Ominous Letter From UAL CEO Draws Union Ire
A letter to United Airlines employees from CEO Jim Goodwin, in which he said the carrier "will perish" unless its daily costs stop outpacing daily revenues by four times the money-losing rate experienced before Sept. 11, prompted angry responses from labor unions. The Association of Flight Attendants, calling for Goodwin's resignation, said, "Current management and its failed policies have shaken our confidence." The executive council of the carrier's pilots union, worried about additional furloughs, said, "Scare tactics or threats will not panic us." The machinists union said Goodwin's credibility "is shot" and that United's employees will continue to deliver to passengers "with or without" him. The letter pushed UAL's stock to a historic low and preceded next week's earnings report, which is expected to be the worst in company history.
WorldTravel BTI Cuts Tech Development
Since Oct. 1, Atlanta mega agency WorldTravel BTI took cost-cutting measures and furloughed an undisclosed number of employees from its Corporate Fulfillment Services division in Kansas City, Mo. A spokesperson for the company said the employees mostly worked in the development of new technologies, and that services for customers of the CFS online fulfillment program would not change. The spokesperson also said the agency would not resume development of new CFS technology for at least two more quarters, although it has acquired eight new CFS clients since Sept. 11.
Air Canada Announces Low-Fare Unit Launch
A self-proclaimed JetBlue Airways clone, Tango by Air Canada on Nov. 1 will take to the skies, offering deeply discounted fares to seven major Canadian cities from a Toronto base and, in the months ahead, to three destinations in Florida. Tango claims to offer fares 80 percent lower than full economy fares without minimum stay or advance purchase requirements. All tickets are nonrefundable but can be purchased on a one-way basis. The "all extras are optional" pricing structure is fairly unique in North America and charges fees for inflight food and beverage, seat assignments and inflight entertainment. Tango will use Airbus aircraft and offer only e-tickets. Tango's 13 A320 aircraft will be reassigned from Air Canada's existing fleet. Though Air Canada has made clear for months its intentions to launch a low-fare subsidiary, the timing nevertheless is notable as the carrier sheds capacity and staff, and as United Airlines and US Airways phase out their low-fare units.
FAA To Screen Airport Employees
The Federal Aviation Administration will run background checks on every employee with access to secure areas of the nation's airports, administrator Jane Garvey said on Oct. 17. Garvey said that 750,000 employees will be checked over the next nine months, including airline and airport employees who have identification badges allowing them access to aircraft. "Legislation passed last year enabled us to do criminal background checks of new employees with access to secure areas," Garvey said. "That was a good first step. Immediately after the attacks, we required revalidation of the ID of everyone with airport access badges and also matched them against Federal Bureau of Investigation watch lists. But we must do more. I am directing that a criminal check be done on all airline and airport employees with access to secure areas." The U.S. Department of Transportation inspector general Kenneth Mead on Oct. 16 released the initial results of a review of background checks of security screeners employed by Argenbright Security at 14 U.S. airports. Those results found that screeners at some airports had criminal records that should have disqualified them from employment.
Small Carriers Move Forward
AirTran Airways on Dec. 12 will begin three daily flights from Baltimore/Washington International airport to Boston and its Atlanta hub. AirTran's market entry comes as one of its direct competitors, US Airways, continues to severely curtail its BWI operations. US Airways, however, last week added four daily shuttle flights between Boston and New York LaGuardia. The carrier now offers 12 roundtrips on the route each weekday. Meanwhile, American Eagle on Nov. 1 will launch three daily roundtrips between Boston and Pittsburgh. Frontier Airlines recalled 70 furloughed employees and reactivated two aircraft to prepare for increased frequencies between its Denver hub and Dallas/Ft. Worth, Kansas City, San Francisco and Seattle. Effective Nov. 15, a fourth daily flight will be added to all four city pairs. Also on Nov. 15, JetBlue Airways will reinstate some of its suspended flights from New York JFK to upstate New York. The carrier on Nov. 1 also will add a third daily flight to Long Beach, Calif.