CEO of the Cockpit #35: If I Were The King Of The Forest ...
Is it the job of an airline to provide a 'great flight,' or just to move people from point A to point B and along the way try to separate more money from those people? AVweb's CEO of the Cockpit has a few more ideas for re-organizing his airline; he's willing to take a pay cut, but only if he can roll a few management heads.
Mo had brought me my second beer and I was well on my way to losing my first ten bucks to the video blackjack machine imbedded in the bar when Janet and Keith showed up to share my Las Vegas layover with me.
Probably in accord with the public's preconceived notions of gender roles, Janet was a flight attendant who flew in from Dallas with us and Keith was this week's "victim" or co-pilot. They settled into barstools on either side of me and after Janet told me that it was a bad idea to "hit on 19" and I had lost another two bucks, Keith put a piece of paper on the bar beside my booze.
It was a news story he had promised to deliver to me when we were flying. We got a little too busy dealing with mountain wave and moderate turbulence so he waited until our layover to fish it out of his suitcase. The gist of the story was that our airline was selling tickets -- regular tickets -- for 15 bucks less than the "big gray dog" bus lines on the same routes.
I couldn't believe it. I mean, I know we had been in a bleeding contest for years with the other airlines. Kind of a two-way Monty Python sketch where the two airlines play the same role -- that of the beleaguered knight who keeps getting arms and legs cut off but can't admit he is losing.
In the airlines case, they have been pricing their product well below what it has cost for years and it is beginning to show. Not only are the "biggies" bleeding, but even the upstarts that are named after colors are beginning to discover that it costs money to fly jets. Even if they pay their pilots nothing (and they are getting perilously close to that) they still have to buy gas and do maintenance. The airlines are beginning to discover what we general aviation pilots have known all along -- it costs serious money to keep and fly an airplane. They don't call it the "hundred dollar hamburger" for nothing.
"I just don't get it," said Keith. "They are killing the business. If it costs more to park your car at the airport than it does to fly coast to coast there is something seriously wrong."
Wisdom From the Real World
"Loss leader," said a voice from behind the bar.
"What do you mean?" asked Janet.
"Let me ask you this," continued Mo, who for some reason, probably Janet's copious assets, was entering our bull session without an invitation. " Janet, did you sell much stuff on the leg from Dallas to here?"
"Yeah; about a hundred cans of beer, 70 meals and I think the on-board catalog of valueless crap brought in another hundred."
"There you have it. The tickets are the loss leader to get the poor schlubs on your plane so you can sell them crap. Why do you think we have a bar in this casino and why do we give free drinks to the gamblers? Because it gets them in the door, gets them drunk and separates them from their money."
Well, since you mentioned the price of beer around here, Mo, I'll have another. You bring up a good point and I'm not just saying that because you have been greasing me with booze, have the best bartender name ever, or because I just got five bucks out of this blackjack machine.
We pilots have to admit that the airline business isn't what it appears to be. To simple-minded captains like me, it is a business that makes its money by selling people tickets to go places. I am obviously wrong and it is about time that I recognize that. I think the problem we pilots face isn't that we don't care enough to do the job for free or almost free. The problem is that we started out caring about the airline like it was an adventure or a lifestyle.
We Just Move People
It isn't. It is a business. I doubt that people working in dry-cleaning stores go home at night and agonize over what it costs to get a pair of pants un-stained. They are probably going home, getting on the web and scoring a 50-dollar ticket to Vegas.
The airline and probably the passengers really don't care if we do a great landing or bump around a little bit. It is all the same to them if nobody gets hurt, the schedule is maintained, and the price is right.
The pilots care. They spend time talking with each other about landing techniques. They bet beers on who can do the best one and everybody who has ever flown a 727 has a secret method for greasing it on.
Pilots spend hours in the air agonizing over the smoothest route around and through lines of thunderstorms. We've all been through pretty bad turbulence in our time and it would be easier on us to just plow through than to work out a plan of action with Center. We do it because we care about the product. There is always a first-time flyer back there or a kid who still loves the idea of flying. We try to give them the best ride.
"The business has changed," said Keith. "The management guys used to talk about load factors, yield and improvements in safety in their memos. Now they talk about this."
Keith had pulled two company press releases out of his pocket and put them next to the bus-fare story on the bar. The first was an effusive story about the $100,000 the airline had just given an organization to build a float for a gay pride parade. The second was a memo telling the world that we were going back to our old company logo, to try and bring back the good old days.
