Scope, RJ's and unions

[Publishers]

disagree

We would probably never agree on this one.

I also want to state that this is not a Delta issue, it is all of them. Big carriers have big momentum in a direction, big cultures, big labor contracts, big equipment contracts covering long periods of time.

This is what makes them vulnerable to small efficient operators who only have an interest in one segment of the business.

In the end, scope clauses will have proved little and been mostly counter productive to all parties to them. As that and labor are the things most important to these boards, that is what we talk about but there are other equally important long term issues like gates and slots etc.

In your contracts, you are trying to protect and guarantee your place in the system you want when in fact that may no longer be feasible. It is difficult to have that as an objective and yet recognize that there are a number of things that could make all that go away including your own objectives.

Boeing workers want job guarantees for life. What would happen if no one bought aircraft one year. The very guarantee would break the company and the guarantee would have led to the demise.

This is a gross overstatement I know but a valid example.

 

[goldentrout]

Csmith

You say, "The market realities are that Delta is bleeding money right now. The reason they are bleeding is that they have let their business become inefficient. They have relied on the business traveller to support their flawed business plan, and subsequently taken hits during recessions and prospered during growth. Check the history. It is all there. Labor unknowingly has gone along with this by taking pay cuts during the bad times and large raises in the good times. Hence the cycle. They never learn. Why should labor continue to take it in the shorts when they have the leverage, management continues to take their bonuses, and management continues to follow the same flawed model. "

I agree 100%. So what management is currently doing is fixing this by using planes/pilots that can still make money for the company.

So Delta is apparently doing what you suggest...changing their business plan to be more in line with revenue, and to compete with the low cost carriers.

With the reality that the revenue stream will be significantly decreased with this new business plan, how do you propose that Delta continue to pay it's current overhead based on the current business plan, when it's going to change to a lower cost/lower revenue business plan?

As for why there are only 300 pilots as plaintiffs on the RJDC...that's because a) many people do not want to be financially liable for the lawsuit b) some are afraid of being blacklisted by ALPA. Know though that 95% of the guys/gals are 100% behind the RJDC, and contributing money, though maybe not officially on the plaintiff list.

A few Questions

1. How is Delta going to continue to pay its current overhead (including employee compensation packages) with a business plan that has significantly less revenue?

2. Why won't "one list" work, where everybody at Delta comes in at the bottom and starts on the RJ. Yes, there are always "integration problems," but pilot list integration has been done before. One pilot group of 13,000 or so pilots...everbody starts at the bottom...people come and go based on seniority.

It's really a simple concept...someone just has to have the vision and guts to make it happen.

As for your concern that mainline guys would take a compensation hit...the solution to that is pay protection. Whatever your making on the day of integration...you keep that salary as long as you remain in your current position. When you change, you fall under the new pay system (which I'm sure would still have most mainline pilots making well into six figures). This way you have a choice. You can keep doing what you want and keep your pay protection. If you choose to change your position, then you fall under the new compensation package.

3. You didn't address my question about Frontier/Air Tran and the way those pilot groups took a pay cut to help out their fellow pilots. You say Mullen hasn't asked you for concessions...I ask you why your MEC hasn't offered some temporary concessions to keep 1000 or so of you guys on board. The guys at Frontier and AirTran did it...that's a brotherhood.

You're big on facts...let's do some math.

For discussion, I'm foing to say Delta has 8500 active pilots averaging about $13,000 in salary a month. So the pilot payroll at Delta per month (salary only) is about $110,000,000.

Let's say you've got 1000 guys on furlough. These are guys with 1-2 years with the company. Their total compensation package...health care, insurance, b-fund, etc., probably runs the company $9000/month. That's $9,000,000/month...that's 8% of $110,000,000. You all would have to (or could at least offer up) a temporary 8% pay cut to try and keep all your people on board.

Let's see how that translates into dollars for Delta pilots.

1. For the top 777 Capt with 30 years, making $21,845/month, he'd have to give up about about $1750/month. Throw in some lost per diem, and he's out about $2,000 a month.

2. A 12 year 737-300 Captain is out $1260 in salary. With lost per diem he's out $1500/month (that's my current total monthly salary by the way).

3. A 6 year FO in the 757. He's out $930 in salary, with lost per diem about $1,200 per month

4. A 3 year 737-300 FO. He's out $730 in salary, with lost per diem about $1,000 a month.

So it looks like the average pilot at Delta would have to give up $1,000-2,000 a month to keep eveyone on board.

