Glenn Tilton.com

I’m going to go out on a limb and say that both United and Aer Lingus made a big mistake yesterday when they announced a joint venture that I can best describe as goofy. But that’s about the closest I can get to saying something nice. More importantly, United has decided that yes, labor relations can (and apparently should) get worse. Aer Lingus not only agrees, but it also has proven that it has no clue what to do with its business. I actually worry that in the long run, this could be the end of United. So for that, they’ve certainly earned themselves the Cranky Jackass award. Let me explain.

First, let’s talk details. Aer Lingus and United will join forces to first fly Washington/Dulles to Madrid in summer of 2010 (that’s a lot of notice) and then fly elsewhere the following summer. All costs and revenues will be shared between the two on the joint venture routes. Aer Lingus will be responsible for actually flying the route with three A330s (1/3 of its existing long haul fleet, though 6 more A330s are coming in starting this year) that will have Aer Lingus branding on the outside and apparently both United and Aer Lingus branding on the inside. United will be in charge of actually filling the plane. It appears the crews will come from the US but won’t be United employees. I’m not entirely sure how that will be structured yet, but my guess is that it will be low cost, non-union labor.

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Pilot schedules built to incorporate only minimum days off leave no room for recovery when the schedules don’t fly as planned. In May, for example, some 50% of the pilots on some airplanes were assigned schedules built to minimum days off. Any burp in the system (thunderstorms for example) leaves no room for recovery since the pilot is at minimum days off and can’t fly anymore.

There is no feedback loop to the schedule builders from the actual operation. The crew scheduling group responsible for the day-to-day misconnections and cancellations for the real time operation is different than the schedule planning group. The day-to-day group knows that the lack of a pad or buffer doesn’t work, but there is no mechanism built by management to correct this, because any corrections would increase costs.

So the lack of communication and coordination increases misconnects, lowers customer satisfaction, and creates entirely predictable failures in the system. But management would rather pay these unbudgeted costs instead of increasing budgeted costs as required to do things properly. Short-term thinking, long term losses.  

The crew schedule planning software has a new optimizer that is scheduling considerably more “deadheads” than the old one did (a deadhead is a pilot scheduled to ride in a passenger seat for positioning purposes rather than fly the flight). This impacts customers by reducing available seats.

The ALPA scheduling committee asked management if there is any sort of revenue input parameter to the deadhead selection process. For example, does the new optimizer know how much ticket prices are on a specific flight or whether the flight is oversold? The answer is no — the program that schedules pilots for deadheads has no knowledge of potential revenue issues on those flights.

 It probably should, if they’re truly looking to minimize costs and increase revenue— but one-dimensional thinking is not a new problem for the Tilton regime.

What’s the best defense against rising fuel prices? To Tilton’s management team at United, the answer is a host of new charges and restrictions on travel, guaranteed to anger travellers and place United at a competitive disadvantage.

Over the weekend of April 19th, the airline introduced two new “Upgrades:”

1. A new $150 change fee for domestic itineraries, a 50% increase over the prior $100 fee.

2. New Saturday night stay restrictions that apply to almost 65% of our markets, a return to the “bad old days” of much higher fares for business travel.

 According to the airline:

“In an environment where fuel prices are averaging almost $120 a barrel, we are facing a cost increase of more than $2 billion this year and that is more than twice the operating earnings we generated last year. Making these changes is another example of how we need to continue to adapt to today’s tough market realities and find new ways to generate revenue.”

 Of course, the airline blames the lack of operating earnings on fuel costs, and intends to recoup it from you, their customers. Instead of boosting earnings, this decision will simply boost business at low cost carriers and other airlines that have not opted for draconian change fees and flight restrictions.

Of course, all of this begs the larger question: What is this airline doing paying huge dividends to shareholders, and offering gigantic bonuses to inexperienced executives who make boneheaded decisions to cover bad management with higher fees and more restrictions?  If you want to know, why not ask Glenn Tilton?

United Airlines is reporting May 2008 Year-to-Year traffic is off over 3.3 percentage points… at a time when other airlines are growing.

Revenue Passengers boarded are down 6.7%, while revenue miles flown are down 1.9%… so passengers are shrinking three times as fast as miles flown. Both are bad signs.

 System load factor is off 2%.

 There is no good news in this report. Again, these failures belong to Glenn Tilton and his shortsighted management.

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