Talk About A Bad Week

Talk About A Bad Week

A couple of years from now, when some journalist or academician sets out to write about the decline and fall of the Big Six airlines, I’m fairly confident that he or she will date the beginning of the end to the summer of 2000.

That, of course, was when United was canceling about 25 percent of its daily flights, running about 60 percent of its remaining service late, fighting with its pilots–and denying that anything was wrong.

In the intervening years, the Big Six has made so many strategic and tactical blunders, so many stupid pricing decisions, so many truly offensive service decisions, that it is nearly impossible to keep track of them all. If anything, their corporate conduct since September 11 has been even more egregious.

But this was a week (Nov. 15-22, 2002) quite unlike any other week since the summer of 2000. The stupidity was so rampant that it must be at least partially documented.

So, for history’s sake, a look at the week that was. God knows what these miscreants will do tomorrow.

Delta Air Lines is losing hundreds of millions of dollars a year and has no hope of making a profit anytime soon. And what is airline management worried about? Bad luggage jokes in an advertisement in its in-flight magazine. As you will learn from Steve Huettel’s sad and hilarious piece in the St. Petersburg Times, Delta executives were offended by an ad in Delta Sky magazine that depicted a luggage handler mishandling checked baggage. So it ordered the ad removed–by hand–from all of the more than 400,000 copies of the magazine. You have to wonder on what line Delta’s auditors will place “manpower costs to deface company magazine at the whim of company management.”

Effective (last) December 15, Northwest Airlines is reducing the weight allowance for checked bags to 50 pounds each from the industry standard of 70 pounds. Passengers who check bags between 51-70 pounds will now pay $25 more for the privilege. Northwest vehemently denies the newest fee is a crass and calculated move to generate revenue during the holiday period. “Lower-back injuries have been the leading cause of on-the-job injuries,” insists a Northwest flak. “And 35 percent of the back injuries are attributable to lifting bags.” Okay, then, that leaves only one conclusion: Northwest honestly thinks bags weighing more than 50 pounds lead to back injuries. But Northwest will look the other way on its employees’ health if you bribe the airline by paying it a $25 surcharge.

It’s a great airline tradition when explaining away failure: Blame labor. Blame passengers. Blame the government. Blame the weather. Blame anyone but the arrogant, overpaid clods who run the joint. But the history of the airline industry is one of repeated stupidity and miscalculation by the men who run the business. One way you know these guys are business midgets: Almost none ever get good jobs after leaving the airlines. They either slink into retirement and lecture about their past miscalculations or they stumble into academia and spout truisms that they never followed when they were in power. Those very few who do land on their corporate feet at another place invariably crash and burn. The latest case in point: former Northwest chief John Dasburg. He left Northwest in tatters in the spring of 2001 to become chief executive of Burger King. Dasburg had one job at Burger King: Sell the ailing fast-food chain for its chain’s owner, Diageo, P.L.C. Guess what? Diageo announced this week that the sale of Burger King to an investment group has collapsed.

US Airways confirmed on Tuesday (Nov. 19, 2002) that it had accepted a pitiful $240 million–or about the price of one new wide-body jet–for a 37.5 percent stake in its bankrupt carcass. So can anyone explain why Steven Wolf is allowed to remain chairman? In his nearly seven-year tenure, Wolf has paid himself enormous sums (he received a startling $34 million in 1997 alone) while making a series of astonishing blunders. He severed a successful code-share arrangement with British Airways to pursue an ill-timed international expansion. His low-fare creation, MetroJet, flopped. Southwest drove him out of Florida and out of his Baltimore-Washington hub while JetBlue is driving him from New York. He engineered a $2 billion stock buyback that strapped the carrier’s funds and helped lead to its bankruptcy filing. He pursued a quixotic merger with United and admitted he had no back-up plan if the deal collapsed, which it did. Yet even as US Airways slashes its network and its staff and bleeds concessions out of its remaining rank-and-filers, Wolf keeps his job and his perks.

Delta announced this week that it would create another airline within an airline, this one aimed at stunting the growth of JetBlue, AirTran and other low-fare carriers. Although details are sketchy, Delta’s new airline seems most notable for what it won’t offer, including the Delta name. And, of course, it flies in the face of all the previous attempts of mainline carriers to create low-fare subsidiaries. In recent years, Continental (Continental Light), US Airways (MetroJet), United (United Shuttle) and even Delta itself (Delta Express) have tried and failed with exactly the same strategy.

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