Examiner.Com has a story about Delta wanting to hire an additional 1000 flight attendants starting in June 2011.  There are quite a few things that I think people ought to be ware in this story.  For instance, Delta has already received over 85,000 applications for these jobs.  For every one opening, 85 people are available to fill it. It’s a highly competitive field for jobs even in the best of times.

Flight attendant with 12 years of seniority at Delta who flies about 75 flight hours* a month earns roughly $41,000 a year.  In other words, a college graduate who wins this job can expect to earn that after 12 years of rather hard work.  These days, we don’t treat teachers that rough.

Want the better advantage in winning this job?  Then speaking Japanese, Mandarin Chinese, Dutch or Spanish will help a lot.   With the exception of Spanish, those aren’t language skills that are common or easy to acquire. 

In addition to that, only the candidates who are exceptionally personable, conscientious, and physically able are going to even get past a first group interview. 

While it’s more possible to hold some kind of line at Delta with junior seniority, there are some airlines where flight attendants fly reserve** for a decade or more before being able to hold a line***.   That means a decade of working the unknown every month. 

And that $41,000 per year is income that has to go towards paying for the expenses involved with working a job that requires one to be away overnight regularly and a job which does not supply even a meal despite being captured in the air sometimes for more than 12 hours per day.  So you get to earn that $41,000 / year after 12 years while your hungry and without snapping at pushy customers.

In the base salary, at most airlines anyway, you get to pay union dues.  Those dues pay for someone to represent you with the company in contract negotiations that involve your compensation for the future.  Contract negotiations that can go on for as much as 4 years but which average at least 2 years before a resolution is reached and voted on. 

Yes, people actually want these jobs.  Lots of people want them.  Yes, you get flight benefits but those flight benefits are traveling for free on space available basis.  Let me point out that load factors on aircraft are at historically high numbers.  In other words, the chances of getting to use that flight benefit are less than ever before.  It’s a benefit that has marginal value at best these days.

Yes, any job you choose should be done right and done cheerfully.  It is the job.  But before we cast stones, let’s remember just what comes with this job and be a bit more tolerant of those servicing us when we fly.

*  Flight hours aren’t how many hours flight crew work.  Flight hours are the hours you work (and get paid for) essentially from the time the door closes on an aircraft to the time it opens again.  A crew member who works 8 flight hours in a day may end up working a “real” 12+ hours in a day. 

** Flying reserve means that you are to make yourself available to fly a flight to replace another crew member with little notice.  Some forms of reserve require you to sit at the airport wait to be told where you are going with as little as 30 minutes notice.  Other forms require you to be at home, near a phone to take a flight with as little as 2 hours notice.

*** Holding a line means that a flight attendant gets to bid for a certain group of flights and have some knowledge of what they’ll be working for a month.  This changes from month to month and the best “groups” of flights are held by the most senior flight attendants.  It can take 25 or more years to be able to fly the best “groups” of flights. 

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Southwest Airlines’ flight attendant union has come to a tentative agreement on introducing the larger 737-800 into the SWA fleet.  By all I can see, this is a reasonable agreement  and reached in what has to be nearly an all time record time even for SWA.  When this originally came to light a bit over a month ago, there was rampant speculation (even on my part) that SWA made this public in order to cajole a recalcitrant union.  Now, the agreement has been reached and SWA is still working with their pilots who, if anything, should have even less of a problem agreeing to the addition.

So what was the fuss about?  Perhaps this once it was what the flight attendant union said it was.  They were contractually obligated to talk and they really saw no large obstacle to making it happen.  This just doesn’t feel like there was a real conflict brewing.  Suddenly it feels like the pilots might be hemming and hawing over this. 

Actually, I doubt even that.  Perhaps SWA and its unions will have complete agreement in a few weeks and make their order with Boeing.  No one yet has found a reason why adding the -800 is a bad idea for SWA.  Yes, there will be a slight change in the number of FA’s on these aircraft and, yes, it will add a slight level of complexity for managing scheduling.  However, the benefits are bigger and this potentially gives SWA a chance to find out if they’re ready to go to another level in the future.

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The pilots of Continental and United Airlines have decided to throw a whopper on the table and see if the stink gets them anywhere in their negotiations for a unified pilots’ contract for the proposed ContiUnited merger.  They want an end to all outsourcing of flights.  In other words, they want ContiUnited pilots to fly all the flights.

