Public Anger Against Northwest Rising

The pilots’ strike against Northwest Airlines--now in its fifth day--is disrupting the Midwest’s economy while tapping into a well of anger from passengers fed up with the carrier’s service problems and labor discord.

In the nation’s auto capital, where Northwest is the dominant airline, public resentment concerning its recent shoddy performance is so deep that many passengers are vowing never to fly the carrier again.

“I won’t fly Northwest,” said Robert Warner, a businessman traveling Tuesday from Detroit Metro Airport to Chicago on United Airlines. “I’ve had too many problems in the past.”

Even the Big Three auto makers are so disgusted with flight delays and high ticket prices that they are encouraging employees to find alternatives to Northwest. General Motors Corp. and Chrysler Corp. recently signed on with upstart airline ProAir for regular service to four cities from Detroit’s inner-city airport.

The strike by nearly 6,200 Northwest pilots is playing into the debate in Washington about whether the airline industry ought to be re-regulated to spur competition.

Northwest is a prime developer of fortress hubs, using its dominant position in a few key cities to keep out discount carriers. Northwest, the nation’s fourth-largest airline by revenue, handles more than 75% of the traffic in Detroit, Minneapolis and Memphis, Tenn.

Small Markets Held Hostage

In some smaller Midwest cities, like Duluth, Minn., and Grand Forks, Fargo and Bismarck, N.D., it is the only carrier. With such dominance, Northwest’s shutdown is disrupting business and personal activity throughout the region.

“Airlines today are like the railroads of the last century,” said Joseph Schwieterman, economics and transportation professor at DePaul University in Chicago. “They wield great clout over an entire region’s economic well-being.”

Since the strike began, Northwest has been forced to cancel its 1,700 daily flights that normally ferry about 170,000 passengers to destinations throughout the United States, Asia and Europe.

The airline, which has 50,000 employees, laid off 177 dispatchers and meteorologists Tuesday. Union officials expect the company to announce layoffs today of 11,000 flight attendants.

Northwest is losing $27 million in daily revenue, which analysts say translates into lost profits of $10 million to $15 million a day. The company, along with governors of seven Midwestern states, asked President Clinton to intervene in the strike, claiming the walkout would reduce the region’s economic output by $736 million in the first 10 days of a strike.

The pilots and their supporters in Congress say the strike--a dispute largely about wages and job security--will cause minimal economic damage and have asked the White House to stay out of the dispute.

Clinton, who can order the pilots back to work under the Railway Labor Act, thus far has stayed out of the dispute, though both sides met Tuesday with Transportation Secretary Rodney Slater. Administration officials hint that Clinton might intervene if the strike lasts through Labor Day.

Economists are divided as to what broad impact the strike will have on the nation’s economy. The major short-term effect, they agree, is the disruption caused to business and leisure travelers.

“It’s inconvenient, but there are ways to get around it in most cases,” said Diane Swonk, an analyst for NBD First Chicago Bank. “The real casualties are small businesses that can’t afford to get goods shipped in other ways.”

William Wilson, an economist for Comerica Bank in Detroit, estimates that the strike is costing the metropolitan Detroit economy about $30 million a day in lost business activity. The hardest hit are service businesses, including hotels, restaurants and taxis. Convention-related spending is expected to shrink by $4 million a week during the strike.

Car Makers Planned Ahead

The auto industry expects little impact from the strike. Chrysler and Ford anticipated the walkout, instructing executives to book flights on other carriers, cancel plans or handle meetings through video or telephone conferences. Most of the companies’ auto parts are delivered by truck or rail directly to assembly plants.

In Minneapolis, companies whose carrier of choice has been Northwest also scrambled to make other travel arrangements.

And 3M, the giant consumer products company, shifted its cargo from Northwest to other carriers about three weeks ago. Medtronic, a medical device manufacturer that must often get physicians, researchers and equipment to medical centers quickly, is trying to book employees on other carriers or use video conferencing where possible.

In Detroit, local officials are worried that the strike, coming on the heels of the eight-week walkout by the United Auto Workers that shut down GM nationwide, will further sully the region’s image as an anti-business area.

“Labor-management conflicts impact our economic development recruitment efforts and perpetuate a negative image of our region,” said Richard Blouse, president of the Detroit Regional Chamber.

At the same time, he acknowledges that service problems at Northwest and Detroit airport over the last year are also giving the area a bad reputation with businesses. A canceled flight to Newark, N.J., this spring caused a near riot as police had to be called in to quell about 60 angry passengers.

In the last year, Northwest’s service record has fallen sharply. It ranks at or near the bottom in on-time performance and lost baggage claims. In recent months, federal regulators have received more consumer complaints about Northwest than any other major airline.

Airline Blames Equipment, Unions

Northwest, based in a suburb of St. Paul, Minn., also attributes the poor performance to labor problems, which have afflicted the airline sporadically for years. It has six unions whose contracts have been open since 1996. The company alleges that its unionized mechanics, members of the International Assn. of Machinists, have run a deliberate slowdown that has caused hundreds of flight cancellations and delays.

The airline also notes that baggage delivery at the dreary Detroit airport is slowed by the antiquated terminal, which was built more than 40 years ago to handle half the traffic it now processes. Wayne County is building a new, $1.5-billion terminal to house Northwest gates beginning in 2001.

But passengers believe air service won’t improve in Detroit until competition is increased.

To airline analysts, the strike against Northwest provides a vivid illustration of how deregulation--originally meant to spur competition--has created quasi-monopolies in most major U.S. airports.

Deregulation prompted creation of a hub-and-spoke system, feeding passengers from smaller markets into large airports. Air traffic exploded and air fares came down. But eventually one airline came to dominate each hub, giving them more power to increase fares, especially for business travelers.

The issue has drawn congressional attention and bills are pending that would give more landing slots to new airlines at busy airports. The Justice Department is probing possible antitrust violations by major airlines. And the Department of Transportation is proposing new guidelines to penalize airlines that unfairly block competition from new, discount carriers.

Thomas Nutt-Powell, a Boston-based housing redeveloper who travels weekly to Detroit, where he oversees a project, reluctantly supports re-regulation. A frequent Northwest flier, he said service has deteriorated badly.

“They have a virtual monopoly,” Nutt-Powell said. “My only choice is to put up with their service or fly less, and see my business suffer. It’s not a situation that makes me very happy.”