As a result of recent changes in contracting at Southwest Airlines, critical, front-line passenger service and safety positions – jobs like wheelchair assistants, baggage handlers, and plane cleaners – are now being performed by workers employed by low-road, irresponsible contractors with a troubling history of legal and regulatory violations.
At the same time, the airline is facing increasing legal, regulatory and political scrutiny in a number of areas of its core business.
- In California, Southwest’s multi-year contract as the State’s “preferred provider” for travel for public employees is being scrutinized by elected officials.
- As Southwest Airlines supports a major new terminal development project at LAX, the company’s aggressive approach to cost-cutting for contracted workers may threaten to undermine needed public support.
- And, just as the airline’s oversight of contracting out of critical services is being questioned, the airline is also facing scrutiny on a national level with regard to the airlines’ extremely close relationship with Boeing, including its role as a lead customer for the 737 Max.
Southwest Airlines and Its Passengers Rely on a Contracted Workforce
While 83 percent of the airline’s direct employees are members of a union[i], there’s no LUV for the primarily people of color and immigrant workforce that carries Southwest customers’ luggage, assists Southwest customers who need wheelchair assistance, cleans Southwest plane cabins and secures Southwest’s safety checkpoints. These subcontracted staff played a critical role in bringing in Southwest’s $2.5 billion in profit last year, but in airports across California contracted subcontracted workers have no voice on the job and at Los Angeles International Airport (LAX), Southwest fired their union contractor and took away workers’ hard-earned seniority, quality health care, and their seat at the table.
Southwest Hires Irresponsible Contractor at LAX with Troubling Legal and Regulatory Issues
In Los Angeles, Southwest replaced a long-term, union contractor with S.A.S. Services Group. S.A.S. owners have been cited for nearly $1,000,000 in wage theft at LAX[ii], and settled another wage theft case for $450,000 for employees in San Diego in 2018.[iii] In addition, according to documents received from a recent public records request, the company has been cited by airport staff at LAX 18 times for violations that include operating a vehicle “not in a sound and mechanical and safe condition” and “violation of LAX rules and regulations and/or airport security plan.”[iv]
Southwest’s Contracted Workers in Denver Raising Alarm with Regard to Training, Voice on the Job
Denver is also a key airport in Southwest’s network. But some wheelchair assistants for Southwest’s contractor, Prospect Airport Services, say they are being asked to do things like handle checked firearms without proper training.[v]These workers, employed by Prospect, also say they are required to work repeated shifts handling oversize luggage, without training or fair compensation.
“As a wheelchair attendant, I ensure the safety and mobility of passengers navigating our busy airport,” says Medina Adem. “On top of that responsibility, my coworkers and I have been forced to move oversized baggage and luggage containing firearms, jobs we were not hired to do nor trained to do. With a union, we would have a voice on the job to call for the training we need to keep DIA workers and travelers safe.”
California’s State Travel Program: Southwest’s “Preferred Provider” Status Called Into Question
In 2017 alone, Southwest Airlines received more than $41 million in revenue when public employees flew on the airline on travel arranged through the State Travel Program. But, the State’s contracts under the State Travel Program are set to expire on June 30, 2019 and Southwest’s role as a “preferred provider” is being called into question.
Last month, SEIU United Service Workers West – which represents more than 7,200 airport service workers in California’s major airports – released a report that questions whether Southwest should continue to be the “preferred provider” under the program. The report proposed new standards for workers (both direct and subcontracted) and oversight for companies awarded the contract.
In response, California State Senator Maria Elena Durazo, who chairs the Senate’s Budget Sub-Committee on State Administration and Central Government[vi]said,
“It’s not acceptable for any amount of public money, let alone millions of taxpayer dollars—to be used in any way that drives down worker standards, costs employees their healthcare, pushes workers beyond their reasonable limits and increases turnover at the airport. We know the companies that benefit from the California Travel Program—including Southwest Airlines—can do better.”[vii]
Southwest Needs Major Expansion at LAX; Labor and Political Issues Create Risk
Los Angeles International Airport is a critical base for Southwest and the airline is supporting a major new terminal expansion. The proposed expansion will require a future environmental analysis[viii]and faces significant community opposition and will require broad political support to move forward. Upon announcement of the plans, the Mayor of neighboring El Segundo expressed concerns and vowed that the City “will use any strategy necessary to protect our residents.”[ix]
As discussed above, Southwest’s passenger services contractor at LAX has a troubling record, , including significant financial settlements for wage theft allegations. , At the same time, the Los Angeles Mayor’s Office has made investigating wage theft a priority and signaled his commitment to the issue by created a new City office, the Office of Labor Standards (OLS)[x]. Mayor Garcetti has spoken strongly of the importance of airline-contracted workers at LAX and said that recent legislation was designed to ensure that “the gains made as a union aren’t undermined by those seeking to cut corners.”[xi]
Investors may well ask why, with California’s central role in role in the airlines market and at a time when Southwest wants to grow at LAX with a major terminal expansion[xii], one of its top ten airports by departures, Southwest management is taking such an aggressive, risky approach to contracting its passenger services.
