Flying Cheap


Background:

Colgan Airways Corp. was founded in 1965 by Charles Colgan who was a former Air Force pilot.  At this time, Colgan Airways Corp. did not fly its own planes; it served as the fixed-base operator at Manassas Airport in Manassas, VA; refueling and servicing other aircrafts.  In 1970, under contract with IBM, Colgan started flying IBM executives.  They started flying scheduled flights between Manassas, Washington’s Dulles Airport and Poughkeepsie, N.Y.  As a result of deregulation in the late 1970s, there was increased competition and lower airfares in the airline industry.  Deregulation also brought about a new operating model called hub and spoke; this was where major airlines created central hubs in big cities and contracted out to regional airlines to feed their network.  Now, low cost carriers where the hot commodity and tickets were sold on the internet.  Customers could go online and shop for the lowest ticket price.  Charles Colgan and his son Michael Colgan started a new airline business under the name Colgan Air in 1989.

Code-share Contract:

In July 1997, Colgan signed its first code-share contract with Continental Airlines.  A code-share agreement is an aviation business arrangement where two or more airlines share the same flight.  In essence, major airlines would outsource flights to independent carriers in order to reduce cost.  The agreement was that Colgan would operate under the Continental Connection destination on flights to 10 cities in the Mid-Atlantic and northeastern regions.  Under the code-share contract, Colgan would operate the planes, but the planes and the crew would be branded to look like Continental.  Continental would also be in charge of selling the tickets.  On January 28, 1998, Colgan Air became a regional airline and the company was supposed to upgrade its operations to meet the same level of safety as the major airlines.  Founder Chuck Colgan signed a letter to the FAA stating that Colgan would make significant changes to meet the safety standards set in the Part 121 regulations.

By 2005, Colgan Air grew rapidly through a series of code-share contracts with United Airlines Express, US Airways Express and Continental Connection.  Colgan serviced 58 locations in the East, Northeast and Southwest.  Between 2001 and 2005, the company nearly tripled the number of planes in operation and annual revenue grew from $55 million to more than $136 million.

Safety Questions:

After a US Airways Express flight operated by Colgan Air crashed near Cape Cod on August 26, 2003, the National Transportation Safety Board (NTSB) cited improper plane maintenance and inadequate pilot inspection as the main cause of the crash.

In June 2005 Chris Monteleon, the principal operations inspector of Colgan Air, raised several safety concerns about the company.  When he told the FAA about his concerns and called for enforcement actions, this office manager did not approve the actions.  Monteleon claimed that the manager said “Mike Colgan [company president] is a friend of this office” (Frontline).  This particular FAA office manager does not recall saying this.

In December 2005, the Department of Defense (DoD) performed safety audits of Colgan Air.  The DoD documented safety problems at the airlines stating that the “company has not adequately maintained a safety feedback structure that informs management of safety policy results, including possible safety problems” (Frontline).  Two years later in December 2007, Colgan was put on the watch because of lack of management.  This was from an audit done by the DoD.

New Q400 Planes:

In a $20 million deal, Colgan Air was bought by Pinnacle Airlines Corp.  After this deal, Continental Airlines signed a contract with Colgan to operate 15 new 74- seat Bombardier Dash-8 Q400 turboprop planes out of Newark, NJ.  These new planes were set to be in the air in February 2008.  In March 2008, the FAA and Colgan both noted problems in the way the pilots were operating the new Q400 planes.  The FAA noticed many problems in the cockpit which included airspeed limitation compliance, incorrect use of the automated control system, and incorrect cabin-to-cockpit communication procedures.  Colgan responded by conducting a series of observation flights to monitor flight speed.  But Corey Heiser, a former Colgan pilot, claimed that he was brought in to supervise the observations even though he was not yet trained to fly a Q400 plane.

