Let’s see. While you have been the CEO, your company finished last among its peers. It was the only company of the group that managed to lose money ($471 million) while the rest of the industry made millions. Your airline has gone from the largest in the world to the third-largest. Your stock price dramatically underperformed the industry during the past year. Your labor relations are rocky.
So, why not give yourself a raise — an 11 percent raise up to $5.2 million dollars in total compensation — for a job well done.
These are good days for airline CEOs. In fact they are good days for airline executives in general. Never have so few at the top of the airline industry made so much money.
At the same time that airline executives are raking more than ever in the history of the industry, they are working to squeeze more production out of their pilots, flight attendants, baggage handlers and gate agents, outsourcing maintenance operations and customer service. The workers are having to do with less and have not been awarded raises for years.
Customers are being treated to less and less amenities and being charged more and more airline fees and surcharges and have seen customer service drop to its lowest levels since the formation of the airlines.
Customer service has been so bad that the Department of Transportation (DOT) has had to promulgate the most extensive customer service regulations since deregulations.
According to Associated Press,
AMR’s stock rose less than 1 percent in 2010 while shares of its four biggest U.S. rivals gained between 11 and 107 percent and the Arca Airlines Index climbed 39 percent.
After struggling during 2010, a good year for the industry, AMR has continued losing money this year as airlines face the difficult challenge of rising fuel prices. This week, AMR reported a $436 million loss for the first quarter.
AA union videos explain that the executives have insured their bonuses even when their stock is performing badly and the company is hemorrhaging red ink through accounting slight of hand.
The American Airlines’ executives are not the only group exhibiting this kind of greed. They have been joined by others across the industry. AA is simply the poster child for unfair executive compensation. Next week, I will post the airline compensation of each of the top airline executives.
Passengers should not simply shrug their shoulders and say, “That’s the way of capitalism.” The effects of the current MBA mindset in the executive suites of the airline industry is felt through labor relations tension, deteriorating customer service and rising airline fees and airline fee complexity.
The airline executives have set up a bizarre system that excessively rewards them for making their workers do more for less and making your flight experience worse and your purchasing process for airline travel more difficult.
Honestly, I am not sure of the solution. I believe in capitalism, but at some point airline executives must become more in tune with their workers and their passengers. American companies are moving in a direction where workers and customers are simply numbers on a spreadsheet or beans to be counted. Continuing in this kind of direction is a recipe for disaster.
A recent episode of Undercover Boss, showed the Republic Airlines CEO, Bryan Bedford, in a mind-opening experience of seeing his airline from the inside out.
Maybe a show like “Undercover Passenger” might be interesting. I can’t imagine legacy airline executives having any idea of the work their employees do or the hoops that they make their customers jump through in order to save a dime.
I’d like to see airline executives waiting in the same security lines I face, having to juggle for seat reservations, facing patdowns on a daily basis, having to decipher a frequent flier program reward system, flying transatlantic in coach with about 30 inches of pitch.
When I have seen how airline CEOs brashly breeze through airports complete with their entourage, I shake my head.
They need an awakening, a reconnection to the real world of flying.
Charlie Leocha is the President of Travelers United. He has been working in Washington, DC, for the past 14 years with Congress, the Department of Transportation, and industry stakeholders on travel issues. He was the first consumer representative to the Advisory Committee for Aviation Consumer Protections appointed by the Secretary of Transportation from 2012 through 2018.
