AFA RESPONSE TO THE COMPANY PLAN TO SELL NON-ALCOHOLIC BEVERAGES ONBOARD THE AIRCRAFT
Last week, the Company announced a new business model in an effort to deal with the current high fuel price crisis. The new model is based on a three pronged approach consisting of capacity reductions, furloughs and charging fees for services. The Company believes this new model will, in the short term stem losses and, in the long term, stabilize the industry.
The long term approach is sound and supported by the Union- charge what it costs to fly a passenger from point A to point B. The short term approach to "nickel and dime" passengers is immature and shortsighted.
This week, in various investor and media interviews, US Airways President Scott Kirby stated, "the only way the airline industry is going to survive and prosper is to increase fares." Mr. Kirby went on to say "the planned industry wide capacity reductions will finally allow airlines to do that."
The capacity reductions won't begin to take effect until the fourth quarter of 2008 with additional capacity cuts in 2009. US Airways plans to cut capacity by approximately 6-8% in the fourth quarter. The US Airways capacity cuts are well below the double digit cuts announced by United, Continental, Delta and Northwest. Mr. Kirby blamed existing labor agreements with the Pilots and Flight Attendants of US Airways from allowing the carrier to further reduce capacity. A deal is a deal and in this business- both sides must honor contracts. Mr. Kirby once again lays the blame on its employees. In fact, the real reason the Company can't park airplanes is because most of our fleet are under lease agreements and it is impractical to park an airplane when a lease payment still has to be made. If that were not the case Mr. Kirby would be attempting to negotiate with the two Unions for relief.
Until the law of supply and demand kicks in, and fares are increased to a level commensurate with the cost of producing the product, the Company is planning to aggressively charge for services. Charges for the first and second checked bag, administrative fees for frequent flyer award tickets and the onboard sale of soft drinks are anticipated to generate 300 to 400 million dollars in revenue. The expected revenue increase and the anticipated 100 million dollars in cost savings through furloughs will help the airline lose less money until fares are increased.
It all looks good on paper and, in fact, some of the revenue increases may manifest themselves, but the Association of Flight Attendants (AFA-CWA) believes the Company's plan to sell beverages will place an insurmountable and unrealistic strain on our members. As much as the Company believes their passengers will accept the new fee for beverages, the Flight Attendants know they won't. In the end, the plan will lead to a mid-air collision between passengers and Flight Attendants in an already highly charged atmosphere.
Basically, the Company plan is a ruse. Rather than take an honest approach, and implement the necessary and inevitable fare increases, the Company has chosen a path that insults both customers and employees.
Everyone knows that in the current economic environment, air fares must increase in order for airlines to survive. If they don't, airlines will go out of business in record numbers. If that happens, the cost to passengers will increase more than necessary. The Union does not want to gouge the traveling public, nor do we want to go out of business and lose our jobs. What the Union encourages is a responsible approach to the business. US Airway's decision to charge for beverages will not solve the problem and we are issuing the following statement to support our position:
ON BOARD SALE OF NON-ALCOHOLIC BEVERAGES -
The Company informed us on May 1, 2008 it was exploring the idea of selling soft drinks onboard the aircraft. We wrote US Airways Chairman and CEO Doug Parker a letter (copied below) dated May 8, 2008 strongly objecting to the idea. In response to the letter, the Company arranged a meeting with the MEC Presidents and various Company Vice Presidents and Directors. The meeting was led by Chief Operating Officer Robert Isom who explained because of the dire straights the airline was facing, every possible revenue source had to be considered. We were told if the Company decided to sell soft drinks, "every possible way to minimize the impact on Flight Attendants would be utilized".
The Company's announcement last week to start charging for non-alcoholic beverages onboard the aircraft came approximately one month after that meeting. At the meeting the Company made the assertion that approximately 20 million dollars per year in revenue would be realized by implementing a fee for beverages previously offered for free. Although the Company has failed to address our specific concerns, they now publicly state the revenue figure to be closer to 40 million dollars per year. No plan yet, but a 100% increase in revenue projection-interesting!
