Tag Archives: airline pilots

We Warned PBB Readers About This: Southwest Airlines’ Pilots Vote Down Tentative Agreement

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Three weeks ago I published a letter from a concerned Southwest Airlines’ pilot in PlaneBusiness Banter. This particular subscriber is one of the Southwest pilots we go to on a regular basis to get a “read” on just what the group is thinking at any given time. The substance of his letter?

He gave readers a head’s up about the fact that if the pilots’ tentative agreement passed — it was not going to be by much. That more and more pilots he was talking to were going to vote “no” as a protest vote against what the pilots now perceive as a “lack of leadership” or a “lack of direction” both at the airline — and within the union’s leadership.

Or maybe a bit of “misdirection” would be a better term.

To put it more bluntly — why should the pilots at the airline vote for a contract that was going to put even more financial pressure on the airline that has seen its operating margins erode, its costs continue to rise, and its revenues continues to slump?

You got that? In other words, the pilots at the airline were going to vote against the contract because it was too good.

Today, the final vote tally on what would have easily been the most lucrative pilot contract in the U.S. was announced.

The TA did *not* pass. But it was close. Very close.

A little less than 51% of the pilots voted against the contract.

Our last call on the contract? I still thought it would pass — but not by much.

This is a major piece of news for those of us who are airline labor/management watchers, because I’m not sure where this one goes now — but one thing is for sure. This vote was clearly a “protest” vote.

The question now is — how do both sides go back to the table and renegotiate a contract that is NOT as lucrative or financially draining on the airline?

Yes, you read that correctly. NOT as lucrative.

And how much more aggressive will the pilots’ union leadership be (or new leadership) in pressing management for better financial performance at the airline?

Whew.

I said at the beginning of 2009 that Southwest Airlines was going to be the biggest newsmaker of the year — on the domestic airline front. Nothing has changed with that prediction.

And …it’s only June.

Here’s Official Ammunition: Airline Hubs Have Lost Their Cost Advantage In Terms of Airline Profitability

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“In 1999, there was evidence of scale economies for connecting flights. Conditioning on other variables, the marginal cost of serving a connecting passenger on a long route was $18 less than that of a direct passenger, or roughly 12 percent of the average marginal cost.

The cost advantage of connecting flights disappeared in 2006. Conditioning on other cost shifters, the marginal cost of a connecting flight was $12 more expensive than that of a direct flight. The change is probably driven by the increasing fuel cost in the sample period. Since the fraction of fuel consumed at the takeoffs and landings could be as high as 40 percent, rising fuel costs offset the benefit of denser traffic created by connecting flights.”

So says researchers Steven Berry at Yale and Panle Jia at M.I.T.

In a new working paper the two have published entitled, “Tracing the Woes: An Empirical Analysis of the Airline Industry, ” they confirm that it used to be cheaper for an airline to place a passenger on a connecting flight — rather than a direct one. But by 2006, that advantage had gone away. Why? One simple answer: the increasing cost of fuel.

According to the two researchers, “Channeling passengers through a hub airport allows carriers to increase the load factor. But it also requires extra fuel, both for the two extra landings and the longer distances passengers have to travel. The authors estimate that in 1999, the marginal cost of servicing a connecting passenger on a long route was $18, or about 12 percent, lower than that of servicing a direct passenger. That cost advantage disappeared in 2006, probably because fuel was more expensive. In 2006, servicing a connecting passenger cost $12 more and reported inflation-adjusted operating costs increased from 11.4 cents per available seat mile to 12.5 cents.”

The authors estimate that by 2006 the legacy airlines were transporting 4 percent more passengers with 9 percent less revenue and 19 percent less in profit than in 1996. And, despite the bankruptcies and mergers in the early 2000s and the sharp downturn that followed 9/11, the average revenue-passenger-miles divided by the available-seat-miles of a flight, known as the load factor, rose from 71.2 percent to 79.7 percent from 1999 to 2006. It reached a record high of 80.5 percent in 2007.