If, at my company, after good faith negotations with mangement, the only alternative to furloughs was an 8% paycut, with conditions to bring salaries back up based on improving economics...I'd do it in a heartbeat...so that my fellow pilots could pay their mortgage, their car payments, just continue to live.

They did it at Frontier...they did it ar AirTran...again I ask why it isn't being proposed/won't work at mainline?

I'm not accusing anyone particluar pilot of anything, but as a whole this is just flat out greed and selfishness...
I have what I have...I earned what I have...it sucks for the guys on furlough...but I'm not willing to give up a dime to help my fellow pilots." You said as much,

"I will do everything in my power to keep them all the way they are. Not looking for sympathy. Not giving any either. I earned it. "


I've got to put this forward, because it really is the crux of the issue.

Here's something to think about...your pilot group got what they have by some hard work, some luck, and maybe, just maybe by some blesings from the big guy up above. I would suspect that what you "earned" could just as easily be taken away from you in a heartbeat (literally).

Somewhere along the way on the road of good fortune, your pilot missed an important road sign. It said,

"I've blessed you with great fortune and opportunity. I've given you much more than you need for food, clothing, and shelter. I expect your to use some of the blessings I've given you to help you fellow man (read fellow pilots)."

The arrogance here is that you all think you have a God given right to what you have...but you have no responsibility to use the blessings you have in a way that benefits your brotherhood.


"I will do everything in my power to keep them all the way they are. Not looking for sympathy. Not giving any either. I earned it. "


Without sounding too judgmental..I'd say that those in your pilot group who share this same attitude really have lost perspective on what's truly important in life.

Matthew 6: 19-21

"Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where moth and rust do not destroy, and where thieves do not break in and steal. For where your treasure is, there your heart will be also."

Matthew 6: 24

"No one can serve two masters. Either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve both God and Money. "

"I will do everything in my power to keep them all the way they are. Not looking for sympathy. Not giving any either. I earned it. "

Who is your master, and where is your heart?

 

[FlyDeltasJets]

Re: disagree

In the end, scope clauses will have proved little and been mostly counter productive to all parties to them.

I could not disagree more. Scope is the single most valuable section of any contract, and the ONLY thing which has allowed us to achieve the gains that we have. While there are a few examples of scope being implemented or negotiated improperly, scope as a whole is, and always has been, extremely valuable to the piloting profession. Take scope away, and we are doomed.

 

[goldentrout]

FlyDeltaJets

Scope flies in the face of economic laws. Look at the US steel industry. They refused to innovate, lower costs, and compete in the marketplace. Now they're a mere shell of their former grandeur.

One list...with a contractual provision that ALL flying at Delta will be done by Delta pilots...no outsourcing. If the company wants to fly a plane, they buy/lease it, and a Delta pilot flies it.

Yes the size of the fleet would probably be smaller, and career advancement would be diminished to some extent. But wouldn't it be great to have a list of 13,000-15,000 pilots, all advancing/regressing in seniority order, and all Delta aircraft flown by Delta pilots.

That's the vision...now who at ALPA has the leadership and guts to make it happen?


Here's another intertesting thought (or heresy at ALPA). One seniority based Capt pay rate...one seniority based FO pay rate. It's not feasible...they do it UPS...and they've got one of the best benefit packages/stable pilot groups around. (I'll concede there might have to be a smaller pay rate for aircraft in the 40-70 seat range).

That's the vision...one pay rate that saves the companies millions of training dollars a year, and keeps people from draining the company's resources by continually searching for the next bigger paycheck.

Who at ALPA has the leadership and guts to make it happen? Cause I guarantee if they don't, market forces and airline managers will do it for us...and we probably won't like the outcome.

 

[katanabob]

Re: Re: disagree

I could not disagree more. Scope is the single most valuable section of any contract, and the ONLY thing which has allowed us to achieve the gains that we have. While there are a few examples of scope being implemented or negotiated improperly, scope as a whole is, and always has been, extremely valuable to the piloting profession. Take scope away, and we are doomed.

