Less is more
December 15, 2002
by Gary Aldrich - Volume 2, Issue 53
This article appeared at Townhall.com on December 11, 2002
We recently learned that United Airlines has filed for Chapter 11 Bankruptcy protection, but the collapse of major airline carriers is not news if you consider the long line of defunct airlines in the industries history.
I happen to know a bit about airlines and why they go belly up. Both my parents worked for airlines for decades. My mother was personnel director for the "old" National Airlines which used to be Florida's top carrier and a major source of jobs for those who lived in South Florida. National Airlines grew and grew and grew, until it failed. Was it a poor economy that did National in? Nope, it was good old-fashioned bureaucracy, aided and abetted by the firm grip of organized labor.
Mom would come home from work frustrated with the layer upon layer of management that made her job increasingly difficult. Airlines didn't pay very high wages - except to the captains and co-captains who flew those wonderful planes, and that was understandable because of their expertise and level of responsibility. But the rest of the employees were expected to enjoy the unlimited free passes that came with longevity - and the promise of travel after retirement - instead of higher wages. Both my parents took full advantage of the travel opportunities, as did I. My mother was happy enough with her job, and she certainly had an interest in the financial health of National Airlines - she was a dedicated, loyal employee.
But the lower wages enabled unions to make a case that the airline could afford to pay the rank and file more and more. Strikes were common in those days, and each strike drove management further apart, while weakening the overall financial health of the corporation. Finally, National Airlines could no longer pay its bills, and it went out of business.
South Florida's tourist industry was shaken for a little while, and there was some sadness and unemployment for a time, but good workers can always find new jobs, and so they did. The shiny airplanes were sold to other carriers, repainted, and many are still flying today.
My Dad had a similar experience at Eastern Airlines, another major carrier which also went out of business. He once called me into his office, "Gary, the unions are going to kill Eastern Airlines one day. Mark my words."
Dad, who managed an airplane maintenance program, gave me several good examples of how unions got in the way of production. He simply wanted to change his office around one day and asked workers who were standing nearby doing nothing, to help him move a filing cabinet. They complied, but later filed a "grievance" with their union steward, complaining that there were "special" workers at Eastern for "moving furniture."
Dad was in big trouble as senior management explained that job descriptions ruled, not because it was the best, most efficient way to run an airline, but because unions could monkey-wrench operations if they didn't get their rules enforced.
In the end, unions also complained that Eastern Airlines was lying about the profits they had made so that they would not have to properly pay rank and file employees. As it turned out, this claim was totally bogus, but the unions created the perception of "evil" management, and no amount of examination by teams of CPA's could convince workers otherwise.
Unions and management engaged in a death struggle for years about this claim of phony books until the money ran out. Eastern failed, just as my Dad predicted it would.
Of course, my Dad also talked about the cumbersome bureaucracy that made it impossible to get anything done quickly. Just like National Airlines, Eastern had become so big it could no longer be managed well - there were too many layers of management.
And so, a major airline carrier failing is nothing new, and except for the frustrated stock holders who hung on to the bloody end, change came and people adjusted.
Next year, United Airlines may emerge from bankruptcy and flourish, or it may not - there's a chance the planes will be repainted and the pilots will be wearing new uniforms.
In other words, the system works. Perhaps bankruptcy, while never welcomed, is in many ways, actually healthy in the long run.
I think there are interesting parallels with these huge corporations and our federal government. While the federal government may not be totally union controlled, it is special interest controlled and management-laden just like the airlines.
The difference is that whenever the federal government gets to the point that it cannot pay its bills due to its own failure to "just say no!" or properly manage itself, it either deficit spends or it raises taxes.
The federal government gets bigger and bigger, and moves more and more slowly - but it will never go bankrupt - at least there doesn't seem to be much chance of that. There is no "safety-valve" to contain the excesses and failures of federal government management.
There is only good leadership to fix what ails these massive federal bureaucracies. So let's hope we can get more good leadership - and soon.