United Airlines chief Glenn F. Tilton last week announced the carrier would cut 1,000 salaried and management jobs — 2 percent of its worldwide workforce of nearly 57,000. That is part of a $100 million plan to lower general and administrative overhead costs.
The airline, which in February emerged from Chapter 11 bankruptcy court protection, was also slicing $200 million off its purchased services. And here’s the coup de grace: It’s slashing advertising and marketing by $60 million. That’s nearly 80 percent of its measured ad spend last year, if TNS Media Intelligence estimates are to be believed.
Yes, the airline industry has suffered severely since 9/11. Yes, it struggles with high fuel costs — if not properly hedged. Yes, air travel is vulnerable to the vagaries of economic ups and downs. Yes, a disease outbreak can dampen travel, as can war. Yes, established carriers like United, Delta Air Lines and American Airlines face no-frills competitors like Southwest Airlines and JetBlue Airways.
But almost every business with international interests faces some of these issues. How do they cope? From all accounts, air travel is on the rise, with more people flying for work or leisure. And major U.S. carriers have already announced hikes in summer fares.
Now guess next year’s headlines: “So-and-So Airline Files for Chapter 11 Bankruptcy Protection.”
Enough coddling. Let the laggards wither on the vine. Let market forces determine the strongest and the ablest.
This is an industry that has barely paid for itself since the Second World War. Admitted that road and rail have relied on subsidies, too — Amtrak’s lifeline is the last-minute sentimental congressional handout.
But the airline industry doesn’t pay tax on fuel for international flights. It has yet to face the environmentalists’ ire the way the automotive sector has. It is addicted to state support and state bailout. It pays its CEOs tens of millions of dollars for cutting costs elsewhere. It has cut its flight attendants’ pay by 40 percent and yet expects them to serve customers with a smile. It has stopped serving food on bicoastal flights. It announces drinks are complimentary in business class but $5 in the “main cabin.” It’s squeezing legroom in the “main cabin.”
This, above all, is an industry that has shown insufficient care for its main source of business: passengers.
And now United wants to curtail its communications with them? When it’s fighting for market share and life? When customer loyalty sectorwide is at its lowest? When there is virtually no differentiation among the three major carriers aside from their flight attendants’ uniform and tail fin colors?
Airlines should remember what politicians do year in, year out: Either you define your image or your competition will. The only way to do that is through continuous branding and targeted marketing. What won’t help is flying below the radar.
