Costly holiday for airline
A computer error that gave too many American Airlines pilots approval to take vacation during the busy Christmas travel season is expected to cost the world’s biggest carrier about $10 million, according to an industry expert.
The Fort Worth-based carrier has confirmed that a glitch in the airline’s work scheduling program raised the possibility of canceling of hundreds — perhaps thousands — of the nearly 200,000 flights scheduled during December because no pilots were available.
The airline initially offered to pay pilots 150% of their salaries to work during those shifts that were left vacant. During negotiations with the pilots’ union to staff the flights, American Airlines increased the offer to 200% of a pilot’s regular salary.
The extra pay is expected to cost the carrier $10 million, according to Jamie Baker, an aviation analyst with J.P. Morgan. That is a fraction of the $2.7 billion in wages and benefits the airline is expected to pay for the entire fourth quarter, Baker noted in a memo to investors.
Baker said the decision by American Airlines Chief Executive Doug Parker to pay double the normal salary initially seemed overly generous. But he concluded that the move makes sense.
“Alas, we estimate ... the difference between a 150% and 200% pay rate to be sufficiently immaterial that we won’t criticize management for choosing a gentler, more collaborative approach in order to deflect both negative press coverage and passenger angst around this issue,” Baker said.
Airlines see more severe disturbances
Fewer passengers became unruly on commercial flights last year but a bigger share of those incidents involved serious behavior problems such as fighting or threatening passengers and crew members.
That was the assessment by the International Air Transport Assn., and industry trade group. The group has tracked 58,000 incidents of unruly passengers since 2007.
The trade group categorizes the incidents on a scale of one to four, ranging in severity from a passenger who fails to comply with safety procedures to a flier who attacks the cockpit crew.
Unruly-passenger reports decreased 9,837 last year from 10,854 in 2015, with 87% considered the least severe, or level one incidents, the report said.
But the share of incidents considered level two cases — involving “physical aggression to others and damage to aircraft” — grew last year to 12%, up from 11% in 2015, the trade group reported. The cabin crew had to restrain a passenger 169 times last year, up from 113 in 2015.
Alcohol played a role in a third of the level two incidents, the report said.
The trade group said most of the drinking took place at airport bars and restaurants or in the plane without the knowledge of the crew. The trade group urged bar and restaurant operators to better train employees and called on more countries to ratify an agreement to impose harsher punishments on misbehaving passengers.
Bag fee disclosure rule is dropped
An Obama administration proposal that would have required airlines to disclose fees for checked and carry-on bags at the start of a ticket purchase rather than later is being dropped by the Department of Transportation.
The department said in a notice posted online Thursday that it is withdrawing the proposed rule — along with early-stage rulemaking to force airlines to disclose more information about their revenue from fees charged for extra services — because the rules would have been “of limited public benefit.” It also said airlines would incur “significant costs” if required to report their revenue from fees for perks such as early boarding or extra legroom.
Airlines are already required to disclose bag fees, but critics say the information is often hidden until after customers have taken several steps toward buying a ticket and isn’t always clear. Travel agents and websites that sell tickets also say that airlines sometimes withhold information on fees, preventing third-party sellers from telling shoppers the full cost of the airfare.