Never. Gonna. Happen.

Pilots want job security and I can’t blame them.  The investment in both time and money towards their career makes them much more tied to an airline to earn a living than most people experience in their lives.  The seniority system just compounds that issue for them even more. 

But airlines aren’t going to agree to eliminating regional airline partners for their flying.  They can’t.  It isn’t economically viable at the labor rates insisted upon by unions of these legacy airlines.

Each part could give a little on this.  Regional airlines don’t offer just cheap pilots.  They offer flexibility and less expensive flight attendants and even less expensive maintenance.   Both parties need to find a way to offer employees better job security in exchange for more competitive costs.

Given that this is most important for pilots, it seems to me that the SuperLegacy airlines might be better served by “leasing” not only their aircraft but their employees to these regional airlines in down times.  In other words, craft an agreement that allows the SuperLegacy pilots to displace the regional partner pilots when their laid off.  Lease those pilots at the regional partner rate and, at the least, preserve some job security. 

It’s one way to work within the seniority system.  A system that, frankly, pilot unions are using to make their membership become indentured to airines.  It’s a system that I disagree with but if you must preserve it, at least find some flexibility within it.

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The Transport Workers Union of American Airlines has rejected 2 out of 3 contracts that were being voted on.  Only the “Technical Specialists” guys accepted theirs and before you think that’s something positive, let me point out that a total of 78 members voted on that particular contract.  Rejection by the other two groups also includes a strike authorization.

What that doesn’t mean is that there is going to be a strike.  First, an impasse has to be declared and that is probably, at minimum, months away.  The two parties will enter into negotiations again and we’ll see what happens after that.

Laura Glading, president of the Association of Professional Flight Attendants, decided to chime in applauding the contract rejection and describing the pathway to success as a “struggle” against American Airlines.  Frankly, I really don’t think using language from the 1930’s and adopting an extremely loud and hostile stance towards anyone is going to get anyone anywhere. 

Regardless, I think American has a problem.  Virtually all of the unions are nowhere near agreeing on a contract and even though none of these negotiations appears very close to being declared an impasse, it does present risk to AA as a going concern.  These negotiations will only get tougher if American begins to earn quarterly or full year profits.  A great any of these unions represent frontline employees and embittered or angered employees don’t make for a successful customer service product. 

Even with AA’s recent executive reorganization, I don’t see any positioning being done to get these contracts concluded so the airline can go forward.  Ironically, the one group that has some appearance of perhaps being ready to get  a deal done are the pilots who’ve been waiting the longest to get a deal done. 

Both sides could stand some new leadership.  Sadly, I don’t see much evidence that that is going to happen.

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The American Airlines pilots union, APA (or Allied Pilots Association), has new leadership now and the President of that union, David Bates, is already sounding like someone far more reasonable than his predecessor, Lloyd Hill.  Bates acknowledges that to recover all the salary cuts given years ago is not possible to do in one fell swoop.  That’s a signal of a willingness to find some common ground in an agreement.

However, I remain concerned about a few things.  First, this continues to be about salary above anything else.  I understand that there continue to be pilots who are resentful of not earning a pre-2001 salary today but it seems unproductive to focus only on that. 

A better approach would be getting quality of life improved in return for productivity gains in the next contract.  I know of a blog written by a pilot who has spent 11 years at AA and the best he can do is hold a reserve line as an FO on the MD-80.  That has to be highly unsatisfying to him and others in the same position.  

One complication is American’s focus on its core cities:  LA, New York, Dallas, Chicago and Miami.  Those are very expensive cities to live in with the possible exception of Dallas.   Finding a better way to avoid longer commutes and longer duty days that occur day after day might just help pilots feel a bit more satisfied.  While these pilots get to ride aircraft for “free” to their duty stations, there are a number of associated costs that come with that option that are paid for by pilots.  Little things like food or a crash pad or a hotel room.

In fact, I’ve never understood why an airline like AA doesn’t offer some sort of accommodations in its large base cities to help with quality of life issues. 

Finding a way for a pilot to do his duty hours, get to and from home reasonably and otherwise be a productive member of the crew would go a long way towards making pilots feel appreciated.   If this approach was offered, pilots should take a long look at it instead of just counting dollars up.

