What's Wrong With U.S. Airlines?

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( TheStreet) -- Recently, the American Customer Satisfaction Index published its annual ranking of America's worst customer service providers. Of the seven worst, four were airlines. American Airlines ( AMR) was rated seventh, Delta ( DAL) was sixth, U.S. Air ( LCC)was fifth and United ( UAL) was the second worst company in America for customer service (Charter Communications "won"). Airline service is a far cry from what we see on the Pam Am television series. But why?

Hypothesis 1: The nature of airline travel makes customer service difficult, if not impossible.

Airline travel is difficult, but good customer service is not impossible. On her first trip out of China, my 85-pound administrative assistant looked at me in terror as airline screeners told her to take off her shoes, then her jacket, then her sweater, then her belt, and then scanned her all over with a wand. Airline travel is stressful.

Yet, many airlines provide outstanding customer service. SKYTRAX rates customer satisfaction of the world's airlines. In 2011, there were no five-star U.S. carriers and, of 31 four-star carriers, only one was U.S. -- Jet Blue (a non-union U.S. airline).

Hypothesis 2: Customer service is not America's strong point.

Each year, Businessweek ranks the world's best companies for customer service -- The Customer Service Elite. In this year's top 25, 24 are American-owned. America's service capabilities are extraordinary. In the travel and hospitality industry, the U.S. is home to the world's best hotel companies: Fairmont, Ritz Carlton, Marriott, Intercontinental, Westin, Hilton, Hyatt, Sheraton, etc. Yet, despite dominance in hotel service, the U.S. simply cannot compete in airline service.

Hypothesis 3: Unions have crippled the airline industry.

This hypothesis has legs. Think of great organizations like Nordstrom or Disneyland. When you walk through the door, you viscerally feel a service-obsessed culture.

Nearly all major U.S. carriers are unionized. Unions can survive only if there is conflict between managers and non-managers -- if the culture is toxic. Increasing toxicity is the lifeblood of unions. The Association of Flight Attendants is the world's largest flight attendant union. Its trademarked rallying cry is CHAOS (Create Havoc Around Our System).

How do unions impact culture?

Seniority-based rewards is a core union belief. Thus, seniority, not service excellence, drives flight attendant pay, benefit and scheduling. According to Steve Turner, Chairman of WASINC, a recruiting firm for international pilots, long-haul international flights are routinely staffed by the most senior employees. Many fly only one trip per month and still collect a full-time, senior-grade paycheck. Pay too little and employees quit and leave. Pay too much and employees quit and stay -- especially when there is no performance management system to drive out low performers.

Travel on a United Airlines international route and you will find that almost all flight attendants are over 50 years old. Many are in their 60s and 70s and routinely ask customers for help stowing overhead bags. With no performance management system, a flight attendant can work until he/she dies of old age without fear of termination.

Many "experienced" flight attendants start each flight by letting the passengers know they are in charge. Their message is clear, "I have been around the block; don't mess with me." The reason is described in the safety demonstration at the beginning of the flight. The announcement states that the flight attendants' primary purpose is safety. The unions have pushed the safety theme to move away from a customer service focus. In truth, almost no one reading this will ever depend on a flight attendant for safety. And safety procedures take days, not years, to learn. Seniority is irrelevant to safety.

Contrast the United picture with my recent flight on All Nippon Airlines (ANA). I first saw the flight attendants as they walked toward Immigration. They walked confidently as a team, smiling and proud. Disneyland calls its employees "cast members" and tells them when a guest is present, they are on stage. The ANA attendants acted as if they were on stage. The flight attendants were mostly in their 20s, a few in their thirties. They were beautifully dressed with identical dresses and hair styles. As they walked through Immigration, each flashed a big smile and bowed or curtsied to an adoring immigration officer.

During the safety demonstration, I could see three flight attendants down the long aisles of the 777. They looked like a dance team -- every movement was perfectly synchronized and their smiles warmed up the plane. At takeoff, each flight attendant sat up straight in a backward-facing chair with hands folded as she scanned her section back and forth with great vigilance.

For the entire seven-hour flight, all retained their seemly genuine smiles. They walked up and down the aisles to pick up food trays as soon as each passenger finished eating and they popped in and out of the lavatories to make sure they were always clean. Nothing that separated ANA and United flight attendants cost money. Blaming bad service on customer refusal to pay more is a cop-out.

Why can't U.S. carriers compete? Culture -- when a corporate desire for service excellence meets CHAOS, the result for customers is mediocrity at best. Ironically, the result for employees is also bad. No rational customer is going to argue with an ANA attendant -- they're too nice. But as condescending attendants put up their dukes, passengers put up theirs. Inadvertently, they create their own hostile work environment.

A very basic and deep human need is to go home at the end of the day and feel like we did something important; like we make the world a better place. The culture promoted by airline unions is counter to that need. By trying to help make flight attendant work easier, unions make their members' lives worse.

As children we learn this core principle: we are happier when we give than when we receive. That's true in life; and it's true at work.

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Hall is managing director of Human Capital Systems (www.humancapitalsystems.com), a firm that designs systems for improving workforce performance. He is also an instructor in Duke Corporate Education's teaching network and author of The New Human Capital Strategy. Hall was formerly a senior vice president at ABN AMRO Bank in Amsterdam and IBM Asia-Pacific's executive in charge of executive leadership and organization effectiveness. During his tenure, IBM was twice ranked No. 1 in the world in Hewitt/Chief Executive magazine's "Top Company for Leaders." Hall completed his Ph.D in industrial-organizational psychology at Tulane University, with a dissertation on people management practices of Japanese corporations.

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