About ten months after the Bombardier Dash-8 Q400 went into operation, Colgan Air had still not finalized the airplane’s operation manual.  An operation manual is a critical set of guidelines for pilots.  It tells them how to operate the particular plane in varying conditions.  Between December 2008 and March 2009, no one worked on these manuals.  Colgan blamed this on company’s workload.

   

The cockpit crew of Continental Connection flight 3407 included 47 year old Captain Marvin Renslow, and 24 year old First Officer Rebecca Shaw.  They were both new Q400 pilots.  Renslow was hired by Colgan in 2005 with only 618 hours of flying time, less than half the time required by most major airlines” (Frontline on Youtube).   He completed his training two months before the accident.  First Officer Shaw joined Colgan in 2008 and spent the night before the crash commuting to Newark, NJ, from her home in Seattle, Washington.  She finished her training a few months before Renslow.  On February 12, 2009, flight 3407 was delayed because of bad weather; there was mist and light snow with visibility of less than a mile.  Despite this, the flight took off that same day from Newark, NJ, and crashed in Clarence Center, NY.  Fifty people were killed including all 49 people in the plane and 1 person on the ground.

From May 12 to May 14, 2009, the NTSB held preliminary hearings on the Continental Connection Flight 3407 crash in Washington, D.C.  The hearings concentrated on issues such as Captain Renslow’s lack of stall-recovery training, First Officer Shaw’s commute and low pay, Colgan’s pilot hiring and training practices and pilot fatigue.  The transcript of the plane’s voice box had sounds of the two pilots yawning and sniffling.  First Officer Shaw stated, “If I call in sick now, I’ve got to put myself in a hotel until I feel better” (Frontline).  Shaw also talked about only making $15,800 in her first year at Colgan.

NTSB Conclusions on Flight 3407 Crash:

February 23, 2010

“The National Transportation Safety Board (NTSB) determined that the probable cause of this accident was the captain‘s inappropriate response to the activation of the stick shaker, which led to an aerodynamic stall from which the airplane did not recover. Contributing to the accident were (1) the flight crew‘s failure to monitor airspeed in relation to the rising position of the low-speed cue, (2) the flight crew‘s failure to adhere to sterile cockpit procedures, (3) the captain‘s failure to effectively manage the flight, and (4) Colgan Air‘s inadequate procedures for airspeed selection and management during approaches in icing conditions” (NTSB).

In the hearing, it was found that the crash was caused not by icing but by pilot error.

Colgan Pilots- Testimonial:

In an interview with Frontline, Corey Heiser, a former Colgan Pilot from 2005-2009 states, “We are only paid when the door is closed and the engines are running.  As soon as we block out of the gate and we close that door, that’s when we start.  All that time we’re walking through airports, eating lunch, reading a book while we wait for airplanes standing at the gate, we’re not paid for that time.  We may be on duty for 80 hours a week and get paid for 20 hours if we’re lucky” (Frontline on Youtube).

Low pay and high costs have created what pilots refer to as crash pads.  This is an underground housing market in the airline industry.  Heiser noted, “I had a crash pad in Albany, NY with nine people living in a small two bedroom apartment.  We had guys sleeping on the couch, they rented the couch, guys who rented a closet; a big walk in closet.  And then you had three or four guys crammed in a little biddy ten by ten room, hardly bigger than jail cells it seemed.  Sleeping on air mattresses,, we couldn’t afford to rent our own apartment.  We just did not make enough money to be able to pay for that” (Frontline on Youtube).

Crash Victim’s Family Testimonial:

Kevin Kuwik’s girlfriend, Lauren Maurer was a passenger on flight 3407.  Kuwik pulled up Maurer’s flight itinerary from Orbitz.com and although all the bold print said Continental, he found that the small print under the flight number said “operated by Colgan Air”.  In an interview with Frontline, Lauren Maurer’s father, Scott Maurer, said “no doubt in our mind that when she is buying this ticket, she is buying a flight on Continental for which she believed she had Continental pilots and Continental safety and Continental service” (Frontline on Youtube).