One comment I’ve read does bother me.  Bates made the comment that many of these pilots families “had to pull their children out of school.”   What the hell?  It’s poor form to complain about taking your children out of school when that can only possibly mean you took them out of PRIVATE SCHOOL.  Sorry but a lot of people have had to readjust that way and you won’t get much public sympathy for not being able to afford private school for your children.

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The Chicago Tribune has THIS story on American Airlines and their desire to lower the amount of fuel being carried as reserve on an average flight.  In short, AA has discovered that it is carrying an excessive amount of reserve fuel on the average flight.  What’s excessive?  Some aircraft are landing with almost twice the amount mandated by the FAA and let me point out that the FAA is a pretty conservative organization.

Predictably, American pilots see this as an instrusion on their authority and a dangerous path.   But is it?  Currently, the FAA mandates that you have 45 minutes of fuel reserves and that’s worked very,  very well over the years.  Interestingly enough, American itself requires 65 minutes of fuel reserves but the aircraft are landing with an average of 92 minutes of fuel reserves and that’s a problem. 

Why?  Because when you carry more fuel, you burn more fuel to carry that extra weight.  All American wants to do is get their average down much more closely to their mandated reserve number of 65 minutes.  Doing so would save them the cost of carry 30 extra minutes of fuel, which over the course of a year in a fleet of over 600 aircraft will translate into millions of dollars of savings. 

Captains, traditionially with final say on what fuel they’ll require for a flight, say that this is an intrustion on their authority and potentially puts them into the position of being reprimanded or fired if they do it too often because the airline wants pilots to justify extra fuel by filling out a form.   I think the pilots union would love for this to be another bone of contention between pilots and the company. 

However, every airline should be doing this for a variety of reasons.  First, we really do know how much fuel a typical flight should carry and we know that by route and model of aircraft and the process for figuring this out is genuine science and genuinely accurate.   Airlines do *not* want their flights to routinely lack enough of fuel that causes diversions, trust me.  Every flight that has to stop and refuel represents a flight that just lost a spectacular amount of money.

Does AA’s form make the process potentially punitive?  Yes, I think it does and I think it should.   American’s pilots are, quite literally, the best, most experienced pilot corps in the world.  The fact that AA’s average has gone up to 92 minutes of fuel left upon landing is shameful for those pilots.  They should be nailing the company average 10 months out of 12 and they’re not getting close.  So, yes, I think pilots should justify loading more fuel and if they’re inappropriately loading too much fuel, yes, I think they should be counseled on that too. 

Just like any other employee today in America’s workplaces who is wasteful and inefficient.

There are legitimate reasons to add additional fuel before leaving.  If an airport is particularly congested or experiencing long delays, a pilot will add extra fuel for taxi purposes.  If a flight route suddenly has developing weather crossing it, a pilot may add some additional fuel to fly around the weather.  There are other legitimate reasons as well and there is no reason why pilots can’t simply document their reasons for increasing their fuel reserves on a particular flight.

US Airways did this a couple of years ago and, yes, a few pilots were sent for extra training and counseling after repeatedly adding more fuel than necessary for flights.  Ultimately, US Airways and the pilots came to an agreement on how to work out those conflicts and the airline now saves money by meeting its reserve goals (also in excess of FAA minimums). 

This conflict is a union conflict, not a safety conflict.  More than a decade ago when fuel prices suddenly rose significantly, all Southwest Airlines had to do was communicate to their flight dispatchers and pilots that they needed to save more fuel and suddenly better, more fuel efficient altitudes were being planned and pilots were being exceptionally aggressive in requesting higher altitudes and more direct approaches to airports to save that money.  Safety wasn’t compromised and millions of dollars were saved.  If American has the most experienced crew of pilots, Southwest probably has the second most experienced crew.

At the end of the day, saving this money is essential for success in the airline world.  Pilots not only shouldn’t be pushing back on this idea, they should be embracing it and working even harder to find places for their airline to remain competitive.

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One of the biggest problems with how union leadership gets elected is, in my opinion, that those who do get elected generally do so on the platform that is most aggressive.  Whoever promises to fight for more than the other guy generally wins provided he or she can also appear to look aggressive too.   As a result, unions are led by the vocal minority and that leadership almost never represents a voice of reason.  Without a voice of reason, it’s extremely difficult to get an agreement in place.

