What's the Difference Between Southwest Airlines and Covid?
Covid’s Still Airborne
Yeah, yeah, yeah…I get it.
That’s the kind of dark humor this week’s airline meltdown has caused. It wasn’t so funny for holiday travelers, left high and dry, or employees, who were unsupported and uninformed by management in the face of frustrated customers.
There will be (and already is) a lot of finger-pointing as to what or who is responsible.
The airline’s point-to-point routing system means airplanes and pilots are not easily marshaled to meet challenges.
The airline relied on outdated technology (phone calls) for communicating with employees; once problems cascaded, workers were unable to understand where they were needed and what was expected of them.
The company did manage to announce vile consequences for not working 16 hour shifts, or getting sick. The letter from management went viral on social media; the public learned about how the company was screwing its employees before anybody could tell them where their lost baggage was.
The seven billion dollar question. Southwest received a $3.3 billion from the federal government in 2020 as COVID relief. In April 2021, as a part of the American Rescue Plan Act and other subsidies, Southwest received another $3.8 billion, according to data on the federal transparency website.
Southwest was the first airline to return to profitability after the pandemic, reporting a net income profit of $116 million by Q1 2021.
Despite warnings from outside the company and internal concerns over infrastructure, the airline announced that it would reinstate its dividend — suspended during the pandemic — by paying 18 cents a share to investors next month, costing nearly $107 million. The company has paid out about $1.6 billion in dividends and repurchased more than $8 billion in shares — since 2015.
Transportation Secretary Pete Buttigieg is personally responsible for the airlines’ stranded customers, according to Fox News.
All of those things are symptoms, not the underlying disease.
Get ready for a (probably) new word: oligopoly. And airlines are first on the list in Wikipedia’s examples.
Many industries have been cited as oligopolistic, including civil aviation, electricity providers, the telecommunications sector, Rail freight markets, food processing, funeral services, sugar refining, beer making,[1] pulp and paper making, and automobile manufacturing.
The way oligopolies have customers by the short hairs is through tacit collusion, which amounts to “wink, wink” understandings about pricing and market share. Southwest IS seemingly cheaper because it operates with minimal competition on many short haul destinations. This arrangement allows companies to focus on what’s really important, namely shareholder benefits. Profits don’t have to be evil, until they are.
As Michael Hiltzik points out, what happened to Southwest is typical of companies getting caught unprepared for trouble when operating conditions stray from normal expectations. “Just in time” scheduling and inventory controls, along with outsourcing look great to bean counters, but all-too-often end up screwing employees and customers. He calls it cheap. I call it greed.
The short answer is their underinvestment in preparation and planning. For decades, Big Business has been squandering its resources on handouts to shareholders instead of spending on workers and infrastructure. There’s not enough give in the system, so when crisis comes, it doesn’t bend, but breaks.
What drives this tendency is economics. Business managements have become hostages to cost-cutting, squeezing expenses out of their systems in every way possible, trusting to luck that what works under normal conditions will continue to work when the outside world goes haywire. They’re betting their companies on a bad strategy.
Southwest employees took the brunt of consumer frustration and anger during this crisis. And that, my friends, is by design.
Veteran pilot Larry Loreno took to Facebook, giving the inside scoop on deteriorating conditions at the company as finance-types took over operations.
The two decades of neglect by SWA leadership caused the airline to lose track of all its crews. ALL of us. We were there. With our customers. At the jet. Ready to go. But there was no way to assign us. To confirm us. To release us to fly the flight. And we watched as our customers got stranded without their luggage missing their Christmas holiday.
He placed the blame on individuals in upper management (which he says was recently rectified); what he doesn’t see is that their behavior was dictated by marketplace expectations. Commerce is no longer about selling things and services (hoping) to make a profit. It’s about profiting first and product second–as cheaply and shortsighted as possible.
Things are to the point where no product or services are needed, as is true with Donald Trump’s imaginary trading cards. Did you know that if you “sell” one of those plagiarized images, there’s a fee going back to its creators? (Trump got paid up front; he doesn’t care)
The marketplace as the source of social order makes getting angry at the wrong people a feature, lest citizens demand regulations or government intervention.
Adam Johnson, writing at The Column, captures it well:
Indeed, corporate executives very much want you to vent your frustration on their low-wage workers. This way you get the vague feeling of agency and control in a system designed to remove any and all forms of it. Southwest Airlines ticketing agents, cashiers at Nando’s Chicken, low-wage call center workers for Verizon overseas, become corporate sin eaters, absorbing all the frustration and anger brought about by our greasy, cost-cutting executives. Add to this the severe mental and physical harms—and death—laid at the feet of low wage workers during the pandemic, and our built-in system of mutual antagonism compounds dozens of other stressors...
…Those who actually make the decisions remain protected like mob bosses, gently nestled between layers of middle management, lawyers, and marketing reps, impossible to reach by design. They have addresses and homes and phone numbers, you just don’t have access to them. And if you did, this would be stalking, and you’d likely get a visit from a police officer. Meanwhile they have all your information, and can hound you with credit agencies and just randomly steal your money. To the extent they face consequences, it’s a pointless fine that’s factored into their cost-benefit calculations at the beginning of the year. Recently, Wells Fargo was, again, found to have stolen or scammed billions from its working-class customers. Hertz Rent-A-Car settled for $168 million for getting dozens of its customers wrongfully imprisoned, leading one to miscarry her baby while in county jail. The punishment for both? A pointless fine. No one was even fired. Business churns on per usual.
Consequences in the “opoly” era are just an operating expense. Any attempt to make them actually punitive will get characterized as anti-business, or even worse–socialist.
There is a role for the government to play in all this, and keeping bad people from doing bad things isn’t about “freedom.” We just have to get to a place politically where the voices saying “it doesn’t have to be this way” get heard and supported.
Email me at WritetoDougPorter@Gmail.com