There is a summary of the paper available for free here. The entire work is available for $5. Spend the money and buy it. It is well worth the read.

Looks Like Southwest Airlines’ Pilots and the Airline Have a New Tentative Agreement

We hear from one of our Southwest Airlines‘ friends that the pilots at Southwest, who are represented by their own independent union, SWAPA, and the airline, have come to terms on a new tentative agreement.

Here is an excerpt from Carl Kuwitzky’s blog that was blasted to pilots this afternoon. Carl is the President of SWAPA.


“Last night SWAPA agreed in principle on a new five year contract with the Company through August 31, 2011. This new contract includes the following: stronger scope language as well as codeshare restrictions not previously released including no domestic codeshare, increase in pay rates including retroactive pay, increase in 401K match, improved disability program and streamlined/improved scheduling and work rule language. Additionally we have retained the Lance Captain program and ELITT albeit with changes to current language. Our Negotiating Committee (NC) is continuing to negotiate final language and when that work is completed will present a Tentative Agreement to the BoD for approval. If the BoD approves the new contract it will be sent to the membership for final ratification. I anticipate a BoD meeting in late February or early March to review the TA.”

This news comes as it was announced today that the mechanics at the airline approved their proposed TA with the airline by a 61% majority.

Delta Air Lines And Pilots Agree to Reinstate ASAP Program

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This is great news.

As I had written in PlaneBusiness Banter in December, it did appear that Delta Air Lines and its pilot union were close to coming to an agreement which would see the airline reinstate its Aviation Safety Action Program.

This morning the airline announced just that.

From the airline’s release:

“Delta Air Lines (NYSE: DAL) has signed a memorandum of understanding with the Air Line Pilots Association (ALPA) and the Federal Aviation Administration (FAA) to reinstate its Aviation Safety Action Program (ASAP) covering pre-merger Delta pilots. The revised program mirrors an existing Northwest Airlines pilot ASAP program.”

In addition to the reinstated pilot ASAP, Delta has formal ASAP programs in place for its dispatchers and Technical Operations employees, and other safety reporting programs for flight attendants and ground employees. Delta also will continue ASAP programs currently covering pre-merger Northwest pilots, dispatchers and load planners, and other safety reporting programs for its other workgroups.

This means that almost 17,000 employees of the airline are now covered by some form of voluntary safety reporting system at Delta.

Excellent news. Just makes me want to do a little happy dance outside. Only problem is that if I did, I’d probably fall on the ice and break a limb. So — happy dance will be postponed until it’s a little warmer. (Yes, I’m at the Dallas-Ft.Worth branch office this week.)

We have two more major airlines and their pilots groups to beat into submission in regard to ASAP participation. And we all know which two airlines I am talking about. American Airlines and US Airways.

And no, as I told my PBB subscribers not too long ago, I’m not going to shut up until the last two stragglers are back in the fold. ASAP program participation is too valuable to all concerned.

Reader Comment on United Pilots’ Stand on Aer Lingus Deal

Tough crowd out there today.

From the inbox:

“You are not serious about this whiny crap from UA pilots are you?”

Heh.

Let me put it this way. Given what is going on at the airline — I would have expected the airline to have at least discussed this “innovative agreement” with its pilot union before it was announced. At least.

Actually, I’m more interested in an arm-wrestling contest between Ryanair’s Michael O’Leary and United’s Glenn Tilton.

I’d pay big bucks for that ticket.

American Airlines Presentation From Monday

For those of you with inquiring minds, you can access the presentation that American Airlines made to the negotiators for the Allied Pilots Association by clicking here.

