The Cost of Safety: Ethics and the Airline Industry

INTRODUCTION

Today, regional airline carriers account for more than half of all domestic flights in the United States, as major airlines have been outsourcing more of their flights.  According to the U.S. government Accountability Office, the regional airlines are responsible for the last six fatal commercial airline accidents (Dillingham).  Thus, their business operations, especially with respect to safety standards, implicate a variety of ethical dimensions and perspectives.

THE STORY OF THE REGIONAL CARRIERS IN THE AIRLINE INDUSTRY

Over the past thirty years, a major transformation has been occurring in the United States airline industry.  It began in the late 1970s when the U.S. government deregulated the airline industry, which inevitably led to increased competition among the major airlines to offer lower airfares (Cunningham, et al).   In response, the airline companies created the regional industry and developed a new business operating strategy called the hub and spoke model as a way of lowering costs.  Basically, the major airlines created central hubs in large cities or metropolitan areas and began relying on small regional carriers or commuters to feed their domestic network system (Wei & Yanji).  (See Appendix A)

In the late 1990s, many major airlines began outsourcing more flying to independent regional airlines due to increased price pressure from competitors.  According to the Frontline investigation film Flying Cheap, a new approach called code-share contracts emerged, which further changed the competitive structure of the airline industry.  Under these contracts between the major airlines and their regional carrier airlines, the regional airline adopts the same ticketing code and colors as the major.  Furthermore, the regionals are paid a set profit upon the completion of each flight (Frontline Flying Cheap).  The code-share agreements represent a cost-effective strategy for the major airlines as they allow the regional carrier to operate as an independent business with its own flying standards. (See Appendix B & Appendix C)

As for consumers, they benefit from lower air travel costs, as fares under the new business model are reasonable, and more air travel options (Wei & Yenji).  However, their safety is being compromised due to the risks involved in cheap travel.  Another issue is the low pay and high living costs for many carrier flight pilots.  In an effort to adhere to the key discipline of controlling costs in regional airline business, many carrier airlines must reduce pilot wages (Field).

PROBLEM: REGIONAL CARRIER SAFETY

The outsourcing of flights to regional carriers has raised several issues, including passenger safety.  Most code-share contracts stipulate that the regional carrier is completely and totally responsible for the safety of it operations, including crew training.  These contracts effectively eliminate the major airlines’ legal responsibility for the safety of their regional partners.  The major airlines rely on the Federal Aviation Administration (FAA) to take responsibility for ensuring the safety standards of their regional partners.

The safety problem of the carrier airlines is in part a result of inadequate pilot qualification and training.  According to the Frontline documentary Flying Cheap, “Since 2002, the last six fatal commercial airline accidents in the U.S. have all involved regionals.  In four of the accidents, the NTSB cited pilot error as a cause”.  (See Appendix D)

Also, the professional backgrounds of some carrier pilots are arguably insufficient.  According to the Frontline documentary, “At the major airlines, it takes pilots five to ten years to upgrade from first officer to captain, but not at the regionals”.  Some pilots attested to becoming captain in as few as nine months (Frontline Flying Cheap).  The financial pressures force regional carrier airlines to promote first officer pilots to captain even when they are relatively inexperienced and have not been mentored by more experienced flyers.  As a result of these training issues, passenger and crew safety is at risk.

Another aspect of the code-share contract that is linked to safety concerns is the idea that the regional carrier is paid upon completion of the flight.  Essentially, such a business arrangement is an incentive for regional carriers to fly in unsafe conditions rather than cancel the flight (Frontline Flying Cheap).  Completing the flight is much more important than safety.  Carrier pilots are often pressured to “move the rig” because the airplane must complete the route in order for the carrier airline to receive revenue (Frontline Flying Cheap).

The most unsettling part of these safety problems is that the majority of air travelers are completely unaware of them.  According to the Frontline documentary, one of the key features of code-share contracts is that “They include very specific provisions that make it virtually impossible for the public to differentiate between the regional contracting airline and the major carrier…Everything from the logo and colors of the airplanes to the staff uniforms to the free magazines stashed in the seat in front of you carry the branding of the major”. (See Appendix E)

The major airlines have succeeded in expanding their existing companies and deceiving the traveling public by contracting with regional carrier airlines.  They effectively make it appear like their own airline and the passenger even purchases the ticket from them.  Passengers are entirely ignorant to the fact that they are flying on a regional carrier airline, which has separate safety procedures, employees, labor standards, wage rates, etc. (Frontline Flying Cheap).  Furthermore, they are likely unaware that the pilots of such flights may lack experience and knowledge, yet they are allowed to fly anyway.

PROBLEM: REGIONAL CARRIER PILOT WAGES

Another issue is the low wages earned by regional carrier pilots.  According to the Frontline documentary, “Pilots are paid hourly, and starting pay for first officers is typically $21 an hour”.  Some first officers may receive as little as $18,000-$22,000 per year (Frontline Flying Cheap).

