US Airways Revisits Outsourcing

Gene Tinker figures his task should have been simple: Figure out what airline offers the best fares to Maine for a family vacation next summer.

Tinker, a retired packaging-products sales executive, doesn't use computers. So he picked up the phone.

In a series of calls to US Airways, though, he says he couldn't find a reservations agent he could understand.

"I could understand some of what they said, but not enough that I could understand where the conversation was going," Tinker said. When he asked to speak to a supervisor, he got cut off, he says.

Fresh from a radical makeover in bankruptcy court and a merger with America West Airlines, US Airways is examining whether it went too far in shipping reservation-agent jobs overseas this summer. Nearly all reservations calls are now answered in the Philippines and Mexico by outside companies.

Although call-center jobs continue to exit the U.S., increasing numbers of companies are reporting dissatisfaction with their outsourcing operations.

A survey released in June by DiamondCluster International, a Chicago-based consulting firm, found that the number of companies prematurely ending an outsourcing relationship doubled to 51 percent from a year earlier. At the same time, companies' satisfaction with overseas service providers fell to 62 percent from 79 percent a year before.

In the past two years, well-known companies such as Dell and Lehman Brothers have stopped sending certain calls abroad. Delta Air Lines, now trying to cut costs in a bankruptcy reorganization, ended a contract last year for one of its three Indian call centers after acknowledging "a few quality issues."

At US Airways, all reservations calls from the U.S. went to its call centers in Winston-Salem and Pittsburgh as recently this summer. But to save money, the airline offered buyouts to reservations agents, closed the 800- worker Pittsburgh center in July and slimmed the Winston-Salem work force to 450 from 800.Winston-Salem handles calls only from elite-level frequent fliers, groups and other specialty areas.

This month, in a signal that the cuts might have been too deep, the airline said it is hiring 30 agents in Winston-Salem.

In a interview with the Observer shortly before the carriers merged last month, US Airways' new chief executive, Doug Parker, said the airline would study how well the outsourcing is working.

"It's not an insignificant issue," he said. Parker noted that America West maintains reservations centers in Tempe, Ariz., and Reno, Nev., and sends none of the work abroad.

"We believe there's real value in having America West employees who care about the company and who care about our customers," he said.

Before leaving the top job at the airline when the companies merged, US Airways CEO Bruce Lakefield said the company's outsourcing was "going OK" and that there is a learning curve with any new workers. He said the carrier might not have made the move were it not for the company's dire financial outlook, which drove it into bankruptcy court last year.

Charlotte is US Airways' largest hub and home to about 5,300 of its 38,000 workers. From Charlotte, it offers 518 daily flights to 116 nonstop destinations.

US Airways started outsourcing some customer-service work last year, when it hired Grupo Atento -- a Spanish firm with operations throughout Latin America -- to take calls related to its Internet site. Those jobs were not covered under the airline's contract with the Communications Workers of America, the union that represents customer-service agents. The Web site calls are handled in El Salvador.

But when the airline filed for bankruptcy protection in September 2004, it reopened its contract with the CWA to try to save money. The union approved a proposal that offered buyouts to reservations agents and allowed the company to replace those jobs with outside labor.