Meanwhile, as far as the APA is concerned, they told members yesterday,

“NEGOTIATING UPDATE: After a nearly seven-week break, formal negotiating sessions with AMR resumed this afternoon. According to the National Mediation Board mediator-directed agenda, AMR’s negotiators were slated to offer specific counters to APA’s responses to portions of management’s latest scheduling proposal. To our disappointment, management had no scheduling proposals or responses to discuss. In fact, they were not prepared to conduct bargaining on any area of the contract.

In a subsequent caucus with the NMB mediators, APA discussed the current status of negotiations. Bargaining was suspended and another day was lost because AMR was not prepared to negotiate, did not adhere to the agenda, and was not held accountable by the NMB. They continue to ignore the NMB’s direction and agenda, are non-responsive to APA proposals, and refuse to discuss major issues such as compensation, stagnation and furlough protections.”

As one of our longtime AMR/APA watchers observed this morning, “APA’s version has nothing about walking out or the Powerpoint slide show. That said I think both sides are getting their ducks in a row for the new sheriff coming to town in January.”

American Airlines and The Allied Pilots Union: Ugly, Ugly

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Trebor Banstetter over at the Ft. Worth Star-Telegram reports today that things got a little heated at a meeting yesterday between the negotiators for American Airlines and pilot union representatives.

AA blasts union, pilots walk out

Officials with American Airlines gave a presentation to federal mediators Zachary Jones and Mike Tosi yesterday that criticized the pilots union for its approach to contract negotiations. The presentation accused the union of refusing to negotiate, pushing for an impasse (which would allow the union to strike), and ignoring the economic realities of the airline industry. It’s strong stuff, and far more aggressive than most of the airline’s public comments about the talks with pilots, which have made little progress after more than two years. Shortly after beginning the presentation, union negotiators “opted to leave the session,” according to the airline.

Don’t you just love the holidays? The season brings out the warmth and the joy in everyone, wouldn’t you agree?

Follow-Up on Southwest Pilots Case of “Codeshare Blues”

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Earlier this week I talked about how I had been rather inundated with emails from Southwest Airlines’ pilots (and other employees) concerning the airline’s announced codeshare agreement with Mexican carrier Volaris.

Since that time, the email bag has continued to fill up.

Now, not only am I hearing from pissed off Southwest pilots, I’m hearing from other Southwest pilots who tell me, “Well, if you have the highest paid pilot group in the country, what do you expect Gary Kelly to do?” One Southwest pilot wrote me, “You can’t have it both ways. We are blessed with the contract that we have and have had. But reality is what it is. And if the airline can fly shorter-haul routes more cheaply using pilots from other airlines — guess what the airline is going to do.”

So both sides of the argument are making their voices heard.

But even one Southwest Airlines‘ pilot who talked about how the pilots should not be surprised, given their current compensation level also acknowledged that “Gary blew it.” A lot of the comments coming into me this week have talked about how after negotiating an agreement as part of the continuing negotiations between the airline and the pilots on a new contract that would allow codesharing — that Gary apparently then went back to the union again wanting to renegotiate the deal — and this is where things have now begun to unravel. Meanwhile, the airline stepped up and announced the codeshare with WestJet this summer.

And then there are pilots from other airlines. The notes from you folks tend to go something along these lines, “It’s about time the guys at Southwest joined the rest of us. Welcome to the club.”

As for the pilot union at Southwest, SWAPA president Carl Kuwitsky said in a letter issued Wednesday,

“While this announcement is yet another step in previously announced plans by the Company to form multiple codeshare alliances, it leaves a very unsettled feeling with many in our pilot group including your SWAPA leadership. In fact, it is very problematic for me personally and as a leader of our pilot group. Codeshare has the potential to severely affect the career of all pilots on our seniority list. At a time when our Company has stated publically that we are not planning to grow in 2009, we have embraced yet another codeshare partner who will benefit significantly from the codeshare partnership by experiencing double digit growth while our pilot group experiences negative growth with the capacity reduction in January. I cannot support these efforts and the cost to our pilots. Our Company needs to be committed to growing Southwest Airlines, not codeshare partners.

