Is outsourcing good for travelers?

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By Christopher Elliott

If you think the outsourcing and off-shoring of American jobs has gone too far, you might think twice before flying on United Airlines.

The carrier recently fired 220 airport employees and as of Oct. 15 will be contracting its ramp and customer service jobs at airports from Albany, N.Y., to Tucson, Ariz.

“While these were difficult decisions, we must continually look for new opportunities to run a more efficient and financially sustainable business,” United spokesman Luke Punzenberger says.

Outsourcing a minor passenger irritant

But is outsourcing really so awful? The reflexive answer among consumer watchdogs is: of course. They say it creates shoddy products, frequent service failures, and, naturally, forces you to speak with incomprehensible agents in offshore call centers.

No question, laying off United employees is a horrible situation. It’s also a problem for industry apologists who make the ridiculous claim that airline mergers don’t result in handing out pink slips like Halloween candy. Those airline fanboys live in a fantasy world.

But for passengers, working with a subcontractor is often only a minor irritant. Geno Gruber, an ad executive from Chico, Calif., and a United frequent flier, tried to check in for a recent United flight at Washington’s Dulles International Airport. He says an outsourced agent kept asking for his passport, even though none was required.

A mixed bag of convenience and controversy

“He made the simple task of checking a bag really difficult,” he says.

One of the worst airline outsourcing incidents happened last summer, when the parents of 10-year-old Phoebe Klebahn accused United of losing their daughter when she flew from San Francisco to Traverse City, Mich., via Chicago O’Hare. The angry parents, who were frequent fliers, blamed United’s babysitting subcontractor, who they say had failed to supervise the unaccompanied minor. The airline claims it never lost Klebahn’s daughter and delivered her to her destination after she missed a connection.

United isn’t the only airline engaging in outsourcing. It’s a safe bet that US Airways and American, which are hoping to merge, are already seeking ways to shed employees. Outsourcing touches every aspect of the travel experience, from the moment you pick up the phone to book a ticket and hotel room, until you collect your luggage at the airport. Everything from the crew on your next flight to the nanny at your hotel may be handled by a different company. In most cases, the experience is so seamless that you don’t even know about it, and when something goes wrong, the company promptly takes responsibility for it instead of blaming a vendor.

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Customer expectations

Do travelers care if the baggage handler doesn’t work for the airline?

Well, no. They’re only upset when the baggage gets lost by the subcontractor – an important distinction that outsourcing critics conveniently overlook.

Gruber says United should set a minimum customer service standard for all its employees and contractors.

“If you can outsource without falling below your benchmark, that’s great,” he says. “If you fall below your minimum standards, then outsourcing has gone too far.”

That makes sense, and United says that’s exactly what it’s doing.

Differing perspectives on outsourcing

“We continue to hold all the vendors who serve our customers to the highest standards,” says United’s Punzenberger.

Some within United doubt that. Marilyn Reynes, a United customer service representative in Albany who is about to lose her job, says the airline simply decided to outsource because it could get away with it.

“United no longer cares about service,” she says.

I searched far and wide for examples of customer-hostile outsourcing in the travel industry and was surprised when I came up empty-handed.

One hotel subcontracted its housekeepers. Another resort hired a company to handle its activity center. Airlines routinely contract with outside companies to handle airport service, catering and maintenance. Travelers are none the wiser.

The potential of aggressive outsourcing

Maybe, just maybe, the travel industry hasn’t taken outsourcing far enough. Other industries have done more aggressive outsourcing, unobstructed by unions and labor agreements, leading to bigger savings. If you work for a technology company, you probably already know the benefits of hiring a third party to handle some of your work.

In information technology, companies save between 6% and 20% by outsourcing, according to one survey. (The travel industry may have taken self-service too far.)

Travel companies, and particularly airlines, need to hold the subcontractors accountable for their service instead of pointing fingers when something goes wrong. Practically speaking, that means you shouldn’t delay your frequent fliers with silly questions. Oh, and try not to lose their kids. (Here’s our guide to resolving your consumer problem.)

As long as their level of customer service doesn’t go into a tailspin, customers will stay on board.

Is outsourcing good for travelers?

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Christopher Elliott

Christopher Elliott is the founder of Elliott Advocacy, a 501(c)(3) nonprofit organization that empowers consumers to solve their problems and helps those who can't. He's the author of numerous books on consumer advocacy and writes three nationally syndicated columns. He also publishes the Elliott Report, a news site for consumers, and Elliott Confidential, a critically acclaimed newsletter about customer service. If you have a consumer problem you can't solve, contact him directly through his advocacy website. You can also follow him on X, Facebook, and LinkedIn, or sign up for his daily newsletter.

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