Alaska Airlines Should Fix Major Problems Before Further Expansion

Following Alaska Airlines' (NYSE: ALK) announcement last month that the airline plans to acquire Virgin America (NASDAQ: VA), the company stands poised to enter a phase of rapid expansion and take on a host of new operational challenges. Alaska also has chosen to simultaneously launch a new ground handling subsidiary called McGee Air Services.

But there's something important this massively profitable company is ignoring: safety concerns, for workers and the traveling public.

In the midst of this complex and expensive expansion, Alaska Airlines management has failed to fix a longstanding problem that creates potential hazards for airline passengers, airport workers and investors. Alaska has outsourced a number of key services - such as cleaning and fueling planes, baggage handling, and wheelchair assistance - to low-cost contractors. As a result of all this corner-cutting, the airline has assumed reputational and operational risks.

One particularly scary incident associated with Alaska Airlines' contract operations occurred when a contract baggage handler who was driving a baggage tug bumped an Alaska Airlines jet at Seattle-Tacoma International Airport (Sea-Tac). After take-off, a 12 x 6 inch hole blew open the plane's fuselage, its cabin depressurized, passengers put on oxygen masks and the plane was forced to make an emergency landing. Although no one was injured, the consequences could have been much more serious.

In 2013, Alaska Airlines and its contractor were issued citations for multiple serious health and safety violations for failing to protect the men and women who work on its jets from exposure to corrosive cleaning chemicals, caustic jet fuel, blood borne pathogens and body fluids including vomit, urine, feces and blood.

Last spring, Alaska Airlines made international headlines when one of its flights was forced to make an emergency landing at Sea-Tac after passengers heard banging and screams from a ramp agent who was trapped in the plane's cargo hold.

This year, at Sea-Tac, Alaska Airlines' primary hub, Alaska and its ground handling service contractor, Menzies Aviation, were both cited for health and safety violations by the Washington Department of Labor and Industries (L&I) and fined $69,000. Inspectors found the two companies had not sufficiently protected workers from "hazards that were causing, or likely to cause, serious physical harm to Menzies ramp agent employees who handle cargo and passenger baggage for Alaska Airlines at SeaTac Airport."

At Portland International (PDX), Alaska's second-largest hub, low wages paid by Alaska's service contractors contribute to high employee turnover. Employees of Huntleigh USA assist Alaska passengers with wheelchairs, and many of Huntleigh's employees report earning minimum wage - not nearly enough to sustain themselves and their families. Not surprisingly, many of them look for opportunity elsewhere. Huntleigh's employee turnover rate at PDX was over 60 percent per year in fiscal year 2015, according to data from the airport authority.

These kinds of low standards are not without consequences. Safety experts and airport authority executives say airport safety is not well served when exhausted employees have to work two jobs just to make ends meet. High turnover stemming from low wages can increase safety and security risks.

Missed opportunities to invest in front-line workers and to safeguard operations

After two years of filing lawsuits to block a voter-approved Sea-Tac airport minimum wage of $15, Alaska recently changed course, and its service contractors at Sea-Tac are now paying the people who work for them in compliance with the initiative's wage requirements. By not complying with the law, contractors serving Alaska now face class-action lawsuits for back pay, plus interest. Such costs are in addition to the already sizeable legal expenses and loss of community goodwill incurred by Alaska Airlines.

Alaska has been competing - and thriving - at airports in Los Angeles, San Francisco and San Jose, all while paying minimum wages of $15 or more when including the cost of health benefits paid for by the employer. Why did Alaska take on such expense opposing comparable wages for their "hometown" workers?

At a time when elected leaders and - above all - the traveling public are concerned about the safety and security of the U.S. aviation system, and as Alaska Airlines seeks to to execute the complex merger of Virgin America's operations into its existing network, the company cannot afford the distractions created by its relentless efforts to prevent contract workers from exercising their rights to a voice on the job.

To maintain stable, safe and secure operations during a difficult transition, the company should focus on fixing the longstanding problems associated with the poverty wages and high employee turnover that are prevalent in its contract passenger service operations.

Hundreds of the women and men who work for Alaska's subcontractors have chosen SEIU as their representative union, and more of them are raising their concerns every day.

Alaska can do better. We invite Alaska executives to partner with us to improve jobs, safety, and service quality in the airline's ground handling and passenger services.

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