Does Southwest’s Exposure to the 737 Max 8 Crisis Point to the Need for Additional Oversight?
Southwest is also facing additional regulatory and operational concerns related to the company’s all-Boeing fleet and its role as the “U.S. Launch Customer” of the 737 Max 8. In 2016, Southwest Co-Founder Herb Kelleher described the partnership between Southwest and Boeing this way: “I doubt that there’s any relationship like it in the history of the airline industry.”[xiii] Southwest Airlines CEO Gary Kelly has also spoken about the close relationship that the company had with Boeing during the development of the new model, explaining that Boeing had originally wanted to design “an all new airplane.”[xiv]
In April, after the Southwest Airlines pilots’ union met with the FAA to discuss issues with the 737 MAX, SWAPA President Jon Weaks noted the “advantages and disadvantages of an airline having a single fleet and having aircraft from only one manufacturer.”[xv] His memo notes that Congress delegated much of its oversight authority to Boeing and that Boeing “will, and should, continue to face scrutiny.”[xvi] But, given Southwest’s close role in the development of the 737 Max 8, it is possible that scrutiny will fall on Southwest as well. Southwest, which has an outstanding order for hundreds more Boeing 737 Max aircraft, may also have ongoing operational concerns related to the grounding of 737 Max 8.[xvii]
[i]https://www.sec.gov/Archives/edgar/data/92380/000009238019000022/luv-12312018x10k.htm
[ii]California Division of Labor Standards Enforcement, Office of State Labor Commissioner, Wage Citation #100076, 10/20/2014, Total Amount of $21,700 in civil penalties, $853,384.37 in wages and premium amount assessed, and $88,122.20 in liquidated damages. Total is $963,206.57.
[iii]Notice of Entry of Final Approval Order and Judgement, Luis Encarnacion vs. SAS Services Group, Case # 37-2017-00026726-CU-OE-CTL, California Superior Court, County of San Diego December 14, 2018
[iv]S.A.S Services Group Citation Report, 2/1/2016 – 2/28/2019. Received via public record request from LAWA.
[v]Interviews conducted with Denver Airport wheelchair attendants employed by Prospect Airport Services.
[vi]https://sd39.senate.ca.gov/news/20181221-senate-leader-atkins-announces-committee-assignments-2019-2020-legislative-session
[vii]https://www.facebook.com/UnitedServiceWorkersWest/posts/10156438003874842
[viii]https://www.latimes.com/local/lanow/la-me-ln-lax-expansion-new-terminals-20190405-story.html
[ix]https://www.latimes.com/local/lanow/la-me-ln-lax-expansion-new-terminals-20190405-story.html
[x]https://www.lamayor.org/mayor-garcetti-signs-historic-minimum-wage-increase-law
[xi]“Eric Garcetti Stands with Airport Workers”, YouTube Video, Posted 10/26/2015, Accessed May 9, 2019. Quote is at roughly 1 minute and 54 seconds.
[xii]https://www.latimes.com/local/lanow/la-me-ln-lax-expansion-new-terminals-20190405-story.html
[xiii]https://theaircurrent.com/airlines/737-max-grounding-tests-boeing-southwest-relationship/
[xiv]https://airwaysmag.com/special-flights/the-737-max-era-begins-at-southwest-airlines-but-with-a-spoiler-alert/
[xv]https://www.aviationpros.com/aircraft/commercial-airline/news/21076329/737-max-crisis-prompts-southwest-pilots-to-question-its-allboeing-fleet
[xvi]https://swaparesources.s3-us-west-2.amazonaws.com/assets/190412_LeadershipUpdate_Boeing_MAX_Update.pdf
[xvii]https://www.bizjournals.com/dallas/news/2019/04/18/southwest-airlines-boeing-737-max.html