Northwest Airlines Canceled Flights
http://money.cnn.com/2007/07/30/news/companies/northwest_canceled_flights/index.htm?cnn=yes
In the attached article concerning Northwest airlines, the author talks about the high percentage of canceled flights due to the number of pilots calling in sick. He goes on to explain that the reason pilots are calling in sick is because they are afraid they will hit the maximum number of flight hours allowed by the FAA too early in the month. This action by the pilots has caused an 8% cancellation rate of scheduled flights and a 6% decrease in Northwest stock. I wonder if the airline has considered its marginal cost and the cost of hiring more pilots verses the cost of bad business?
3 comments:
I thought the same thing today when I saw the story on MSNBC. Maybe this will open the market and actually make some competition. There have been several new smaller airlines offering better deals. If they can compete because Northwest is inefficient, the market may see better prices. Sometimes money is more important than the services offered. Less services equals cheaper flights.
I see this kind of concern over maximum hour restrictions happening in my part-time work place. Scheduling becomes difficult during high-business seasons when the company strongly encourages workers to not go into overtime hours but is reluctant to hire new employees to help cover shifts. I believe it is hard for a company to consider the inefficiency this causes while in a financial tight spot.
I understand that the FAA maximum flight hour rule concerns the safety of flight but the 8% cancellation rate of scheduled flights is definitely a problem worth consideration. I think the airline companies are reluctant to hire new pilots because the extra costs they need to pay for new hires. Those costs includes not only salaries, but also signing bonus and other employee benefits such as insurance and pension plans.
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