Take Flight? No, Take Stock!

The Columbian, January 30, 2000

 “Air travel needs more plans with public sharing ownership”

By Steve Nieman

About the author: Steve Nieman of Vancouver is an airline captain at Horizon Air and president of Horizon/Alaska Customer/Employee CoOwnership Association Inc. Its Web site is www.eahsop.org

The proposed megamergers of United Airlines with US Airways and American Airlines with TWA threaten the freedom required in a free market for airline deregulation to work.

Has the almost 25-year experiment in airline deregulation failed? Consider the list of almost all the major and midsized airlines. The managements, unions and employees have one another in choke holds. Customer service complaints and ticket prices are climbing to all-time highs, service and profitability levels to all-time lows. Is it inevitable that this industry will mutate into perhaps three goliath carriers?

My career in the airlines began as a pilot for Air Oregon in 1978, the year airline deregulation became law. In 1982 Horizon Air, a deregulation baby, bought Air Oregon and has since grown steadily in the West.

This grand experiment of making air travel more commonplace and affordable will be successful as long as a new player enters the mix: Passengers must team with employees as partner-owners. Customer and employee stock ownership plans could bring a whole new level of capitalization and democratic sharing of power. This might ensure that a variety of airlines stay economically robust yet remain affordable and accountable to the public.

At Alaska/Horizon Airlines, a small group of employees and customers has formed a nonprofit corporation, the Horizon/Alaska Customer/Employee Co-Ownership Association. For more than two years we have been lobbying management, our six unions, employees and customers on the merits of this partnership.

Both stock-buying plans would initially be funded by loans paid for by self-liquidating credit. Passengers on Alaska/Horizon would earn stock as well as mileage plan miles. A percentage of the ticket price would pay to retire the loan. Like employees, passengers would partake in profit sharing and stock dividends. When enough stock was purchased, passengers could command seats on the Alaska Air Group board of directors.

This scenario would be duplicated on the employee side, with a percentage of profit retiring the loan. With perhaps up to half of the board of directors composed of employees and customers, true stakeholders would guide the two airlines’ future.

Major obstacles facing the success of airline deregulation are management’s willingness to extend access to capital credit and the unions’ willingness to support employee and customer ownership. Union slowdowns, sickouts and strikes did force ruthless capitalists to behave more justly toward workers, but not more democratically. The next level is broadening ownership and breaking down barriers of access to capital credit by all people.

I look forward to the day when arguing over the minimum wage will be supplemented by what percent of capital-side entitlements should be paid to worker- and customer-owners. An hourly wage will never be more than minimum. There are not enough hours in the day to approach the economies of scale of sharing in ownership of multibillion-dollar corporations.

Competition dwindling

Due to the demand for higher levels of safety and increased government regulation, new airlines entering the market are dwindling. At the end of last year three new entrants – National, Allegiant and Legend – had been pushed to bankruptcy. Lessening competition may have to be accepted in this extremely expensive industry.

Broadening of airline ownership can better guard this prospect as well as oversee how the federal government manages air traffic control and airports. If this board makeup had been in place at Delta Airlines, would it have decided to drop flights to and from Japan from Portland International Airport? That meant an estimated $900 million annually from the local metropolitan economy. And small towns such as Klamath Falls and Port Angeles must push for ownership representation as dwindling resources threaten air service to smaller communities.

I encourage anyone looking for more information to contact HACECA and the managements of Alaska mid Horizon Airlines.