Businessweek Archives

Reality Check


Up Front

REALITY CHECK

MAJOR AIRLINES SAY they are getting creamed by leaner rivals, particularly Southwest, largely or solely because of the rivals' lower labor costs. The drive to rein in these costs sparked the recent strike at American, ended only by White House intervention. Such talk has prompted United to consider splitting itself into several smaller carriers, which will pay workers less. Indeed, many smaller airlines pay as much as 60% less than American, United, and Delta.

IN REALITY, pay rates themselves are not the only problem. Successful Southwest, for instance, pays higher wages than Continental, which recently emerged from bankruptcy. Southwest produces more flying time for the wages it pays. Its pilots make an average of $93,000 but fly 70 hours a month, whereas United pilots make an average of $108,000 and log only 50 hours a month. Southwest and its small cohorts benefit from a simplified point-to-point system. Their planes don't wait at hubs for connections. Result: Southwest planes turn around in 20 minutes vs. an hour or more of costly dead time for the Big Three.EDITED BY LARRY LIGHT AND JULIE TILSNER


We Almost Lost the Nasdaq
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus