Marketplace Report: Air Sickness?

How healthy is the airline industry? Janet Babin of Marketplace discusses recent developments with Madeleine Brand.

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MADELEINE BRAND, host:

Back now with DAY TO DAY. As you may have experienced already, this summer is supposed to be the busiest ever for airline passengers. There will be two million more people traveling this year than last, and this holiday weekend could be the busiest of the summer. Here now with some more airline news is Janet Babin of MARKETPLACE. And Janet, first off, there's a new survey out about which airlines are the best. Can you tell us about it?

JANET BABIN reporting:

Yes, it's from J.D. Power and Associates and Aviation Week, and it polled some 9,000 travelers this year, and it found that Jet Blue is the favorite airline for low-cost carriers, and Continental ranked highest with passengers for traditional carriers. And what's interesting is that the survey found that people seem to care more about things like easy check-in and friendly service than they do in-flight meals or other amenities, which I suppose makes sense when you consider that airline food was, perhaps, never too popular anyway, and many airlines have eliminated it altogether.

BRAND: Well speaking of cutbacks, let's talk about Northwest. It's been trying to cut some labor costs but doesn't have a deal yet with flight attendants. What's going on there?

BABIN: Well, yesterday a bankruptcy judge ruled that the flight attendants have two more weeks to negotiate a deal with Northwest, and after that the judge gave Northwest the authority to throw out the flight attendant contract and then the airline could set up terms of a new contract that was already rejected by most of the flight attendants union.

I spoke to Richard Gritta about this. He's a professor with the University of Portland, and Gritta says the ruling is being called a major victory for Northwest, but he thinks its actually a hollow victory.

Professor RICHARD GRITTA (University of Portland): It's a no-win situation for either. If they throw out the contract and the flight attendants are forced to accept what they're forced to accept, they're going to be very unhappy campers, so Northwest is not going to win. They may win some cost concessions, but they're not going to win the battle of employee morale.

BABIN: And in the service industry, Gritta says employee morale is critical. As the survey pointed out, friendly service is what seems to matter most to passengers, and if the people who interface with the passengers aren't happy about how the company treats them, Gritta says it could harm customer relations. But it would save Northwest about $195 million.

Now, flight attendants have promised to give 15 days' notice if they are to strike, and Northwest has said that a strike would be illegal.

BRAND: Well, despite this problem, it doesn't seem that the airlines are having any problems finding passengers. As we noted, this is the busiest season ever. So what's going on?

BABIN: Well, a few years ago there was a drop in passengers, but again, not the case anymore. There's word out today from the International Air Transport Association that international air passenger traffic is up seven percent last month over last year, so it appears you can't escape the crowds, even if you're traveling overseas.

Later today on MARKETPLACE, we're inspired by President Bush to visit Graceland.

BRAND: Okay, we'll look forward to that. Thank you, Janet. Janet Babin of Public Radio's daily business show, MARKETPLACE. It's produced by American Public Media.

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