American Airlines pilots have new union leadership.  Lloyd Hill is being replaced by David Bates and I got a look at what they’re promising. Mind you, union promises are like any other political promises.  No one expects all of them to come true but they are a gauge of just how much the elected has boxed himself into a corner.  Terry Maxon at the Dallas Morning News has written THIS aviation blog entry.  And here is a quote from the Dallas Morning News that is a quote of the Bates team:

Pay – Restoration, including retro plus annual raises plus permanent COLA raises after the amendable date. Scope – Protection and recapture of flying at both the top and bottom end of our fleet mix.

Stagnation – Mechanisms to deal with FO stagnation including a higher percentage of Captain’s pay.

Sequence Protection is the norm in the industry. Pilots should not be financially penalized because of marketing decisions, earth quakes, volcanoes, hurricanes or other planetary events.

Reserve – Our reserve system needs a complete overhaul. We need a system pilots can live with.

Vacation – Increased credit for vacation.

Sick – Enhanced sick provisions for pilots.

Pension – Pension protection for all pilots on the seniority list.

Profit Sharing – The economy is improving. APA should return to a profit sharing plan that mirrors the one management has for themselves.

 

NEVER . . . GOING . . . TO. . . HAPPEN.

In fact, if this is the negotiating position going into talks with AA, I foresee many more long talks taking place.  I think the pilots (or some other union) really wants a strike with AA.  They want a precedent for restoring that long lost pay and the pilots think they can set that precedent. 

AA cannot afford to give in on issues like that.  The productivity of pilots and flight crew compared to other airlines is already pretty bad.  Restoring that pay means the end of AA.  Management cannot meet those demands.  They cannot get close to meeting those demands.  To even arrive in the same state much less the same ballpark on those demands would mean the end of AA. 

Even worse, AA loses in any strike action that shuts down the airline.   I would guess that AA could survive, at most, 10 to 20 days of a strike and that’s it.  There are no resources available to assist them with keeping the airline in the air.  Not like British Airways has done (While BA seems like a “huge” airline, it’s actually a pretty small airline in terms of fleet size.  BA has about 250 aircraft total.  AA has considerably well over 600 aircraft.)

There are reasonable union leaders out there.  Delta’s Lee Moak is one.  Continental’s ALPA leader, Jay Pierce is pretty reasonable.  Those men have recognized the fundamental changes in the industry and they understand that a return to status quo not only isn’t going to happen, it isn’t in a pilot’s best interests to happen. 

And then we have Lloyd Hill giving way to David Bates & Team.  American Airlines let all of these talks go on for too long.   To have one union after another all lining up eager to be the one who “sticks” it to the airline is not a good position to be in.  To have so many labor contracts in talks at the same time is not a good position to be in.  AA is literally standing in a big hall staring at all the other unions who are each independently and cooperatively are determined to A) stick it to the current management team and B) win back  pay levels that were unsustainable 10 years ago and remain unsustainable today.  And those unions have both the power and, more importantly, the anger and fury to shut down the airline. 

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British Airways flight crew union, Unite, has signaled that it will ballot its members for another strike action against British Airways.  The date and conditions of the latest work action, if approved, are not yet determined and BA itself has no comment since it has not yet received the ballot notice.

This is a dangerous path for both the airline and the union leadership.  So far, the strike actions haven’t had nearly the impact that Unite would desire.  On the other hand, the sticking point(s) seem to revolve around union membership who lost travel benefits by participating in the strike.   BA offered to restore those privileges before the last go around but only at “entry level”. 

I have to say that while this strike action by Unite has struck me as ill-timed and poorly led over the issues, BA’s position over the travel benefits is senseless at this point.  It punishes membership (i.e. employees) instead of having an effect on the union leadership itself and it is the one thing that seems both petty and punitive at this point.  CEO Willie Walsh would be well advised to put full benefit restoration back on the table if only to assist in closing a deal and to avoid any more damage to morale.  It’s a small point and if Unite wants to crow about it, let them.  At the end of the day, any sensible person will realize who “won” in this fight.

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 Update (16:30 CDT):  Spirit has now cancelled flights through Thursday.  No signs of any reconciliation between the pilots and the company.

