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Organizational Behavior

Organizational Behavior: The Three America’s Major Airlines (American, Delta and United)

Organizational Behavior is an attitude with in an organization about how people, individuals, and groups act in organizations. Theories and concepts of system approach are applied to implement this behavior smoothly.  That is, it interprets people-organization relationships in terms of the whole person, whole group, whole organization, and whole social system. Its purpose is to build better relationships by achieving human objectives, organizational objectives, and social objectives.  It encompasses a wide range of topics, such as human behavior, change, leadership, teams, etc.

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The Major Airlines of America

American is the largest domestic U.S. airline and American Eagle is the largest regional airline system in the world. Their combined fleet numbers more than 850 aircraft. In addition to the extensive domestic service, they serve numerous destinations in Europe, Asia, the Caribbean, Canada, Mexico, and Latin America. The American frequent flyer program, AAdvantage, is the oldest and largest in the world: A prospering business to provide safe, dependable, and friendly air transportation to customers, along with numerous related services.  It claims to work very hard to make the customer entire experience with them, from making a reservation to deplaning at the final destination, a positive one. Although successful in this effort most of the time, there are times when things do not go as smoothly as the airlines and customers, would like. Operating a network of more than 3,600 flights and servicing hundreds of thousands of passengers each day is challenging and complex. Inevitably, some of the flights are affected by adverse circumstances, some of which are within their control and some of which are not. The Customer Service Plan effective from December 15, 1999, covers the following topics: Lowest fare availability Delays, cancellations, and diversion events Baggage delivery Baggage liability Guaranteed fares Ticket refunds Accommodation of customers with special needs Essential customer needs during extraordinary delays Flights with over sales Frequent Flyer Program - AAdvantage Other travel policies Service with domestic code share partners Handling of customer issues.
The global travel company today challenged the three major airlines (American, Delta and United), who have cut travel agency commissions by 60% on round trip domestic tickets, to reveal their internal distribution costs for bookings made by airline reservation agents and begin charging transaction fees reflective of those costs. "The airlines have sought to reduce their distribution costs amid an industry downturn," commented John Melchior, interim managing director of RADIUS, "but they have done so in a manner that is inconsistent and penalizes their best customers – corporate business travelers."

Melchior continued, "This is the sixth time since 1995 that commissions have been unilaterally and immediately cut by the airlines. Each commission cut has resulted in a transfer of costs from the airlines to corporate America. In addition, the distribution savings quoted by the airlines to Wall Street are overstated as many corporations have in the past and will continue to negotiate with the airlines to get their money back. Furthermore, in other countries where commissions have been cut, airlines have done so over a seven to fourteen-month period and in consultation with the travel agency community, giving corporate customers and travel management companies time to prepare and adjust their operations. This is a significantly different process than the current "we will cut commissions today and other carriers will match tomorrow" approach by American, United and Delta."

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"Airlines appear to be much more interested in posturing for Wall Street than listening to their customers and working in partnership with travel management companies. Airline pricing behavior is not sensitive to corporate procurement needs. Over the last few years, a higher than inflation increases of fares has been seen, especially those business community are forced to use. Last year this was based on the high price of fuel, but as fuel prices have been falling no decreases in fares have been announced. This latest increase of $30 per roundtrip ticket will further strain corporate travel budgets, which have already been cut in many corporations. The result will be fewer trips and more aggressive use of travel alternatives." stated Melchior.

