Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, April 3, 1993 TAG: 9304030072
SECTION: BUSINESS PAGE: A-8 EDITION: METRO
SOURCE: Associated Press
DATELINE: LENGTH: Medium
FLYING'S FACING A HARSH NEW REALITY
If you fly a jetliner on a trip that takes less than two hours, you soon might find yourself climbing aboard a small propeller plane for a longer, bumpier journey.Your ticket might bear a brand name like United or American, but you might be flying a small carrier you've never heard of before, which takes you to a large airport where you change planes for a United or American flight.
Welcome to the new reality of the U.S. airline industry. The big carriers are shrinking - cutting back where they aren't making money, shifting planes and employees to profitable routes.
Leaders of the biggest airlines have decided they can't wait for a stronger economy to fix the industry's financial anemia.
"We're not just going to sit here and do nothing; we will take affirmative steps to restore the company," said Gerard J. Arpey, American's strategic planning chief.
With union leaders fighting wage cuts and passengers refusing to fly without a discount, airlines have struggled for alternative ways to stop the bleeding.
That means scrapping unprofitable short trips; subbing smaller planes for larger ones; and hiring companies to cook, train crews, fix engines and even fly the planes.
To passengers, some of the alterations will be obvious, some won't. For many airline industry employees, however, life could change dramatically.
They might keep a job but work for a different company, likely at a lower salary with fewer benefits, said Jim Conley, spokesman for the International Association of Machinists union.
Talk of taking work elsewhere is a frequent employer threat in the airline industry and has contributed to a more confrontational labor-management atmosphere, said Randolph Babbitt, head of the Air Line Pilots Association.
But even if management's tough line results in lower labor costs, that's not enough, industry analysts and airline executives say.
United, for example, is planning to use outside suppliers to cut costs. The in-house kitchens for flight meals and the Denver pilot school will be axed.
"Anything is fair game as long as it is legal and moral," said John Pope, United's president.
Raymond Neidl, airline analyst at Furman Selz Inc., a New York investment brokerage, said some of the savings will come from abandoning expensive relics of the regulated airlines era, which ended more than a decade ago.
Hefty pilot salaries may be one example. New airlines can hire pilots with 20 years of experience for about $50,000, compared with the $100,000-plus yearly that pilots average at the largest airlines.
The airlines also have cut into the number of jets, the biggest-ticket items of their business. After jet-buying binges of the 1980s, they are delaying purchases and returning leased planes early because they can't fill the seats.
"This is the marketplace telling us we must do something," Pope said. "Also, it's saying, `If you don't do it, we'll get another management to do it.' "
American Airlines recently grounded 25 old DC-10s. Their routes will be flown by smaller jets, which will be replaced by smaller propeller planes, which will abandon some routes altogether.
This week, the airline said it would lay off 500 pilots, 400 maintenance workers and an undetermined number of flight attendants.
American also has been looking at scaling back in San Jose, Calif.; Raleigh-Durham, N.C., and Nashville, Tenn., three of its hubs.
Delta Air Lines plans to retire 28 jets, lay off 600 pilots and abandon some trans-Atlantic and domestic routes. Delta already has given turboprop regional carriers some short-haul flights.
"We'll take a critical look at every route we fly," Chairman Ron Allen said.