Spirit Airlines pilots went on strike starting with flights on Saturday and the latest news says that flights are cancelled at least through Wednesday.  So far,  I cannot discern that any resolution is imminent either.  Since Spirit serve a very small portion of the US and since manyof its flights are Caribbean and Latin American in nature, the President will not be calling an end to this strike and bring both parties to a table. 

This has got to be hurting Spirit badly financially and from what I hear, they don’t have a whole lot of cash on hand to withstand the strike.  In addition, Spirit made some noise in the days leading up to the strike that they would try to cotinue as many flights as possible using either management pilots or through hiring other airlines to fly their routes.  Not only did that not happen, it doesn’t appear as if there were any plan of any kind to do this.  It isn’t good to lead your customers on like that.

The pilots wants a “fair” contract and, in this case, fair is what the other guy is earning.   But who is the other guy?  Is it a Delta pilot or an Airtran pilot?  A Southwest pilot or a jetBlue pilot?  The current offer on the table brings Spirit pilots to about par with Airtran and they still don’t like that.  It is notable that Airtran pilots aren’t even happy with that anymore as they’ve had a strike authorization vote recently themselves. 

In addition, another part of the offer gives these pilots a minimum 0f 4 days between trips and that is kind of unprecedented as a part of a contract and, to me, seems to be a huge quality of life gain.  At the end of the day, I can’t figure out what would make the pilots happy (they sure aren’t talking specifics in the public media) and I’m beginning to think that Spirit’s management can’t figure it out either.  Unless it’s just a whole lot more money than on the table right now.

If so, then I think there are going to be two losers in this strike.  Spirit is privately owned and while they’ve made a profit, the owners aren’t interested in pumping more money into the airline than they already have.  These are venture capitalists and those guys know that sometimes its best to pull the plug and find something else to do with the assets.  Spirit’s management doesn’t have anything to lose by remaining steadfast with their current offer.  If they offer more, they’ll likely become unprofitable (this airline really is an Ultra Low Cost Carrier) since part of their model is keeping costs like labor and fuel as low as possible.  If they become unprofitable, the owners will likely pull the plug there too.

Spirit pilots are high risk for losing their jobs . . . permanently.  There are only so many days that Spirit can survive before it declares bankruptcy.  Once it does, it isn’t likely to come back in some form and that means those pilots now have to restart their careers somewhere else.  It is notable that there isn’t a whole lot of hiring going on among airlines these days.   To a certain extent, you have to accept that when you work for a LCC or ULCC, you’re not going to earn premium salaries no matter who you are and no matter what is happening elsewhere in the industry.  Rising to Airtran standards seems not too bad all in all particularly when consider the quality of life issues that are also getting addressed.

Yes, the pilots have been trying to amend their contract for over 3 years.  Yes, that seems like a long time.  No, it really isn’t a long time when you look at pilots and their negotiations at other airlines.   Is it fair to take so long? No, not in my opinion but that is the fault of the Railway Labor Act, not the airline(s). 

In this situation, I think a bird in the hand is a whole lot better than a pink slip and I think that pink slip could arrive as early as this coming Friday.  Spirit has some cash but the owners are wise enough, I suspect, to realize that preserving that cash is a better idea than it is to hold out against a long strike.

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A federal appeals court overturned a federal district court ruling granting an injunction to the America West pilots who were dis-enfranchised when former US Airways pilots balked at an abritration ruling during the America West / US Airways merger that integrated seniority in a manner that more “blended” the seniority lists. 

US Airways pilots wanted a “date of hire” integration whereas the America West pilots favored a “blending” of the two lists.  Since seniority is everything at an airline, the US Airways pilots felt they had a lot to lose.

This has been going on now for 4 years and, frankly, I believe the US Airways pilots have not only done the America West pilots a disservice, they’ve hurt themselves as well. 

The original arbitration was done “in house” by ALPA between the two unions for each airline.  It was to be binding and while it didn’t settle everything to everyone’s satisfaction, it was as about as fair as one could get in such a situation. 

America West pilots shouldn’t be materially harmed by a merger when it was, after all, their company taking over US Airways.  Likewise, US Airways pilots shouldn’t be “stapled” to the bottom of the list at America West.  The original ruling did neither.  America West pilots weren’t significantly harmed by the initial ruling and, hey, US Airways pilots got to keep their jobs.