During the past five years they had spent millions re-painting all the airplanes with the new logo and changing everything from uniforms to letterheads. Now that we were five billion in the hole we were going to spend millions to bring back the old one.
I suddenly had an image of a lion in my head. The Cowardly Lion from the Wizard of Oz. I don't know why, but I suddenly wanted to tell everybody what I would do if "I Were The King of the Forest ..."
We're Not in Kansas Anymore
Of course, being put in charge of something as big as an airline would be impossible for me. I can barely dress myself and get to work on time. It is the sign of a hypocrite, though, to just complain without offering solutions. Let's assume for a minute, here in this low-rent casino, that I am the guy in charge of turning the airline around. What would I do?
Well, I'd start by canceling the hundred grand we are paying for the gay pride parade float. I'm not homophobic; I'm cheap. Any airline CEO in today's environment has to be if he or she wants the company to survive.
It is unfortunate for the various charities that we used to support that we are unable to keep pumping money their way but it has to stop. No more checks to the ballet, no more sending little poor kids to camp, no more using company resources to build Habitat houses.
Personally, I'm all for charity but we can't borrow the money to donate it. Perhaps, our stockholders can write the checks with the dividends we'll be paying them when we start making a profit again.
Next, I go to the city governments in all of our major hub cities and tell them we will be paying them 50 percent of what we used to for landing fees. They have been propping up the new upstart airlines with low or non-existant fees for years while soaking us. If they want their money they can sue us or shut us down. Let's see how their city economy gets along with no air service for a few months.
Cut the Fat
We currently have two former CEOs from our company raking in something like $49 million for one and $16 million for the second. They are largely the ones that mismanaged the company into the state it in today. I call them where they are staying at St. Barts or wherever and tell them we aren't going to pay their severance packages anymore. They can sue us too. It should take two years.
Then I go to the general offices of our airline and hold a meeting with our 50 vice presidents. That's right, we have 50 of them. Personally, I always thought we only needed one vice president in case the president died. If it is a good enough system for the U.S. of A, it is good enough for this airline.
I fire 35 of these vice presidents along with their entire staffs. That ought to cut down on the bureaucracy a little. I know it will be hard to get along without a "senior vice president of ethnic balance" or a "senior vice president of profit enhancement" but we'll just have to muddle through.
After this I go through the rest of the offices and interview everybody. If they can't tell me what their job is and how it enhances safety or profit, or helps control costs, I lay them off as well. We have way too many clerk typists sending memos to and from our 50 vice presidents.
Look In The Mirror
"That's all well and good," said Keith, "But how are you going to handle us overpaid and under-worked pilots?"
You might think that would be the hardest part but it isn't. There isn't a pilot on the seniority list who doesn't know that we can do things better. There isn't a pilot on the list who wouldn't give up a little of their pay and benefits if they thought that management had some sort of plan of recovery other than telling the world how greedy their pilot group was.
In the recent past, senior management has been ignoring, insulting and generally pissing off one of the most talented and motivated groups in the company. Most of the pilots on our list have graduate degrees; many have combat experience and all of them are experienced professionals with more stake in what happens here than any management person. If we lose the airline we lose everything.
It is time to recognize that and have some actual, real, no bull-crap talks with the union. Hell, their financial people are sharper than ours. I would come up with a plan that would engage the pilots in the recovery. I would respect their opinion and would make sure they knew that if they helped out and took a big hit now that it wouldn't be forgotten when we turned things around.
I would spend less time trying to vilify them in the press and would spend a little time making their trips a little more efficient and -- let's say it -- fun.
Can We Compete With GA?
Janet looked up from her Long Island Iced Tea and said, "What about marketing?"
That would be the subject for dinner tomorrow night in Seattle. I do have one idea I'll leave with you, though. You know how they are talking about doing away with our first class sections on the airplanes? I say we sell them as fractional shares to businesses just like fractional jets.
For 6000 bucks and a $300/month "management fee" your company would get two first class seats anywhere we fly anytime. If general aviation can come up with new money making ideas why can't we use some of them?
I had worked myself into a self-righteous sweat and was glad to see that my potato skins were finally here. Mo slid them down the bar to me and we moved on to noshing, gambling, drinking, and other layover games.
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