delta's pilots are members of the national Air Line Pilots Association (ALPA), and Southwest's Putnam noted that his employees are "totally unionized."
Putnam said that Southwest's higher productivity and lower labor costs show that "you can have unions and still have cooperation." he added that because Southwest pilots have their own independent union, "their interests are totally with Southwest Airlines."
Many newer airlines seem less enthusiastic about detente with labor unions, basing their profit-sharing programs on the condition that employees do not organized. Usually concentrated in one region, their pilots tend to fly more hours at a lower wage than most of the pilots in larger unionized airlines
The ALPA is currently engaged in a million-dollar campaign to extend their union to New York Airlines, a low-cost airline that runs East Coast shuttles and is owned by Texas International, whose pilots belong to ALPA.
ALPA worries that other established union airlines may start nonunion subsidiaries like New York Air, and has hired Ray Rogers, who headed the textile union campaign against J. P. Stevens, to lead a national publicity drive against that nonunion airline.
Esperison Martinez, an ALPA spokesman, said the issue of productivity has become an excuse for airline management to cover its mistakes and high costs with exploitation of labor.
Martinez also said that cost-cutting measures aimed at improving productivity , such as longer flying hours for pilots and job switching, could have effects on safety.
Spokesmen for the nonunion low-cost airlines say they meet all Federal Aviation Administration requirements, and that pilots and workers are glad to find jobs with them in a tight market.
"I don't think the fact that our personnel are nonunion has anything to do with our low fare," said Bruce Hicks, New York Air spokesman. "What makes the difference . . . is employee productivity. Are you doing the same or better as your competition with less? . . . Do you have people standing around with nothing to do?"
Beside New york Air and PEOPLExpress -- both New york based -- the other principal budget airline is Midway out of Chicago. New York Air serves New York , Washington, Boston, Cleveland, and Louisville. PEOPLExpress flies to New York , Buffalo, Columbus, Norfolk, Kacksonville, and Boston. Midway goes into Chicago, Kansas City, Detroit, St. Louis, Cleveland, Washington, Omaha, New York , and Philadelphia.
How cut-rate airlines affect fares Route Day coach Cut-rate fares Chicago-N.Y.C. $193 $95-$134 N.Y.C.-Boston $49 * $35 Chicago-Wash. DC $174 $99-$122 N.Y.C.-Jacksonville $109 79 Chicago-Philadelphia $192 87-$122 Kansas City-Wash. DC $237 $160 N.Y.C.-Omaha $267 $180 St. Louis-N.Y.C. $216 $149 Columbus-N.Y.C. $153 $55 Detroit-St. Louis $147 $89 Ch icago-St. Louis
* Eastern shuttle