It is arguable that without the merger, US Airways would have likely gone into their third bankruptcy and they would not have survived.  Further, America West management corps has done quite a credible job of managing an airline that, among legacy airlines, is probably at a material disadvantage. 

US Airways pilots didn’t like the initial ruling and decided to form a new union for all pilots.  Since they had a  slightly larger number of pilots between the two groups, they got a new union (US Allied Pilots Association) certified and America West pilots rightfully didn’t like that and sued.  Using larger numbers like that was dirty pool.

This new ruling basically says that USAPA hasn’t materially harmed the America West pilots yet and, therefore, should be allowed to negotiate on behalf of all pilots until there is harm.  In essence, they (the court) said “Hey, this is a bit premature.”

I couldn’t disagree more.  Intent on the part of USAPA has been clear from the beginning.  They want a date of hire seniority list and now they have the ability to go negotiate such a deal.  Those negotiations with US Airways are liable to take 2 to 4 years before an agreement is in place.  In other words, it could be 2 to 4 years before these America West pilots can “prove” harm.

The rationale being used is, in my mind, flawed with respect to timeline, etc.  There was already a union (the same union for both airlines) certified at the time.  There was binding arbitration.  If arbitration isn’t binding, then what is it?  Allowing the original agreement to be nullified by establishing a new union with a slight majority of votes is just plain wrong.  

Who wins?  US Airways, of course.  They get to continue to pay pilots according to agreements that have been amendable for a long time at lower pay rates than much of the industry and a dollar saved today is worth 2 dollars tomorrow. 

Who loses?  Both parties to this disagreement.  They are looking at another 2 to 4 years before an agreement is in place and if that new agreement is based on date of hire, there will be another court battle that is likely to overturn that agreement.  Then you can tack on another 3 to 4 years to resolve that dispute. 

When everything is done, these pilots are looking at as much as 12+ years to settle this.

The fair settlement is a blending and everyone gets together and negotiates a new contract and gets that done in 2 or 3 years.  Then everyone earns more. 

A 12 year timeline potentially devestates senior pilots at both airlines who will retire before that conclusion. 

The best conclusion would be for pilots on both sides to get together, toss out the existing leadership in favor of a blending and then get to work on getting that new agreement asap.  Sadly, I don’t think that will happen.  The intransigence on the part of US Airways pilots is just to fixed for them to be moved into a real compromise.

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With the news that US Airways and United are in merger talks, the subject of mergers and industry consolidation among US airlines has been reheated to a high temperature again.  For the past several years, there has been a lot of talk about the need for consolidation among airlines in the US in order to return to profitability and there are many advocates (such as Doug Parker and Glenn Tilton of US Airways and United respectively). 

New fees seem to have brought in additional revenue but no one can seem to really claim that it has changed the equation for earning a profit for airlines.  Advocates say these new fees are helping airlines find a path back to earning a profit and I certainly think that experimentation with these fees isn’t over. 

Oil is always a frequent component of profitability.  Soaring oil prices just two years ago nearly brought several airlines to their knees but also brought huge profits to other airlines who engage in hedging their fuel costs.  I don’t think anyone would disagree that a more stable oil market would not only benefit the airlines but a lot of other industries.  The wide oscillations of fuel prices have brought a big element of uncertainty to many parts of the economy. 

I’m not sure consolidation is really the answer, however.  Frankly, I think one big mistake of the 1990’s and 2000’s is that we have permitted airlines to go through bankruptcies (some multiple times) and reorganize themselves rather than being more insistent on a liquidation or two.  It’s politically difficult to do so because liquidating a large legacy airline means tens of thousands of people suddenly becoming unemployed. 

Yes, the airline industry is a network business to a large degree and network businesses can do better if they grow larger and capture more market share.  I question how viable that is over the long term without restructuring other legacy costs as well.  I think it is a nice, immediate answer and certainly offers short term (2 to 5 years) gains in share prices but there are other issues that need to be decided as well.

Seniority is king in the airline business and I’ve really come to believe that that is a huge obstacle to health for many airlines.  Airlines have to compete on price in the market place but are not allowed to compete on salaries in the employment market place.  Union contracts based on seniority are killing many airlines.  Mind you, that isn’t to say that airline employees don’t have legitimate issues too, they do. 

