Author Archives: Christopher Muise

TruPrice Set to Launch Bold and Innovative New Site Powered by CTECKSOFT

We at TruPrice have been committed to partnering with a highly competent, motivated, and out-of-the box software partner.  After a lengthy search, I am extremely pleased and excited to announce that TruPrice has entered into a dynamic partnership with innovative software company CTECKSOFT .  This partnership will fulfill the promise that we believe TruPrice has had since day one of its launch.  Driven by CTECKSOFT’s technology expertise, look for TruPrice to re-launch with a bold new look and an intuitive interface.  Check back soon for our updated site and beta.  We continue to remain absolutely committed to providing the world with the most comprehensive and accurate fee information in an easy-to-use and pleasing design.

Chris

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Change Fees? “Southwest would ‘never’ do that.” Oh, really?

Southwest’s recent ad campaigns aimed directly at the booming ancillary fee market that has created net positive margins for airlines has for the most part accurately portrayed the truth:  Southwest has, as stated by this scribe many times, the lowest overall fees in the US aviation market.  But their latest claims, shown here sequentially on theboardingarea.com, make some pretty blunt statements that may come back to haunt that airline.   Why?  As always, I’m pleased as punch you asked.

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Airline Opposition to Full Fee Disclosure Completely Transparent

With various outlets reporting that airlines raked in over $4B in ancillary fees through the third quarter ending in September, 2010, the calls from legislators and consumer advocates are once again reaching a crescendo.  Demands for “transparent” pricing and full travel cost disclosure are pervasive both in DoT rulemaking drafts and legislation being pushed by a consortium led by US Senator Robert Menendez, D-NJ.  Despite the intentions of lawmakers, rulemakers, and consumer advocates, any regulatory movement is running into stiff opposition from the Air Transport Association (ATA) whose members, according to David Castelveter, vice president of the ATA, claim that ancillary fees are already transparent and that airlines “are working on ways to increase levels of transparency.”  Could it be that both sides are right but that the now de rigeur application of the term “transparent” has caused as much confusion as the fees themselves and, unbeknownst to fee disclosure advocates, provided cover to airline executives reluctant to contribute willingly to a repeat of the lessons learned from actual “transparency?” Continue reading

What CO and SWA Can Learn from Two Recent and Very Different Airline Mergers

The tale of two mergers.  One that took place in 2005 and remains a bloody mess (editor’s note: the linked article could be written today as nothing has changed to dilute the poison in the waters at Airways)  and one that took place in 2008 and is the industry standard for labor peace, unlocked efficiencies, and economies of scale.   The difference?  It’s the pilots – stupid.  Like the recognized leaders of virtually any social organization, be it human or animal, pilots have the ability to influence fellow employees to either poison or purify the labor waters unlike any other group.  They interact with all major operational groups.  They are highly trained and hiring criteria are stricter than for any other group.  They have the ability through their skillset and licensing to cause absolutely catastrophic financial losses with a job action thus giving them greater negotiating power than other workgroups.  And even to this day, the word Captain carries with it an embedded respect based on the frontline, highly visible role they play in getting the wheels off the ground and back on safely.  In other words, pilots can convey a message of fairness resulting from labor negotiations or they can douse other labor groups with arsenic-infused dirty bombs with resulting reverberations felt throughout all labor groups.

For US Airways and America West, their pilot groups have been at war and have fueled legal action that five years later leaves Airways a dismembered mess looking for someone, anyone, to put the pieces of their miserably failed merger together.  This utter failure of corporate leadership should serve as a harbinger to CO and SWA leaders to get involved in pilot negotiations early and often.  Not coincidentally, Airways has found forging labor peace among other groups near impossible with no resolution in sight.  For Delta and Northwest, pilot peace was a first and foremost priority with the result of labor peace and unlocked synergies exceeding even the optimistic projections of leaders when the merger was announced.  And as my last post suggests, the cascading results among other labor groups at Delta have been nothing short of awesome.  Now, take those same two pilot groups from Delta and Northwest and throw in the US Airways and America West acrimony and this writer bets his weight in Boston Baked Beans that the labor landscape at Delta might be tilted very differently.  Why?  I’m so glad that you always ask.

Take all that you know about labor issues of this versus that and pay and benefits and, and, and…and suspend it briefly, please.  For in the airline industry, one thing matters:  seniority.  It determines vacation allotments, route bids, unpredictable reserve schedules vs. being able to hold a line, preferred weekday versus weekend shifts, day versus graveyard shift schedules, salaries, and the holy grail for airline employees, non-revenue access to open seats on an airplane.  In short, seniority at an airline conveys countless goodies unknown in other industries.  And in the terminally incestuous business of airlines, it means credibility.  For once the clock starts at day one of seniority, airline employees are on an inexorable walk toward an ultra-magnetic tractor beam that virtually crushes the desire to move to another company either inside or outside the industry.  The resulting social strata based on longevity leads to the “street cred” that creates a virtual pecking order based on years of service.  Proof?  Walk onto any operation at any airline and you’ll notice one thing.  The first place an employee’s eyes go to is the mandated, above-the-waist, visible employee ID.  Why?  One, to make sure you’re where you’re supposed to be according to company and government security policies, and two, it shows when you were hired.  (A quick anecdote, I’ve also witnessed employees wives subconsciously segregate themselves at social events based on their husbands’ seniority with the lowly, young narrow-body domestic wives staring enviously at the spouses of the higher compensated wide-body international pilots.)