I think Adam Smith's 'Invisible Hand' has finally risen up and struck the industry we all happen to be tied to. As has already been illustrated in many, many posts, the existing route structure cannot be profitable given that the average traveller is no longer paying (or generally willing to pay) $800 for a domestic ticket.
Delta (or any carrier, for that matter) can try to compete with the low-cost carriers, but to be successful it requires one of two elements--Product differentiation or lower cost. The former has all but disappeared in today's world, and the latter is what kills them. However, when the almighty dollar is wielded by those whose sole concern is spending fewer dollars, even if the product *was* different, you'd still find yourself at a loss.
Unfortunately, we find outselves atop a pyramid supported by an industry which is no longer as lucrative as it once was. Economics would tell us, however, that this may very well just be a cycle and with the exit of some entities from the market, prices will once again stabilize. [JUMPING UP ON SOAPBOX NOW] This is where scope dooms Delta. Rather than embracing the situation and maximum market share (prepping themselves for an upturn in the market) the choice is to restrict expansion in the most lucrative venues available.
However, with all that said the regional pilots still must acknowledge that without some future scope-type constraint, the jobs they hope to eventually hold (those good-paying mainline jobs) won't exist anymore. With today's scope constraints, they aren't going to be there either. If mainlines would operate all their equipment under one flag, we wouldn't even be having this discussion.
Sorry for my rambling. I fully expect someone to run whatever feeble argument I have into the ground.

 

[FlyDeltasJets]

Re: Re: Re: disagree

I think Adam Smith's 'Invisible Hand' has finally risen up and struck the industry we all happen to be tied to. As has already been illustrated in many, many posts, the existing route structure cannot be profitable given that the average traveller is no longer paying (or generally willing to pay) $800 for a domestic ticket.

----Right now, you are correct. I am not willing to concede that those good times are gone forever. This is a cyclical industry, and the low fare airlines always thrive in bad economies, and the majors thrive in good. Let us not forget that DAL made over a billion dollar profit only two years ago.


Delta (or any carrier, for that matter) can try to compete with the low-cost carriers, but to be successful it requires one of two elements--Product differentiation or lower cost. The former has all but disappeared in today's world, and the latter is what kills them. However, when the almighty dollar is wielded by those whose sole concern is spending fewer dollars, even if the product *was* different, you'd still find yourself at a loss.


----------I agree. The problem is, there are airlines out there who compete primarily on their ability to offer a lower fare through lower costs. An airlines largest expense is wages, and therefore it is logical to assume that they compete mainly by paying their employees less (this assumption is supported by SEC filings). If we were to allow mgt to lower costs through concessions (which still might happen), should we not assume that our low fare competion would be forced to lower their wages as well due to their inability to compete with our schedules, routes, ff programs, etc? Where would it end? I would think that our low wage bretheren would thank us rather than criticize us for our greed. After all, it is only because we make as much as we do that they make what they do.


Unfortunately, we find outselves atop a pyramid supported by an industry which is no longer as lucrative as it once was. Economics would tell us, however, that this may very well just be a cycle and with the exit of some entities from the market, prices will once again stabilize.

-----We can only hope. If it does not, I will support necessary adjustments.


[JUMPING UP ON SOAPBOX NOW] This is where scope dooms Delta. Rather than embracing the situation and maximum market share (prepping themselves for an upturn in the market) the choice is to restrict expansion in the most lucrative venues available.

---------Fortunately (or unfortunately, depending on your point of view) our current scope places NO restrictions on expansion.

However, with all that said the regional pilots still must acknowledge that without some future scope-type constraint, the jobs they hope to eventually hold (those good-paying mainline jobs) won't exist anymore. With today's scope constraints,

----What scope constraints? I wish we had some!


they aren't going to be there either. If mainlines would operate all their equipment under one flag, we wouldn't even be having this discussion.

-------I agree 100%. I wish that those who came before us realized this. Unfortunately, they did not, nor do we have any chance of getting, as they say "All Delta flying done by Delta pilots." Believe me, I wish we could achieve this. I don't think we can for reasons I have listed many times. In lieu of this, I support
A) Strong enough scope to limit our mistake
and
B) strongly supporting any regional carrier in contract negotiations. The better they do, the less incentive mgt will have to transfer all of our flying to them.


Sorry for my rambling. I fully expect someone to run whatever feeble argument I have into the ground.

Not feeble at all. Well thought out and well stated. However, your solutions, unless I am misreading them, seem to be onelist (impossible) or lower wages (not very appealing for reasons mentioned above).

 

[FlyDeltasJets]

FlyDeltaJets

Scope flies in the face of economic laws. Look at the US steel industry. They refused to innovate, lower costs, and compete in the marketplace. Now they're a mere shell of their former grandeur.



----------Do me a favor, don't run for any ALPA position.

One list...with a contractual provision that ALL flying at Delta will be done by Delta pilots...no outsourcing. If the company wants to fly a plane, they buy/lease it, and a Delta pilot flies it.



----Great Idea. How do we get mgt to give up their massive cost advantage?