Volaris is mostly an unknown to our pilot group and your leadership. It is a two year old carrier with 19 Airbus 319/320 aircraft. They serve 23 cities in Mexico focusing on smaller satellite airports. One very troubling aspect to this announcement is that our Company is risking brand dilution by association with an unknown carrier. Our Company’s experience with ATA via a codeshare agreement resulted in numerous customer service and operational problems that reflected poorly on Southwest Airlines which adversely affected our brand. Additionally, when ATA went out of business, thousands of customers were holding itineraries sold by Southwest that could not be completed. Clearly the association with ATA reflected poorly on our Company. While Volaris may turn out fine, it does nothing to satisfy membership angst over potential brand dilution due to poor customer service or operational issues, especially when we could do some transborder flying and completely control our brand image. As employees all of us have worked very hard to build what we know as Southwest Airlines. We take great pride in our Company and what we have built. Our Company has a great responsibility to maintain that positive brand image. I must say that I am dismayed that the Company would risk its image by associating with such a young, unknown carrier.”

This contract should have been wrapped up way before now. But it has now dragged on so long that the airline is looking at simultaneously trying to negotiate three major employee contracts at the same time. While the airline is now watching previously agreed upon sections of the pilot contract apparently go poof!, the TWU, which has been negotiating a new contract for ground workers at the airline, just asked, along with the airline, for the National Meditation Board to help in those stalled talks.

Then there are the flight attendants. Negotiations continue between TWU 556 and the company on a new contract there. Not much progress has been made as far as we can tell. According to the union’s website, “…it is clear that we are still far apart on our Economic Proposals….”

Southwest Airlines Announces Codeshare And Some Pilots Are Not Happy

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Today we have a new subject to talk about.

Well, I guess the main topic is a familiar one. Pilots who are not happy with things that management is doing for, er, to them.

But in this case, the players on the playing field have changed.

You may have read the news release yesterday in which Southwest Airlines announced a new codeshare agreement with Volaris — a Mexican airline.

In the release Monday, Southwest said that the airlines will coordinate flight schedules and reservation systems, allowing Southwest customers to book flights to Mexico using both carriers. Volaris currently serves cities including Mexico City, Tijuana, Cancun, Guadalajara, Mexicali and Acapulco.

But wait just a minute.

Who stands to lose potential flying if the airline goes ahead with this codeshare agreement, as well as the agreement already announced with WestJet?

That’s right. Southwest Airlines’ pilots.

Today the PlaneBusiness email box has received more than a fistful of emails from Southwest pilots who are not happy campers. To say that this is an unusual occurrence would be a hefty understatement.

Here is an excerpt from one of the longer notes:

“In really simple terms, and feel free to use it (just don’t credit me, a bit of a witch hunt going on here), it should not be called Code Sharing, but Outsourcing.

[Southwest CEO] Kelly and SWAPA negotiated a codeshare (outsourcing) agreement in the new contract during the initial current negotiations. This was about a year ago. He stated publicly that even though it had not been voted on, that he would honor that agreement. He has since come back to our negotiators and said he wants to re-negotiate that portion of the new contract. Meanwhile, he is doing all the codesharing (outsourcing) he can while he “slow rolls” our contract negotiations.

WestJet has announced 15% growth after our agreement with them.

Volaris says they will double in size.

Kelly cut 6% of our flying.

Now the rumor is that Republic is negotiating with Kelly to take over our short haul intra-Texas flying.

I am a 20+ year guy and am really disgusted with what is going on here. I spent several years at a Lorenzo airline and am seeing parallels that I thought would never happen here. The line employees realize they are just numbers to Kelly.”

Where is the LUV?

Yes it’s now been two years and counting and there is still no new contract between the pilots and the company. From the sound and tone of the notes we received this morning, it sounds like maybe the tone from the pilots’ side has just taken a little turn towards a more defensive posture.