We told the Company from the beginning that if we thought the plan would make the difference in the fate of the airline we would support it with all of our efforts. We don't believe it will, even if it generates 40 million dollars in revenue. With a fuel bill of 1.9 billion dollars, 40 million dollars is the proverbial "drop in the bucket." is impossible to monetarily quantify the ill will this plan will produce, but it will be huge. Airline passengers are already fed up with airline service in general and overall customer satisfaction ratings may, in fact, be lower than George Bush's approval rating. This plan will put Flight Attendants squarely in the path of increased customer dissatisfaction and we simply will not accept the Company's position that passengers will grow accustomed to the new world order.
The sheer logistics of the plan are enormous and unworkable. Here are some examples:
The plan is cash based. How many times are Flight Attendants going to be making PA announcements in order to acquire change?'
The Company plans to invest in credit card readers and implement the readers sometime in early 2009. So what- there still will have to a transaction conducted and how long will that take?
Short flights already prove a challenge in delivering a beverage service. Even if only half the airplane purchases a beverage it will not be possible to serve the cabin.
The Company has indicated that Flight Attendants are to use their "good judgment" in cases where a passenger may need a glass of water to take medication or relieve a cough. The Company has also indicated that same "good judgment" should be used when someone requests juice because of a blood sugar condition. So now, we are not only safety professionals and potential Company salespeople, we are also going to be diagnosing the severity or reality of medical conditions in the aisle. It won't be long before media airline gurus and passenger blogs will be telling passengers how to get a free beverage.
How many times have we had to take beverage items away from passengers prior to landing? Now that they own it, they will not willing to give it back. How many debates will this lead to as we prepare to secure the cabin under Federal Air Regulations for landing.
These are just a few of the problems Flight Attendants are going to face if the Company implements their plan. We can think of more and we will. This plan is unworkable and embarrassing. To compare us to Allegiant Airlines, a 38-plane airline, that flies leisure travelers to leisure destinations, is beyond absurd. US Airways is a global airline that is trying its best to overcome unreliable service as a result of the merger and keep its customer base and win back the customers it has lost. In some ways the airline has done a good job doing that, but charging for beverages will not further that cause.
Management claims that a commercial airline flight is the only place in the world where customers get a free beverage and most often use the analogy of concessions sold at a movie theatre. In our letter to Mr. Parker we noted there is an intrinsic difference between Flight Attendants and movie theatre concessionaires.
The difference is this- Flight Attendants are hired to be Safety Professionals trained to save lives and provide passenger service. Movie theatre concessionaires are hired to sell concessions. Unlike Flight Attendants, it is unlikely that movie theatre employees are trained to or could evacuate the theatre in 90 seconds the event of a fire as we are.
In Solidarity,
Mike Flores, President
US Airways Master Executive Council
AFA-CWA
Gary Richardson, President
America West/US Airways Master Executive Council
AFA-CWA
LETTER TO DOUG PARKER, US AIRWAYS CHAIRMAN AND CEO:
Doug Parker, Chairman and CEO
US Airways, Inc.
4000 E. Sky Harbor Blvd.
Phoenix, AZ. 85034
May 8, 2008
Re: Company Plan To Sell Concessions Onboard
Via Fax and US Mail
Dear Doug:
Gary Richardson and I were informed last week by Vice President of InFlight, Sherri Shamblin the Company has decided to sell concessions, pillow and blankets onboard the aircraft. We are compelled to write this letter strongly objecting to the Company's plan.
You simply could not pick a worse time to consider the onboard sale of everything but seat cushions. Neither consumers nor Flight Attendants will put up with a point-of-sale airline. Consumers are fed up with poor service and the "virtual merger" of US Airways and America West. Flight Attendants are working under deplorable conditions that include drastic reductions in pay, benefits and working conditions. With a gun to our heads, we agreed to clean airplanes for nothing, lost our pensions and retiree medical insurance. You have a very unhappy workforce- and now want to exceed the scope of our job- by requiring Flight Attendants to act as salespeople.
Post 9/11, airlines turned to the bankruptcy courts for relief. The courts allowed airlines to abandon debts owed to creditors, and decimated the income and benefits of their employees. Airline executives, ever deft at protecting themselves, negotiated golden parachutes, ridiculous bonuses, stock grants, stock options and merger protection separation packages as their airlines navigated through the bankruptcies.
