UA Gets No Sympathy

Agents sorry for employees but not management’s failures

By: Jerry Chandler

Just how thorny are relations between sellers of travel and the major U.S. airlines?

More than a few agents found it hard to repress a sense of satisfaction - “Dare I say, even glee,” a former agent said when United Airlines filed for Chapter 11 bankruptcy last week.

While most travel agents express sympathy for employees of the world’s second-largest carrier, few shed tears for the corporation.

“Bad management brought them to this point,” maintained Pat Funk, vice president of the Association of Retail Travel Agents. UA has been losing $20 million a day, $1.7 billion during the first three quarters of 2002 alone. The company’s once high-flying stock, worth $100 a share in 1997, has plummeted to less than a $1 - and some still consider it overpriced.

The carrier has experienced revolving-door leadership, onerous union contracts, a fractious labor force, fear of terrorism, a down economy and one more thing.

“I think there are huge numbers of agents in the United States who haven’t sold a United ticket in probably two years,” Funk said. After the airline instituted commission caps and, finally, cuts, travel agents “did every thing they could to take away traffic from United. And I think they succeeded,” Funk said.

United filed for Chapter 11 bankruptcy protection Dec. 9, just days after the federal Air Transportation Stabilization Board rejected its request for $1.8 billion in federal loan guarantees.

“When they went for the loan, it wasn’t their cost-cuttings that didn’t get them the loan, it was the fact they terribly overstated their revenues,” said Richard Copland, president of the American Society of Travel Agents. “The problem is that they’re relying on sales over the Internet. It ain’t going to work,” Copland said.

The ASTA president repeated his mantra that airlines and agents should work together to extricate the travel industry from its current problems.

He says that he doesn’t expect the return of 10 percent commissions. But he contends the time is ripe for some sort of airline/agent détente, one over and above overrides.

TravelAge West talked with key agents in two United towns: Denver and San Francisco. The first city is UA’s second-largest domestic hub; the second, its transPacific gateway.

For Paula Keyser, the secretary/treasurer of A Ticket to Ride in Lakewood, Colo., the biggest concern is what will happen to service. “I’m concerned about spots where you don’t get other airlines, like Sheridan, Wyo. the little spots where we don’t have any other service,” said Keyser, who noted that about half the tickets she writes are for United.

Even before the bankruptcy filing, UA had said it would cut 6 percent of its capacity next year. The bankruptcy court could double that number.

But Denver does have a hometown alternative Frontier Airlines. “We’ve actually pushed for Frontier, just so the competition would stay in Denver,” Keyser said. “Unfortunately, Frontier has a limited number of places that it travels.”

Keyser said her clients, especially leisure travelers, are not booking with UA now. “The leisure traveler planning for next March or April, they’re concerned with what might be out there,” she said. Steven Tobin is concerned too. The president of The Travelers Edge in Denver says 75 percent of his clients use United. “United owns the market here,” he said.

As talk of bankruptcy increased over the Dec. 7 weekend, Tobin said, his United representative called. “They were very much trying to reassure us, to say that it’s going to be business as usual,” Tobin said. While that may be an overstatement, Tobin doesn’t think the carrier is going to disappear, nor, he said, do his customers. “Clients are understanding that Chapter 11 is just a reorganization,” he said. “But there are some that are a little concerned.”

George Lippi, president of Fugazi Travel in San Francisco, knows that 40 percent of his customers book United but he believes past is prelude, that United will go the way of Pan Am. Once the Big Blue Ball dominated international air travel. Then, as Pan Am began to struggle, it sold its Pacific routes ironically, to United. The Atlantic routes went to Delta.

Left only with Latin America, Pan Am finally disappeared entirely in 1991. “If you look at Pan American and Eastern you can almost predict what will happen,” Lippi said. “I think they will follow the pattern of pre-existing failures. I think they will probably go away and come back with a different name.”

Lippi said he bears no ill will toward UA, despite its treatment of travel agents. “That’s just the way business is headed these days,” he said. “That’s the way things are.”

Sheila Hyman expresses a similar view. “The worst thing they did was get rid of the travel agency community,” said Hyman, president of Tanforan Travel in San Bruno, Calif. But, she adds, “I am of the opinion that United will make it. I don’t think it’s the beginning of the end.”

Anyone who is familiar with the Bay Area knows San Bruno and its view of San Francisco International Airport. Every day, Hyman watches United’s big blue/gray widebodies head north toward the Golden Gate, then hang a left and head out over the world’s largest ocean for points east.

United is king at SFO. “The brand loyalty is extremely strong. It would take a significant deterioration in both the availability and level of service qualitatively speaking for current preferred fliers of United to seek an alternate means of transportation,” said Chris Spirandelli, president of Bryan International Travel in San Francisco.

But it’s the spectre of shoddy service that worries ARTA’s Pat Funk. UA employees hold 55 percent of the carrier’s stock and have three members on UA’s board of directors. Federal bankruptcy court could scrap that employee ownership arrangement and impose further wage cuts. “That does not make for happy employees,” Funk said. And United employees, some agents contend, haven’t been the most outgoing folks anyway.

“You couldn’t get a smile out of them,” Funk said. “I’ve heard horror stories galore.” But, on Dec. 9, as the bankruptcy papers were being filed, Sheila Hyman was flying United from Miami to San Francisco and reported nothing but good cheer. The captain announced the bankruptcy but “he was very, very upbeat,” she said. “The employees were nice, which was a surprise. The food wasn’t even bad.

“But it’s almost like, ‘It’s a little late.’” n