So what’s the answer we learn from Delta to get pilots on board whereas prior attempts  have flown woefully off course?  Address seniority in a way acceptable to the majority of pilots first and foremost.  If this includes priority weighting for certain groups get the proposals on the table immediately and sort them so both sides can position themselves as winners within their own constituencies.  More than anything, show how by compromising on the most volatile issues, by employing an equal pain for equal gain approach, each side wins.  And use Airways as the penultimate example of how dug-in, no movement strategies benefit no one and in fact can imperil a company’s ability as a going concern.  While this sounds simple in principle, it can become impossible without senior corporate involvement.  Simply said, in contrast to Airways’ assertion, seniority is not a “pilot issue.”  Seniority is a leadership issue.  And make no mistake, Airways is an American Airlines merger with jetBlue or another carrier away from finding itself at the extremely lonely end of a very slippery competitive ladder.  If this were to happen, union members can dust off their funeral pyre dances and chants of “full pay to the last day” as their intransigence cripples Airways’ ability to compete.

So Continental and Southwest senior leaders, get your United and AirTran drivers to the table.  Lay out a growth plan that hits the equal pain and equal gain equation straight on while fully acknowledging the paramount importance of seniority.  Get a deal with your pilots that neuters any potential claims of undo preference or unfairness by the other labor groups.  Accomplish this and you’re off to the races of crafting a successful integration.  Once an early history of fairness is created in labor relations, the rest is much easier.  Short of that, you can take all of the projected synergies, savings, and revenue projections and park them on a  tarmac in Phoenix and await your tarmac delay fine.  Chances are it’ll be far more expensive than you ever bargained.

Chris

Octa-Gone! Dixie-Based Delta Sends 8 Union Forces Scurrying for the Hills. How?

In my last post on Delta’s impressive victory over the Association of Flight Attendants’ bid to organize the legacy-union Northwest flight attendants with the non-organized Delta flight attendants, I opined that the AFA could not have asked for better conditions under which to try to bring the flight attendants under its umbrella.  But couldn’t the same be said for all of the unions trying to get a foothold on fortress Delta’s property?

In a union organizer’s perfect storm, in relatively recent memory, Delta’s employees have witnessed:  Continued industry contraction and with it the continued shedding of overlapping jobs;  relatively new senior leaders in some operating groups and a CEO and COO who replaced wildly popular, virtually cult-like Jerry Grinstein and Jim Whitehurst; necessary contraction of pension and health benefit models that made Delta an employee’s nirvana; promises of “industry standard” pay as opposed to previous promises of “top pay for top performance”; union-friendly NMB rules enacted by a pro-labor White House; and the integration of a workforce from the tundra of Minneapolis where even the mice in the hangars were probably unionized.

So how is it that eight, ocho, acht, octo, huit, otto, yes EIGHT straight post-merger unionization attempts by various groups have been sent to the hinterlands licking their wounds and vowing revenge?  In any language, there’s got to be something in the secret sauce Delta is cooking to keep its flexible, nimble workforce the envy of the entire industry.  My opinion?  It’s not rocket science.  In fact, it’s rather simple:  Communication!  Communication!  Communication!  And did I mention Communication?

Why is communication so important?  Because the single most repeated theme of a front-line employee ripe for organization is “no one listens to me.”  The sense of impotence that can envelope the untended creates a vacuous expanse that cunning pro-union forces quickly inhabit.  We’ve all heard the union mantra:  “let your voice be heard.”  But, too often, companies believe that the only necessary communication is a monologue pushed from the corporate war rooms and think tanks and dressed in typical HR speak that no one believes.  Delta does it differently and very intentionally.  With peer advocacy groups at every level that meet with divisional senior leaders and the wholly unique and brilliantly conceived Delta Board Council designed to give uber Board Room and ultra-executive-level access to a peer-chosen group of frontline and management personnel below the director level, Delta has mastered the often-neglected “pull” method of communication.

In doing so, senior leaders get it.  They’re able to hear that ACS agent who is tired of the rickety ground support equipment.  They can react to the flight attendant who has grown frustrated of flying into her off days.  And even if policies are not always just as employees would want them, leaders have the answers before the question is even asked on a call-in show or during one of the many lounge visits conducted by Delta’s senior leaders.

End result?  The union’s traditionally reliable calling card of giving “voice” to the employees sounds stale, hackneyed, and comes at the real, quantifiable, direct cost of union dues.  To Delta’s frontline employees, why should they pay for the cow when Delta deliberately provides the milk?  The answer is they never have and probably never will.  Delta 8-Unions zero.  Octa-Gone!  Impressive.  Impressive indeed.

