Sun, Sep 05, 2004 page12

• For airline employees, it's the end of a golden age

  Once known for their high salaries, free air travel and perks, airline jobs have become a lot less cushy

  • NY TIMES NEWS SERVICE
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  For decades, an airline job was a coveted plum. Good pay, generous benefits, strong unions and the glamor of air travel made pilots, flight attendants, mechanics and even baggage handlers the envy of their neighbors.

  Now there are two airline industries, one that created those attractive jobs but can no longer afford them, and another that is thriving in large part because it has avoided creating them. Struggling traditional airlines like United, Delta and US Airways have laid off tens of thousands of employees and told the rest that they must absorb round after round of salary and benefit cuts to keep flying. At the healthier low-fare carriers like Southwest and JetBlue, the pay is much lower and the benefits are skimpier, but a good year can yield a big bonus at the end.

  

  American Eagle flight attendants picket outside their terminal on Friday at O'Hare International Airport in Chicago, Illinois. American Eagle flight attendants belonging to the Association of Flight Attendants-CWA picketed, informing the public that they are looking for a fair contract. More than 46,000 flight attendants joined together to form AFA, the world's largest flight attendant union.

  PHOTO: AFP

  Plenty of people still want the work: JetBlue says it gets 120,000 resumes a year, or more than 50 for each opening it fills. But for industry veterans, a grim reality is sinking in: The golden age has passed.

  

  United ramp worker Richard Chu in his JFK Airport office last week. Chu and his family can no longer fly for free, and the company may slash his pension.

  PHOTO: NY TIMES

  Fresh out of Queens College in 1977, Richard Chu couldn't find a job that made use of his teaching degree, so he hired on at United Airlines as a ramp worker, loading and fueling planes at Kennedy Airport and deicing them in the winter. Though it was blue-collar work, it was a gem of a job to Chu. The starting pay was $6,000 more a year than he could hope for from teaching, and that, coupled with ample benefits and free travel, was enough to let his wife, Theresa, stay home and raise their children.

  But that was then. Badly hurt by the slump in air travel after the Sept. 11 terror attacks, United filed for bankruptcy in 2002. Chu's base pay was cut by 13 percent to US$21.96 an hour, his health care premiums jumped and, worst of all, his nest egg of US$150,000 in United stock, bought over the years, was wiped out.

  Now Chu, a union official, is working every overtime shift he can snag, Mrs. Chu has taken a job as a hospital receptionist and the family budget is still strained. "It saddens me to see what this job has become," Chu said in an interview this week.

  For all that, Chu is luckier than some. Since 2000, when industry employment peaked at just over 600,000 workers, the major airlines have eliminated 110,000 jobs. Most of the layoffs came just after the terror attacks, but the major airlines have kept cutting even though air traffic has rebounded to near the levels of 2001. Every major company is now on a drive to reduce costs, eliminating or threatening many of their employees' most treasured benefits, including pension plans and free travel.

  Meanwhile, the low-fare carriers that the legacy airlines once sneered at have grabbed a quarter of the nation's passenger traffic as more travelers shop for the lowest fares and fewer seem willing to pay extra for premium service or a familiar brand name.

  The savings for travelers have been huge, especially on cross-country flights. The average one-way fare from New York to San Francisco has fallen by more than half in the last four years, from US$472.85 in the first quarter of 2000 to US$209.73 in the first quarter of this year, according to Back Aviation Solutions, an industry consulting firm. Over that time, JetBlue's market share on the route has grown to 23 percent from nothing, while that of United, the market leader, has fallen to 24 percent from 41 percent in 2000.

  "When you become a commodity industry, as steel and autos and airlines have done, then you have a lot of destructive competition," said Robert W. Mann, an industry consultant based in Port Washington, N.Y. "It gets worse when you introduce a whole new style of competitor who isn't burdened by legacy costs."

  The low-fare carriers are where the growth is, and they have hired thousands of pilots, flight attendants and other workers in recent years. Paradoxically, because their companies are financially healthy, the nonunion workers at the discount carriers are more secure in their jobs these days than the union members at teetering major carriers like US Airways. And the new carriers have no trouble recruiting.

  For the unionized veterans of the older airlines, getting what they feel they deserve is fast becoming a losing proposition.

  Chu, who turns 50 next month, needs to work five more years before he will be eligible to retire from United with a full pension. But the pension plan may be gone by then, at least in its present form. Struggling to cut costs and emerge from bankruptcy, United has stopped putting money into its four traditional retirement plans and has said it is likely to terminate them and create 401(k) savings plans in their place. If so, Chu's pension benefits will be greatly reduced.

  This week, the airline also said it was planning further cost-cutting moves that could eliminate thousands more jobs.

  One of Chu's most prized perks is already gone. He and his family used to be able to fly free on United. Now he must pay service fees of $110 a person to take his wife and children to California to visit his relatives, Chu said.

  Chiames, the US Airways executive, said the union's stance ignored the reality of the marketplace. "Nobody buying a ticket today says, `They have a really nice health care plan for their employees, I'll pay US$50 extra,"' Chiames said.

  Others in the industry agree that US Airways has little choice but to try to cut its costs to match its low-fare rivals, whether employees like it or not. "It's a bet-the-company risk, but that risk has to be taken," Southwest's chief executive, Gary C. Kelly said in an interview this week. "The future in the airline industry, without a doubt, is low fares, and the only way to survive and charge a low fare is to have a low-cost structure."

  Mann, the industry consultant, concurred. "There's blood in the water," he said, "and the sharks are not just circling, they're coming in for big bites."
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