Airline employees are expected to quite literally work for poverty wages for years before starting to earn a real family supporting wage and then finally make it to a level for their last 10 or 15 years of work careers where they earn extremely generous wages for the exact same work that a junior level employee does for a salary that is unable to provide modest life.   This disparity has to stop.  Entry level wages should be higher and senior level wages should be lower.  Airline crew should be able to move between airlines without having to re-set to the lowest wage scale again.  We have enough airlines in this country that it is somewhat absurd to believe that a strike at one major airline threatens the national economy.  It doesn’t.  Airline employees deserve to be able to agree on a contract in a much more timely fashion.  Failing to do this results in an even greater tenacious hold to seniority since it is the only thing that raises wages.

LCC airlines have managed to remain profitable and grow but only by keeping their business model flat with respect to equipment and staff.  This allows them to keep productivity high and prevent creeping wages based on a structure that makes weight and distance the prime factor in pay.   Actual work loads and skill sets are secondary in paying flight crew. 

No, I’m not sure we need more consolidations and mergers and, frankly, I don’t think such things would substantially raise airfares given that LCC’s are pretty adept at spotting opportunities and entering markets.  Virtually the only thing that keeps them from certain routes is legacy airlines holding monopolies on airport space or slots.   Even then, those LCC’s are very good at looking for ways around those problems to gain a foothold.  Notice how vigorously Delta and US Airways are trying to keep Southwest Airlines from gaining more slots in NYC?

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Have I missed something in the pay of flight attendants?  Are there flight attendants running around and purchasing 10 bedroom McMansions on their salary?  Are Gucci and BMW their favorite affordable brands?

I am baffled at how there can be so much resentment towards flight attendants and their pay.  If you looked at what  the annual take home pay was for a real worker bee at *any* airline, you’d wonder how the airline manages to hire people.  They make many teachers look well off.  I’m not exaggerating. 

So why is everyone so resentful of flight attendants wanting a living wage?  In particular, I’m calling out those airline enthusiasts who love to pretend that flight attendants are bred for serving them and who believe anything less than perfect service (and they, the enthusiast, define perfect) just serves up a reason why flight attendants are underpaid. 

A 25 year AA veteran flight attendant doesn’t earn what en entry level administrative assistant earns at my company. 

Regardless of who happens to lead a union and what drivel they may promote, surely we can all agree that flight attendants (and gate agents, etc) aren’t overpaid and perhaps, in light of pretty significant rise in the cost of living, could use a raise.

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It would be easy to see my two previous posts as anti-union but, in fact, I’m really just anti-stupid and anti-selfish. The primary issue I have with most airline unions is that they have leadership that stands for election on the basis of “getting more” no matter what the present airline industry climate is. The best strategy, presently, for that leadership to remain in power is to promise and fight for short term gains.

I firmly believe that both airline management and airline unions would be far better served by contracts that span a far longer term (7 to 10 years). These contracts would fall into term periods that would most likely contain both up and down cycles in the business. Management is better served by having long term, predictable costs to plan for and union leadership would be able to make a better argument for the well being of their membership in that each party recognizes that the long term success of the business supports the long term financial security of the employees.

Airlines suffer such exaggerated cycles because it is so difficult to diversify an airline company with other counter-cyclical businesses. The business strengths of an airline do not necessarily carry over to other industries. However, it is possible for an airline to perform a kind of business diversification for itself by diversifying its route and customer structure. Several airlines such as Delta, Continental and Northwest have recognized that by increasing the percentage of their business (and revenue) that derives from international travel tends to balance against their domestic business. Accordingly, they’ve worked hard to adding new, fuel efficient aircraft and flying new long haul routes to mitigate against domestic conditions that rarely align with the rest of the world.

This means the business model is changing and that requires a certain cooperation from airline employees. It means that pilots may have to fly longer trips but that can be balanced by requiring fewer trips over a certain period. It means that airlines likely need to measure this “balance” for their employees over a 90 day period instead of a traditional 30 day period. But that can benefit an airline employee as well. Having a route schedule planned for 90 days means that employee can make better personal decisions about their lives and how to accommodate their work.