In addition, the regional carrier pilots may work for eighty hours per week and only get paid for twenty hours.  According to the Frontline documentary, “while FAA regulations limit pilots to eight hours of actual flight time a day, pilots may be on duty for up to sixteen hours a day”.  The pilots are only paid when the door is closed and the engines are running.  In fact, they may be flying up to ten flights in a single day; however, they receive no compensation for the time they spend walking through airports, eating lunch, or waiting for an airplane standing at the gate (Frontline Flying Cheap).

Such low wages are economically unsustainable for the demanding profession and lifestyle of a pilot.  When they cannot afford hotels or their own apartment, many regional carrier pilots must sleep or live temporarily at cheap “crash pads” – the underground housing market in the airline industry (Frontline Flying Cheap).  Usually, the “crash pads”, which are specifically designed for these low income traveling individuals, consist of a one or two-bedroom apartment where 10-14 pilots may sleep (Frontline Flying Cheap).

THE ROLE OF THE FAA

The relationship between the major carriers and their regional partners is a topic of debate.  The major airlines don’t want to take responsibility for the safe operation and performance of their regional partners, mainly because they don’t want to assume the legal liability, especially in the event of a catastrophe.  They believe that it’s the Federal Aviation Administration’s responsibility to regulate the regional carriers’ safety, as the agency sets standards to monitor and inspect the safety of the entire airline industry.  However, the FAA’s ability to effectively watch over such a vast and dynamic industry has been disputed.

The FAA only has about 4,300 inspectors to oversee the safety of about 25,000 commercial flights in the U.S. every day, including flight operations, pilot certifications, and maintenance (Frontline Flying Cheap).  Given these conditions, the FAA’s competence and capacity to conduct adequate oversight is limited, particularly its ability to control the growing regional airline business.

ETHICAL IMPLICATIONS

Ethical issues always arise in situations where multiple stakeholders, interests, and values intermingle and rules are ambiguous or poorly enforced.  Businesses and government often have the authority and the power to make decisions that consequentially affect others’ well-being; thus, they participate in ethical decision making.  Their decisions and actions have the ability to produce tremendous social consequences, particularly with respect to the health, safety, and welfare of consumers, employees, and the community.

Donaldson’s perspective:

Given the situation in the airline industry described above, Donaldson would likely argue that the right to physical security of the passengers and flight crews to physical security is being compromised (Donaldson).  He would reason that physical security is a fundamental human right that generates a correlative duty for the regional airlines, the major airlines, and possibly the FAA.  These groups have certain duties to avoid depriving individuals of their rights and to help protect these individuals from such deprivation (Donaldson).  In the case of the airline industry, these groups are obligated to ensure the safety of the passengers and the crew members.

Kant’s perspective:

The Kantian approach to business ethics discusses the “respect for persons” principle and the concept of negative freedom.  According to the “respect for persons” principle, “any business practice that puts money on par with people is immoral…” (Bowie 3).  The profit-driven major airlines identified an opportunity to decrease costs by outsourcing their regional flights.  Furthermore, they rationalized that they could not be held accountable for the actions of independent contractors.  In turn, the regional airlines followed suit by jeopardizing passenger and crew safety in attempting to minimize their own costs.  Such business practices are unethical in that they violate the “respect for persons” principle and fail to treat these groups with dignity.

In addition, in Kant’s view, negative freedom refers more specifically to the freedom from coercion and deception.  Christine Korsgaard, a Kant scholar, asserts that “…coercion and deception are the most fundamental forms of wrongdoing to others – the roots of all evil…lying treats someone’s reason as a tool” (Bowie 8).  Thus, the regional airlines, the major airlines, and possibly the FAA are acting unethically by providing passengers with misleading information and cues with respect to the airline on which they are flying.  Several factors, including but not limited to the appearance of the ticket, the logo and colors of the airplane, and the crew members’ uniforms, allow the passenger to mistakenly assume that he/she is flying on the major airline when in fact he/she is flying on a regional carrier airline.

Additionally, Kant would defend that meaningful work, among other criteria, “provides a salary sufficient to exercise independence and provide for physical well-being and the satisfaction of some of the worker’s desires…” (Bowie 10)  With respect to the carrier pilots’ wages, Kant would consider them deficient as they do not provide the pilots with enough income to live adequately. Thus, the regional carrier airlines may be regarded as unethical as they do not contribute to the meaningful work of their employees.

Freeman’s perspective:

Edward Freeman, in his article, “Business Ethics at the Millennium”, emphasizes the idea that businesses should be accountable to others.  He introduces the concept of stakeholder theory, which says that a business should consider the legitimate interests of all appropriate stakeholders, or “those groups who can have some effect on the firm or may be affected by the firm’s actions” (Freeman, “Business Ethics” 171).  It is critical to ask the question: “For whose benefit and at whose expense should the firm be managed?” (Freeman, “Stakeholder Theory” 39)  Freeman’s stakeholder management approach considers all relevant stakeholders in establishing organizational structures and general policies.