The proportion of tickets that are currently sold through travel agents has remained very high due to agents’ ability to supply non-biased fare information, superior service covering all travel segments including hotel reservations and ground transportation and the provision of management reports to their corporate customers. These services are provided in a cost-effective manner. "If the carriers are convinced that the customer should pay for the service delivered by agents," questions Stanley (Buzz) Levin, chief executive officer of Travel Destinations Management Group in Owings Mills, MD, and RADIUS board member, "why don't the carriers charge fees to customers who visit city ticket offices or call an 800 number?" Levin suggests there should be, "no fee for booking electronically, but there should be a fee to deal with a human, no matter who employs that person, and the airlines would benefit from commission cuts and their own service fees. I am confident the public will see that airline distribution costs for limited, biased service is not competitive with the service travel agencies are able to provide. Nonetheless, the time for hiding is over, let the airlines reveal their internal distribution costs and implement appropriate service fees as they have forced us to do. Without a level playing field, travel agencies and our corporate customers will continue to be disadvantaged."

"RADIUS urges the other major carriers to refrain from matching the anticompetitive actions of American, United and Delta. It continues to encourage the Bush administration and the Department of Transportation to step in to ensure that competition is preserved and encouraged and that the rights of the traveling public are appropriately safeguarded." concluded Melchior.

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RADIUS® - the global travel company, is the world’s largest travel management organization with combined annual sales of over $21 billion (USD). RADIUS is comprised of 110+ shareholder agencies in 70+ countries around the world with over 6,000 travel agency locations and is headquartered in Bethesda, Maryland with regional offices in London, Miami, and Singapore. (Press release)
On Sept. 11, 2001, the bloodiest day in American history, terrorist attacks killed thousands of people in the nation's political and financial centers, crippled the airline industry and shook America's sense of safety.  Struggling to fathom the horrible tragedy, Americans came together to mourn the victims, to honor the heroes who fell during rescue attempts, and to prepare for a war of a new kind.
Even before the world witnessed the disastrous hijacking of four commercial airliners on Sept. 11, 2001, the airline industry sat precariously close to financial ruin. The terrorist attack and the need for major investments in airport security have pushed the airlines into nothing short of a fight for survival.

Congress responded quickly and sensibly last Friday by approving a bill which will allocate a $15 billion emergency grant to the airline industry once President George W. Bush signs the legislation, as he has already stated he will. Whether or not to provide heavy assistance to the airlines did not pose much of an economic dilemma for U.S. lawmakers; the airline industry is a major sector of the U.S. economy, and many other industries depend on air travel as part of the nation's basic infrastructure.

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The bill was not unanimously approved, however. A significant number of legislators and labor advocates have criticized the bill for overlooking the needs of the 80,000 airline workers expected to be fired in the aftermath of the attacks. With most flights taking off at half-capacity and the major carriers announcing a 20 percent long-term reduction in the number of flights offered, the financial fallout will extend well beyond the airline industry. Boeing, the nation's leading aircraft manufacturer, has already announced that it will lay off as many as 30,000 machinists and other workers. In response to these feared layoffs, Sen. Jean Carnahan (D-Mo.) has announced plans to introduce a $3.75 billion bill that would provide health coverage, job training and unemployment benefits for former airline workers.

The spirit behind Carnahan's proposed legislation is commendable. Yet it also highlights one of the major temptations lawmakers will face as they confront the financial costs of stabilizing the airline industry. The economic aftershocks of the Sept. 11 attack will be widespread; in addition to the airline industry, tourism, insurance and shipping are also sure to suffer substantial losses. Congress cannot identify, let alone compensate, every company harmed by the attack and every worker laid off as a result. Instead, it should focus its efforts on preventing widespread bankruptcies in industries vital to the nation's economy. The airlines present an immediate risk, but if most of the nation's insurance companies were to fail due to the attack, America's economic infrastructure would be similarly jeopardized. In giving direct aid, Congress's mission is not to redress all wrongs, but to make sure the U.S. economy continues to function.

This is not to say that laid-off workers should be abandoned. Unemployment benefits must be made available for everyone eligible to receive them. But special consideration should not be given to one group of unemployed workers simply because of the circumstances surrounding their untimely dismissals.