Ethical Issues:

There are two ethical issues that caused the crash in 2009; the first issue being employee treatment and the second being the code-share agreement.  According to Jeffery Pfeffer and John Veiga, Colgan Air did not put their people first.  Pfeffer and Veiga published a piece called Putting People First for Organizational Success.  Here he outlines seven practices of successful organizations.  He provides these principles to help companies become more successful.  I define success not just as high profitability, but also by high ethical values.  The seven principles are:

  • Employment security
  • Selective hiring
  • Self-Managed teams and decentralization as basic elements of organizational design
  • Comparatively high compensation contingent on organizational performance
  • Extensive training
  • Reduction of status difference
  • Sharing information

All of these principles involve putting the employee first, something Colgan Air’s neglected to do.  They were more concerned about cutting costs and increasing profits.  I will highlight the four principles I feel apply to the Colgan Air case most effectively.  The first principle is employment security.  Pfeffer stated that “employment security is fundamental to the implementation of most other high performance management practices” (Pfeffer, 40).  High employee turnover is actually not a good thing for businesses.  The Colgan pilots should not be worried that they might lose their job if they did not fly enough hours.  This would relieve stress and encourage pilots to fly comfortable hours.

Pfeffer’s second principle is selective hiring.  Successful companies have to select the right employees for the job.  This entails having a large applicant pool and then outlining the particular skills and attributes that are most important for the job.  If Colgan put this amount of thought into their hiring process, they would have hired more qualified pilots.  First Officer Shaw was just 24 years old and was not qualified to fly such a flight.  The third principle is comparatively high compensation contingent on organizational performance.  This was the downfall of Colgan.  They did not value their employees enough to pay them what their jobs were worth.  Many Colgan pilots claim that they did not make enough money to even rent a hotel while commuting for a flight.  The pilots were only paid when they were in the air.  This encouraged them to pickup long hours, only making about $21 an hour.  From the plane transcripts, First Officer Shaw said she only made $15,800.  After paying bills this is not enough money to survive.  The fourth relevant principle is extensive training.  This is another very important principle Colgan failed to implement.  At Colgan, pilots were able to move up the ranks with very minimal training.  They did not have the proper training or manuals to fly the new Q400 planes.  Colgan is in a highly specialized business and extensive training is required in order to be ethically successful.

The fact is the crash of Flight 3409 was caused by pilot error.  The pilots were Colgan’s employees and Colgan dropped the ball.  They neglected their employees and did not put them first.  There was no employment security, no selective hiring, lack of fair compensation, and lack of training.  These are all things ethically successful companies need, especially a company like Colgan who is in charge of people’s lives in the air.

The question I contend with is who is to blame for the crash?  The pilots are not off the hook, but considering the circumstances and the pressures of their job I do not blame them.  Continental Airlines signed away all responsibility when they entered the code-share agreement but I blame Continental as much as I blame Colgan Air.  They deceived their customers and did not provide the service they promised.  The passengers expected Continental quality service, but instead they got second class service.

Bibliography:

1)      “Flying Cheap.” Frontline. PBS, 09 2010. Web. 22 Nov 2012. <http://www.pbs.org/wgbh/pages/frontline/flyingcheap/etc/croncolgan.html&gt;.

2)      Interview by Miles O’Brian. “Crash of Flight 3407: And the Dangers of Flying Regional.” Youtube. . Frontline. 03 2012. Web. 22 Nov 2012. http://www.youtube.com/watch?v=DYcLq8z8KoM.

3)      Pfeffer, Jeffrey, and John Veiga. “Academy of Management.” Academy of Management. 13.2 (1999): 37-48.Print.http://www.jstor.org/discover/10.2307/4165538?uid=3739808&uid=2&uid=4&uid=3739256&sid=21101336890023

Exhibit 1 is on the PDF

It is a copy of the confirmation tickets for one of the crash victims.  Everything says continental except for the very small print.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s