Many of the work rules in place at large legacy airlines derive from the 1950’s and airline travel in the 1950’s was vastly different. Airline travel in the 1990’s is vastly different now too. Wiping the slate clean and negotiating a contract that provides for flexibility (on both sides), economic security (for both sides) and which addresses both the existing business model as well as the evolving one would be of huge benefit to both parties.

Unions mistake the need for increased productivity per dollar spent as a call to eliminate jobs in this industry. It isn’t. Increased productivity means being able to use a mechanic to work a variety of aircraft or being able to use a pilot for a variety of routes. It means re-arranging the job functions and duty times to provide for financial growth, not to simply eliminate jobs.

Many legacy airlines have let their employees down in one area in particular. Leadership. An airline is best served by a CEO who is, first and foremost, a leader. That CEO should no doubt be served by an executive team who excels at management but a leader “leads” all the employee groups with some common goal and with some harmony. In fact, many legacy airline unions often call for more “leadership” on behalf of their employees and I believe it is no hollow wish.

Find a successful airline, today or 30 years ago, and you’ll most often find an airline being run by a leader. American Airlines employees used to refer to former AA CEO Bob Crandall as a Son of a Bitch but they also acknowledged that he was *their* Son of a Bitch. Former Continental CEO, Gordon Bethune, did not architect Continental’s rise from the ashes of bankruptcy through financial management alone, he did it by working very hard at re-aligning the goals and interests of his employees with the airline’s long term success. He worked to make things both flexibile and financially rewarding.

It comes as no surprise that many United employees are badly demoralized and disillusioned with their leadership. That executive team has found ways to reward itself during bankruptcy, after bankruptcy and in spite of poor financial performance while tirelessly grinding away at the financial security of their own front line employees. Shareholders would be wise to structure financial incentive packages that only reward and retain airline executives who deliver financial and service performance.

The Continental executive team has proven at least 3 times in the past 15 years that it can turn a profit while treating their employees humanely and their customers with great service. The same is true of Southwest Airlines (who I note does have some of the longest term union agreements in the industry.)

If an airline executive doesn’t wish to remain a CEO if he doesn’t get millions in financial incentives each year whether the airline performs good or bad, then he (or she) really isn’t the best choice to lead the airline. Airlines are a business whose success can only be measured over a fairly long duration of years. Indeed, if you look at the financial results of legacy airlines just this year, there is no argument for ever investing in the business.

The airline employee is the front line service delivery mechanism for an airline. It isn’t the plane, it’s the people staffing the airline that provide that discriminator for choosing one airline over another. No airline in the US can afford to discriminate on price alone anymore. Southwest, a low cost leader, recognized that a few years ago and now has begun offering a more differentiated service product that is more attractive to the business traveler. It is critically important for airline management to get over itself with this idea that airline employees are commodity. They aren’t. They are the prime service provider for customers and customers really do notice and differentiate on that experience more than anything other discriminator (aircraft choice, etc.)

Filed under: Airline Service by ajax
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The pilots of both Delta and NorthWest Airlines have approved a new joint collective bargaining agreement according to CNN.  This is likely the biggest obstacle, labor-wise, to this merger although I do think that there is potential trouble when it comes to the flight attendants of each airline.

You see, Delta’s flight attendants are not unionized but they do enjoy some of the best pay, schedules and working conditions of any of the legacy airlines.  NorthWest flight attendants, however, are highly unionized and have not traditionally been very management friendly.  No doubt, some of that enmity is earned.  From time to time, there is a movement to unionize Delta FAs but it always results in a no vote with only about 1/3 of their FA’s ever voting for a union.

In this new matchup, it is quite likely that Northwest flight attendants will move to organize under the new company structure immediately and they themeslves have a physical majority over the total number of Delta flight attendants.  See where this is going? 

Delta, particularly the current leadership, needs to go to great lengths to try to head off that move for two reasons:  First, they just gave a very handsome deal to the pilots and flight attendants are going to want to share in that wealth.  Second, they currently enjoy unprecedented flexibility that allows them to work much more closely with the flight attendants on things like scheduling and other work rules.  That flexibility rewards both parties presently but a pro-union/anti-management organization will cut deeply into Delta’s ability to maneuver in today’s business climate.

I don’t hold out much hope for Delta though.

Filed under: Airline News by ajax
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