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The months ahead will no doubt bring numerous fiscal, social and political challenges. To the best of its abilities, the federal government must continue its stewardship of the nation's economy. But at the same time, it must also be careful not to undermine its capability to help by overextending its economic resources.  (Crimson, 2001)
The House passed aviation security legislation Thursday after rejecting a Senate version that would have turned airport-screening operations over to federal employees.  "I want every mom and dad who gets on an airplane to feel safe," Bush said. There was common agreement that Congress must act quickly to get leery Americans back on planes. "If we do not upgrade aviation security and show the American flying public that our skies are once again safe and secure, then the American aviation industry will continue to flounder and shrink," said Rep. William Lipinski of Illinois, a senior Transportation Committee Democrat. Gephardt said that could include private airport security companies that have been under fire for giving their employees poor pay and training. "We shouldn't be rewarding the mistakes and failures that these companies have committed." (Airline Security, 2001)

Among other differences, the Democratic bill would have moved overall control of aviation security to the Justice Department. The Republicans would create a new transportation security agency in the Transportation Department.  (Airline security, 2001)
“Improving the air travel experience for passengers is a joint effort and airlines have stepped up to the plate,” said Carol Hallett, ATA president and CEO. “It’s time for the government to do its part to reduce the massive air traffic control delays that are frustrating passengers nationwide. The present system was better suited to the traffic levels of the 1970s and cannot handle today’s demand, let alone meet the needs of the new century. As we approach the new millennium, we must have a state-of-the-art air traffic control system.” (Airline call, 1999). The Air Transport Association is the trade association for America’s leading airlines and has 23 U.S. and 5 foreign carrier members. ATA airlines carry over 95% of all the passenger and cargo traffic in the United States.

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We are also announcing the formation of an airline, airport, FAA task force to review and make recommendations that will help ensure airport display monitors and other information customers receive are accurate and timely. We will also explore ways to coordinate efforts with airports for those passengers remaining overnight due to delays or cancellations. (Airline Announces)

Delta Air Lines, the Atlanta Convention and Visitors Bureau (ACVB), and Georgia Institute of Technology (Georgia Tech) have joined to develop a new travel program linking commercial and professional development for the travel industry.  (Delta Airlines, 1999)
According to American Airlines Human resource management employment program a member of the American Airlines Family, each regular exempt employee enjoys a wide variety of benefits, unique programs and special services designed to enhance their career.  These were as follows:  Travel Privileges, Flexible Benefits, AAchievers Program, IdeAAs in Action, Career Opportunity System, FlagShip University, Employee Assistance Program, Credit Union, Holidays, Personal Emergency, Profit Sharing Plan, Reimbursement Account, Sick Pay, Stock Purchase Plan,  $uper $aver Plus - 401(k) Plan, Vacation, and Vacation Buying.

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Works Cited

Airlines Announce Additional Initiatives to Improve Customer Service

Pledge More Voluntary Actions.  Nov. 26, 2001 <http://www.customers-first.org/releases/18topten-atc.doc>

Airlines Call on Government to Improve Air Travel.  Air Traffic Control Delays “Must be reduced” says Trade Group.  Airline Transport Association. Nov. 26, 2001 <http://www.customers-first.org/releases/pr07.doc>

Airline Security: House Passes GOP Bill.  (2001).  Legislation Heads To Conference Committee.  Channel13000.com.  UPDATED: 10:21 a.m. EST November 2, 2001.  Nov. 26, 2001 <http://www.channel3000.com/wtc/1037914/detail.html>

Crimson, H.  (2001).  Airlines in the aftermath.  By Staff Editorial.  (Harvard U).  Nov. 26, 2001 <http://www.sccs.swarthmore.edu/org/daily/archive/fall_2001/20010927/opinions.html>

Delta Airlines Teams with Georgia Tech, Atlanta Convention & Visitors Bureau to Market Atlanta's Business, Professional Services throughout Latin America.  Nov. 26, 2001 <http://www.news-info.gatech.edu/news_releases/delta.html>

Press release.  Radius comments. Published on September 27, 2001.  Nov. 26, 2001


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