American Airlines Chief Commercial Officer, Virasb Vahidi, has apparently been given the task of promoting the idea that American Airlines be allowed to farm out more flying to regional airline partners which is currently against the contract AA has with the Allied Pilots Union.

American wants the ability to send flying up to 88 seats out to regional partners using as much as 255 aircraft (50 to 70 seat flying is limited to just 47 aircraft right now) or 50% of the mainline fleet, whichever is greater. 

Of course it does.  Because this is what makes it competitive against airlines like Delta and United Airlines who already have the ability to access regional airlines for that kind of flying.  The concept of right sizing aircraft to demand is perfectly sane and I would go so far as to say it is way overdue for many airlines.  All too often, we’re seeing high frequencies of 50 seat (or less) jets to destinations that would be better served with 2 or 3 frequencies of a 70 seat jet. 

But I have to ask a question:  Am I the only one who sees the continued farming out flying to other entities as a stop gap measure?  At the end of the day, it feels economically inefficient compared to simply being able to operate the aircraft you need to operate within a consolidated infrastructure at labor rates that make sense.  When do pilots and other flight crew recognize that it really is no difference to fly an Embraer E-170 for a regional at a lower pay rate than it is to accept flying that same aircraft for a mainline airline?  And, in fact, the ability to upgrade via the seniority system becomes easier, no?

Let me suggest something radical here for American Airlines and its unions:  Bring it all under the AA roof and negotiate competitive pay rates for each class of aircraft based on seat count.  Be smart and pay a living wage and consolidate the flying into something more rational than what exists today between other regional and mainline airlines.  Be aggressive and find those savings in the forms of productivity, employee reward and using one infrastructure to win against the other SuperLegacy airlines. 

Mind you, this requires unions such as the APA to concede that low pay rates are required for small, regional flying and productivity gains are necessary to beat the competition.  This requires AA to recognize that it has to reward its employees for those productivity gains and for accepting those lower entry level pay rates.  That’s pretty radical for both parties. 

It seems to me that regional airlines all to often are killing themselves over contracts for flying using airliners that are just stupid to use in this economic climate.  40 seat Embraers are still being used simply because of scope clause contracts that leave airlines no other choice.  It artifically raises the cost of tickets and leaves those same regional airlines stuck with aging equipment that has no value on the used market and which is unreliable for the flying its being asked to do today. 

I’m suggesting sanity and I realize that suggesting that in the airline industry is foolhardy on many levels.  But . . . airlines figured out capacity control.  They figured out some revenue enhancements via a la carte pricing.  Why can’t unions figure out how to grow jobs and provide more stability for its work force overall?

Consider the impacts to a regional airline pilot who is new to the business.  Under the current systems, this guy may bounce around several times and each time he/she starts anew at a regional airline or mainline airline, they start at the bottom.  Wouldn’t be nicer to enter into one seniority system, enjoy a relatively stable if fairly low income in a relatively stable base with an upgrade path that can span your career.  Isn’t that worth giving more productivity and accepting the lower wage given the quality of life and quality of work improvements that come along with that? 

I would suggest that if AA wants to really compete and by AA, I mean both management and labor, why not get radical and try something that takes competition to another level?  If you do, you potentially cut down SuperLegacy airlines at the knees on the cost side and win more business which translates into potentially far greater profits.  Imagine just how nervous Southwest Airlines gets with that kind of productive, rewarding system showing up in its own backyard?

First you have to show up at the negotiating table with an attitude of wanting to embrace a real change on both sides.  Trust is needed and trust has to be given.  This can’t be about who gets to screw who.  It’s got to be about two parties coming together to save their asses against all others.  That requires a bold move in these days.

Filed under: Airline Fleets by ajax