Friday, August 23, 2019
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The consumer's stake in showdown between unions, NWA

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Traveler John Carlson is seen at an e-ticket kiosk inside Northwest Airlines' terminal at O'Hare International Airport in this file photo. (Photo by Tim Boyle/Getty Images)
Air travelers might be wondering how they could be affected by Northwest Airlines' ongoing showdown this week with two of its biggest labor groups -- the flight attendants and pilots. A bankruptcy judge in New York is currently considering the airline's request to ditch the two unions' contracts altogether and impose new employment terms. The groups have not yet reached agreements on concessions after weeks of negotiations. Both pilots and flight attendants have threatened to strike if the judge imposes concessions they consider too steep.

St. Paul, Minn. — The consequences for travelers of Northwest's labor cost cutting measures are speculative at this point, since the details are still being hashed out. The airline is looking for $1.4 billion in total labor cost savings from its unions.

The company has reached an agreement with the ground workers, Northwest's biggest union, to let rank and file members vote on a settlement proposal.

But in any case, Northwest spokesman Kurt Ebenhoch says customers won't see any immediate effects from the company's ongoing contract negotiations with its other unions or its appearance before a bankruptcy judge.

"This week's proceedings will have no impact on our customers or our operations," said Ebenhoch. "They can expect business as usual at the airline."

Some travel experts have cautioned that customers run the risk of dealing with demoralized employees as the contract talks wear on. The flight attendants and pilots have expressed deep disappointment with the offers put to them so far, which they say will outsource thousands of jobs. But Ebenhoch disputes any concerns.

"Northwest Airlines employees understand we're in a customer service business, and that all of our success rests on our ability to provide good customer service. Our employees have had to work through a number of difficult and challenging situations, such as the events surrounding 9/11 or the Iraq wars," said Ebenhoch. "And during those periods, they remained focused on providing good customer service and that remains the case."

Northwest says it's losing $4 million - $5 million a day and its long term goals for restructuring will strengthen its operations and make the airline more competitive for the long term. One thing customers might eventually notice is new planes; the company is planning to replace aging aircraft.

A carrier that has lower costs can certainly compete with lower cost airlines and that means lower fares.
- Consultant Mike Boyd

Airline analyst Mike Boyd of the Boyd Group says a successful restructuring would spell good things for consumers.

"A lower-cost Northwest would tend to be a lower-fared Northwest. Would they be a discount, budget carrier? No," said Boyd. "They're in business to make money. But a carrier that has lower costs can certainly compete with lower cost airlines and that means lower fares."

But Boyd offers this caveat: fare pricing is something over which Northwest doesn't have total control. He says the marketplace ultimately determines the price of tickets.

So while the airline's increased profitability would be positive for customers, Boyd said "it doesn't necessarily mean that people will be paying $59 to get to Orlando out of Minneapolis."

Boyd says it's heartening that the bankruptcy judge has praised Northwest's restructuring efforts. Boyd says that's not common in airline bankruptcies and means the airline is coming up with good ideas about how to become more efficient and profitable.

But the dark specter over Northwest's future is the possibility of a strike by the pilots or flight attendants. A top Northwest executive says a sustained work stoppage would likely force the company into liquidation. Travel expert Terry Trippler of cheapseats.com says consumer jitters over a strike threat could cause major problems.

"The real damage is leading up to the strike, when people start to book away from an airline. Now the cash, the cash flow has started to be shut off for that airline. So the whole thing-- just even discussing strike is very damaging to the company," said Trippler. "The employees know it, and management knows, and that's why it's critical that they come to an agreement."

Northwest wouldn't comment on whether there's any indication customers are avoiding the carrier for fear of a walkout. Trippler says a strike is unlikely, and overall he recommends continuing to book on Northwest. But he does advise staying abreast of what's going on with the labor situation so travelers don't encounter unpleasant surprises.

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