The events of 9/11 devastated the industry and the lives of airline employees. The attacks did not put any airline CEO or senior management official in personal bankruptcy as it did many of our members. After a period of adjustment (the aforementioned employee givebacks) an industry rebound occurred that produced record amounts of passengers and profits for airlines over the last two years. In a large part the profits were fueled by the low cost labor contracts "negotiated" during bankruptcy protection.
While it is true the industry is suffering from high oil prices and the associated costs- the industry once again turns to labor to solve your problem. Why? - Because you think you can.
Airlines are charging 1997 fares (adjusted for inflation) to fill airplanes and paying 1997 wages (NOT ADJUSTED FOR INFLATION) to staff those full flights.
The Association of Flight Attendants fought very hard during the bankruptcies to protect the jobs of our members and their ability to maintain their profession and earn a living. We kept an eye on the economic realities the industry faced and negotiated in good faith-trying to balance the needs of our members and the needs of the airline. In bankruptcy the cards were stacked against labor- so you got more than you deserved and needed, and we kept less than we deserved and needed.
We are not in bankruptcy now; however, airline executives are using the high price of oil to once again cry poor. The refrain, "this is as bad as 9/11", is repeated by airline executives across the country. Maybe so, but the Association of Flight Attendants is not going to bail you out this time.
The misguided idea to sell products onboard the aircraft-driven by marketing "whiz kids" and finance "bean counters" is not going to be accepted by your customer or the Flight Attendants. The industry is littered with failed attempts at this concept. To liken a "big six" carrier to Allegiant Airlines is naïve and does not demonstrate a successful outcome for this airline should we enter into the business of selling soft drinks and pillows.
The concept of a la carte pricing in the airline should be limited to seat selection and checked baggage. Forcing Flight Attendants to sell soft drinks, magazines, pillows and blankets is an unworkable concept. Flight Attendants are safety professionals- not mall "food court" workers. While we acknowledge the fact we also provide customer service to out customers we are not money takers. If you don't want to provide meals and beverages to your customers then don't.
Please do not tell us that it is up to the Flight Attendants to provide a revenue stream for this company. When we discussed this "idea" with Sherri Shamblin, we talked about the sale of items in the boarding area rather than onboard the aircraft. Ms. Shamblin's response was doing so would infringe on the airport vendors.
It is amazing to us the airline is more concerned with the rights of airport vendors than with the rights of its own employees.
We are not going to allow you to use our members to make money for you by forcing them to be salespeople. We are also not going to allow our members to be cannon fodder for the complaints and abuse that will surely come their way. Airlines always turn to the wrong audience to fix their problems. They have turned to their creditors and their employees for salvation. So far that has worked, but that well has run dry.
The way to solve the problem is to turn to the people who provide the revenue-the customers. US Airways has carried slightly more than 18 million passengers through April 2008.
Airline executives tell us fares can't be raised because demand will fall. We went to college too. We learned about supply and demand and price elasticity. We also learned that a dog will know it is time to eat when the owner rings a bell. It took the dog time to learn that. Airline executives hit the panic button when they raise fares and see a decrease in bookings in the first few days of the increase. Just like the dog, it is going to take more than a few days for passengers to realize what happens when the bell is rung.
Would anybody notice, in the long term, if fares were raised by the same amount the airline wants to charge for soft drink-two dollars? Using the year to date figure of 18 million passengers a two dollar fare increase would have produced an additional 36 million dollars in revenue. We seriously doubt the airline would be able to raise that kind of revenue selling soft drinks. We know this because of the BOB (Buy On Board) meal experience. We also know, according to former VP Ron Cole, the contract with Coke is so good that they are virtually giving the product to US Airways.
We will not support, endorse nor promote your plan that would reduce our members' profession to that of convenience store clerks. Our members will not support you either. We would rather go to jail in support of our members' decision not to participate in the sale of additional items onboard the aircraft than tell them they have to.
During discussion with Ms. Shamblin she attempted to draw the analogy between the airline and movie theatres stating, "movie theatres don't give away popcorn and Cokes so why should airlines". The difference is the intrinsic nature of the employees of both enterprises. The employees at a movie theatre are paid to sell concessions- not watch the movie.
Sincerely,
Mike Flores, President
US Airways Master Executive Council
Gary Richardson, President
America West/US Airways Master Executive Council