Chris

If You’re Only Paying Attention to Baggage Fees Watch Out!

Garnering the lion’s share of attention during any mention of airline fees, baggage fees (notwithstanding Spirit’s hideous overhead bin baggage charges) have remained somewhat stable in 2010.  In fact, TruPrice research shows that 2009 was a much busier year for sizable jumps in baggage fees.  Does this mean that airlines have reached the outer limits of what customers are willing to pay for checked baggage?  Perhaps.  Does this mean that airlines have grown passive about ancillary fees?  Not a chance.

Rather, airlines have supplemented their huge hauls of ancillary fee profit by adding to many existing fees that don’t have quite the panache of baggage fees.  Examples?  Just take a look at American’s recent increase from $50 to $60 for bags weighing  between 51 and 70 lbs.  Or Continental raising its fee to make a reservation over the phone from $20 to $25.  Or for that matter Continental dropping its free in-flight snacks and meals and adding a menu with items ranging from $1.50 to $7.00.  To wit, not all news on the fees’ front is bad.  For just this past June, Frontier announced the elimination of the $25 ticketing service fee for travel purchased through its reservations call center and airport ticket counters.

Re-stating our long-held opinion that airlines are for-profit entities and TruPrice encourages the open market business model, we nevertheless do believe that consumers and business travelers alike need the proper tools to ensure that they know the true cost of their travel choices.  We at TruPrice believe that in this day of constant (and typically upward) movement in the less visible areas of ancillary fees, we ask now more than ever:  Have you TruPriced your travel? If you haven’t, don’t be surprised if the final bill from your trip is up to, or perhaps more than, double what you originally thought.

Chris

Who Is the Real Loser in Delta’s Flight Attendant Union Vote?

The simple answer to that question would be fairly easy to identify:  The Association of Flight Attendants.  The AFA, who, in this zero-sum game, not only lost 13,000 potential dues paying members of Delta’s flight attendant group, but also lost the 7,000 already-union former-Northwest flight attendants, is surely smarting over the loss of $43.00 per month in union dues times 12 times 20,000.    Given my score of 380 on the math section of the SAT back in 1983, I don’t even attempt to figure those numbers in my head.  (Never fear though, I slammed the verbal section with a gaudy 490.)  But my trusty computer calculator suggests a loss of about $10m annually to the AFA.  So the big loser is the AFA?  Wrong.

The real loser in this election is quite simply Delta’s competitors.  Why?  Glad you asked.  Back in 2005 I had the incredible honor of accompanying Gerald Grinstein, then Delta’s CEO, and Delta’s BOD in every board meeting as part of a hybrid group at Delta called the Delta Board Council – brilliantly formed in 1996 to give non-union workgroups the same “representation” at the senior leadership levels as the unionized pilots had negotiated.  This access afforded me an insight into Delta’s fundamentals unheard of for middle managers at other companies.  One fascinating fact I learned through this experience was that as part of the valuation process that Delta’s September 2005 bankruptcy required, an independent firm valued Delta’s non-union workforce as contributing over a billion dollars in operational efficiency.  You read that right.  As Dr. Evil himself once mangled:  ONE BILLION DOLLARS.  For unencumbered by union rules and their inefficient mandates around negotiating virtually every bodily function of frontline employees, coupled with the ability to move quickly in the market again sans the time-consuming quid pro quo union rule negotiations, Delta was able to quantify the the value  of its tens of thousands of non-union scale employees.

Fast forward to 2010.  All of the indicators show Delta ripe for union representation.  Industry consolidation is everywhere providing fertile ground for the pro-labor platform.  Delta’s leadership is relatively new in some places.  A very strong pro-union (some would say downright hostile) workforce has been integrated into Delta’s frontline.  Employees are still smarting from two paycuts in 2005, increased health benefit costs, and the dumping of their defined benefit pension plan.  And the result?  The AFA loses under the most favorable circumstances it may find ever at Delta.  While I suspect the ramp workers may fare differently, I’ve seen enough to know that Delta’s post-merger mojo is showing.

Don’t think for one second that the folks who operate out of Love Field weren’t watching this closely.  With its own union battles looming and with its attention pointed directly at Atlanta, this cannot be good news for Southwest.  A major union on the property at Delta may have provided the momentum to secure organization for other work groups.   Instead, Delta and its ONE BILLION DOLLAR labor efficiencies survives a major insurgency.  Yes, this was a huge, deserved victory for Richard Anderson, Edward Bastian, Mike Campbell, and Joanne Smith.  And it shows that rumors of the Delta family’s demise may have been greatly exaggerated.  Delta’s competitors may want to take notice of how to pull off a successful merger and keep the troops in the fold.  Anything short of this type of herculean effort that Delta pulled off could prove to be a competitive disaster.  (Just ask the basket case out in Phoenix where 6 years later US Airways and America West still operate as two airlines causing Doug Parker to market his company for sale everywhere short of Craig’s List.)

Time will tell.

Chris