It is the duty of the major airlines, the regional carrier airlines, and the FAA to protect their stakeholders.  Instead, the major airline companies aim “to internalize the benefits and externalize the costs of their actions” (Freeman, “Stakeholder Theory” 41).  In doing so, they are neglecting the interests of some of their most important stakeholders, i.e., the safety and livelihood of their passengers and crew.

Finally, Freeman firmly believes that a business should be managed according to society’s best interests.  The airline industry and the FAA are expected to embody the doctrine of corporate social responsibility.  They are responsible for serving the public interest by creating sustainable value for society.  In others words, societal values should influence the behavior of all of those involved in the airline industry, including the major airlines, the regional carrier airlines, and the FAA.  They should make decisions based on the goal of enhancing societal well-being, and avoid behavior that has the potential to harm society.

CONCLUSION

As stated above, more than half of all commercial flights in the U.S. today are flown by regional airlines.  Concerns linked to safety as well as indecent pilot wages in regional carrier operations raise a range of ethical issues with respect to the overall airline industry and its regulatory agency, the FAA.  Safety has always undeniably been a critical element to the successful business operations of the airline industry, and, at some point, safety must take precedence over profits.

In my opinion, the major airlines need to take greater responsibility for the safe operations of their regional partners.  Also, the regional carriers should make a conscious effort to update their operations to meet the same level of safety standards as the major airlines, including such aspects as pilot training, record keeping, management, maintenance, and thorough safety audit systems.

The U.S. government and the FAA need to fundamentally address the problem from safety standpoint.  They should implement legislative changes to strengthen pilot qualifications, raise training standards, and modify code-share agreements to make the major carrier and the regional carrier jointly liable for any negligence.  Most importantly, the flying public should have access to adequate information about code-sharing arrangements in order to make informed decisions when purchasing airline tickets.

APPENDICES

A. Example of the hub and spoke model

Science.howstuffworks.com

B. Watch Frontline Flying Cheap film:

http://www.pbs.org/wgbh/pages/frontline/flyingcheap/view/

C. FAA’s What Is Code-Sharing? PowerPoint Presentation

http://www.ntsb.gov/news/events/2010/code_sharing/presentations/opening-1-duncan.pdf

D. Accidents involving passenger fatalities

http://www.ntsb.gov/data/paxfatal.html

E. Regional airline flight ticket labeled with major airline

http://www.pbs.org/wgbh/pages/frontline/flyingcheap/continental-3407/confirmation.pdf

Works Cited

Bowie, Norman E. “A Kantian Approach to Business Ethics.” Business Ethics Quarterly 1.3 (2000): 3-16. Rpt. in Philosophy Documentation Center. JSTOR. Web. 18 Mar. 2012.

Cunningham, Lawrence F., Myron B. Slovin, Wallace R. Wood, and Janis K. Zaima. “Systematic Risk in the Deregulated Airline Industry.” Journal of Transport Economics and Policy 22.3 (1988): 345-53. Jstor. Web. 26 Mar. 2012. <http://www.jstor.org/stable/20052859&gt;.

Dillingham, Gerald L. “Aviation Safety.” U.S. Government Accountability Office. U.S. Government, Mar. 2012. Web. 01 Apr. 2012. <http://www.gao.gov/assets/590/589444.pdf&gt;.

Donaldson, Thomas J. “Rights in the Global Market.” Ethics and Governance: Business as Mediating Institution. Oxford: Oxford UP, 2001. 139-59. Web. 10 Mar. 2012.

Duncan, John S. “Federal Aviation Administration What Is Code-Sharing? PowerPoint Presentation.” National Transportation Safety Board. U.S. Government, 26 Oct. 2010. Web. 01 Apr. 2012. <http://www.ntsb.gov/news/events/2010/code_sharing/presentations/opening-1-duncan.pdf&gt;.

Field, David. “Low Cost & Regionals: Branch lines.” Aerospace and Aviation News. Airline Business, May 2007. Web. 01 Apr. 2012. <http://www.flightglobal.com/news/articles/low-cost-regionals-branch-lines-213501/&gt;.

Freeman, R. Edward. “Business Ethics at the Millennium.” Business Ethics Quarterly 10.1 (2000): 169-80. Rpt. in Philosophy Documentation Center. JSTOR. Web. 23 Jan. 2012. <http://jstor.org/stable/3857703&gt;.

Freeman, R. Edward. “Stakeholder Theory of the Modern Corporation.” General Issues in Business Ethics. 38-48. Web.

Oster, Clinton V., John S. Strong, and C. Kurt. Zorn. Why Airplanes Crash: Aviation Safety in a Changing World. New York: Oxford UP, 1992. Print.

Wei, Song and Yanji, Ma. “Hub-and-spoke System in Air Transportation and its Implications to Regional Economic Development,” Chinese Geographical Science, vol.16, pp. 211-216, 2006.

Young, Rick (Writer & Producer). (2010, February 9). Flying Cheap. In D. Fanning (Executive Producer), Frontline. Boston: Public Broadcasting Service WGBH. Retrieved May 24, 2012, from the PBS Web site: http://www.pbs.org/wgbh/pages/frontline/flyingcheap/view/