United outsourcing jobs at 12 airports

from July 9, 2014 05:00 pm to July 9, 2014 05:00 pm

by The Wall Street Journal

July 8, 2014



Airline representatives at US airports increasingly aren’t employees of the carriers they represent.


United Continental Holdings Inc. said Monday it will outsource jobs at 12 US airports in cities including Buffalo, N.Y., Charlotte, N.C., and Detroit on Oct. 1 to vendors who will perform the duties at lower cost. The jobs currently employ about 635 workers in areas including check-in, baggage-handling, and customer service.


The move, part of a broader effort by United to lift its flagging fortunes through cost-cutting, reflects how big US airlines are using vendors to handle key jobs at most domestic airports, a trend that can reduce expenses but also risks hurting customer service. American Airlines Group Inc., Delta Air Lines Inc., and Alaska Air Group Inc.’s Alaska Airlines are among the carriers that already outsource a large share of this work – although in some cases the carriers use their own contractors.


Passengers often don’t realize the check-in agents they deal with at US airports don’t work for the airline they are flying. Often, at smaller airports, the same workers may represent multiple competing carriers at different times on different flights.


United declined to comment on the expected savings. The airline pays such workers from $12 to $24 an hour, while some vendors start workers at $9 an hour – $1.75 more than the federal minimum wage – and don’t offer health coverage or travel benefits.


According to Rich Delaney, president of the International Association of Machinists union district that represents the United airport agents and baggage handlers, outsourcing the work at the dozen airports will save United $1.6 million to $3.5 million per airport a year, depending on the size and the worker population.


“It does make economic sense,” said Michael Boyd, a consultant at Boyd Group International. “It’s not a $40,000 job to load bags. Cleaning planes is not a $20-an-hour job.” But the outsourced work offers “no career path, no loyalty,” he said. “When you replace employees with Air Fred, you’ll see the bottom line improve, but you’ll get more lost bags.”


Indeed, the transition can be bumpy. When Alaska Airlines decided to use Menzies Aviation, a unit of John Menzies PLC of Scotland, to handle ramp jobs at its Seattle hub in 2005, the shift was marked by misplaced luggage, late flights and an incident in which a damaged aircraft had to make an emergency landing. But the problems eventually were corrected.


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