Route to Air Travel Discomfort Starts on Wall Street

[coyote25]

Interesting story, which most of us could have guessed, about the move away from having customer service outcomes in CEO bonus pay performance incentives to now being almost solely short term profits (which have always been part of performance pay).

https://www.nytimes.com/2017/05/28/business/corporate-profit-margins-airlines.html

"Five years ago, American Airlines factored in on-time arrivals, lost baggage and consumer complaints to help calculate annual incentive payments for top management. Today, these bonuses are based exclusively on the company’s pretax income and cost savings

 

[drron]

It's not just airlines or the USA.
Auspost for example.If bonuses were calculated on service delivery they would be negative.

 

[clazman]

It's not just airlines or the USA.
Auspost for example.If bonuses were calculated on service delivery they would be negative.

Don't mention Telstra, the banks and government departments

 

[JohnK]

The culture get worse by the day. How are they able to get away with it?

 

[serfty]

The culture get worse by the day. How are they able to get away with it?

Its not culture ... It's business.

There is nothing to "get away with".

Airlines owe us nothing and will reduce service costs to as little as possible while still getting business.

Consider what QF's 330 services for Perth would have been without VA's coast to coast - 2x3x2 in business with 36" pitch.

 

[dajop]

The culture get worse by the day. How are they able to get away with it?

You've got to remember the top four airlines have incredible market power, and share similar owners (biggest holders are funds, and most of the top 20 owners in one company appear in the registry of the other three. UA/DL/AA seem to have almost identical strategically - acting as one to keep their shareholder representatives (fund manager analysts) happy.

Ironically, Australia's current two major airlines, with two very different sets of owners may well be more competitive from a consumer point of view - although not so profitable - than having 4 majors in the US.