Yes the size of the fleet would probably be smaller, and career advancement would be diminished to some extent. But wouldn't it be great to have a list of 13,000-15,000 pilots, all advancing/regressing in seniority order, and all Delta aircraft flown by Delta pilots.

That's the vision...now who at ALPA has the leadership and guts to make it happen?


-------It takes more than leadership and guts, it takes a realistic strategy. That seems to be where everyone falls silent.

Here's another intertesting thought (or heresy at ALPA). One seniority based Capt pay rate...one seniority based FO pay rate. It's not feasible...they do it UPS...and they've got one of the best benefit packages/stable pilot groups around. (I'll concede there might have to be a smaller pay rate for aircraft in the 40-70 seat range).

--------I'll get back to you when I have more time.

.

 

[Tim47SIP]

So what is next?

Excellent topic! But after reading most of the replies here, I still have one question. Many mainline guys seem to feel that when times get better, their contract will go back to status quo. I can not imagine Leo or any other CEO going back to the old restrictive scope language. Is scope an industry must? You bet! But will scope go back to the manipulation of aircraft type in certain markets? Dont think so. I think that todays CEO's (especially Leo) have tasted flexibility and it's rewards. The days of restricting aircraft type to specific routes, size, miles flown, overflying hubs, etc. are close to being gone. Additionally, todays CEO's are getting much smarter and learning every day how a flexible airline can compete and ways to keep them flexible. The scope languages of today will be significantly different tomorrow. Mainline will be forced to include all of these smaller jets into their contract because they will be flying them. Operational integration will be a contentious issue with the mainline guys, so ALPA will of course re write that deffinition to keep out the regional rif raf.


My personal guess is that Delta's new Low Cost Carrier will be a seperate entity under Delta Inc., flown by (at first) furloughed delta pilots. The pay scales, compensation packages, retirements, med etc will be totally seperate from mainline contracts and look more like DCI's but with higher pay or the competitons cost structure. These pilots will not have seniority numbers at Delta (except the furloughed pilots) as management will have to keep the lists seperate to ensure that the pay stays lower. Another "Alter Ego" airline! If this airline starts to do well, mainlines real nightmare will start. Delta will replace mainline routes with the lower cost airline. Delta mainline will shrink and Express will expand no matter what mainline guys have stated in their scope to prevent this. There are many examples of ill fated scope language and you can be best assured that if management signs any type of restricive language, they allready know a way arround it if the need should arrise.

This is just a guess, not a wish. I in no way want to see the demise of scope, any reduction in quality of life for any pilot group, or the shrinking of the mainline fleet. It is just the way I see things moving along and ALPA's reaction to them.

 

[goldentrout]

Fly Delta Jets

Here's my strategy.

1. One list...we have leverge by offering a one rate Captain/FO seniority based pay scale. That saves the company millions a year on training/moving costs.
2. Pay protection on the date on list integration/one rate pay scale. Whatever a pilot is making on the date, he keeps it as long as he holds that position. If he changes, then he falls into the new pay scale, but he's able to still pay his bills based on his current budget.
3. One list/one rate will require the top pay rates to come down...and yes the potential to make $300,000 a year for a select few will go away. However, the 777 Capt making $250,000 a year will still keep his money as long as he keeps his position.

As for pay rates, let's use UPS

Capt at 12 years makes a minimum of $17,290/month, that's about $210,000/year, plus per diem, plus a B fund, plus an A-fund, etc.

Top FO makes $11,584/month, about $140,000/year, plus per diem, plus B-fund, plus A-fund, etc.

If we can't live off that kind of money, then we've got to rearrange our priorities

4. Management incentives:

1. Savings in training and moving costs
2. Elimination of scope clauses...with the condition that any Delta flying be done by a Delta pilot, no outsourcing. That way, management can concentrate on getting the right size planes to fit the right market, instead of fighting scope clauses which artificially keep oversized planes in unprofitable markets.

I don't have all the answers...but I have taken enough economics to have a basic grasp of market economics. Sure, the technical aspects of my proposals might be laborious, and I'm sure all my suggestions would not be implemented in the exact way I proposed. But something like what I'm proposing is going to have to be done, or else, as I said above, much as the US steelworker, we'll be a shell of our former selves.

 

[Publishers]

argumants

There is nothing wrong with your argument, the problem is that it does not reflect where things are headed.

The mainline carriers will use the regionals as their flexibility. They want the ability to fire, hire, move, operate and they do that through the regionals. It is why instead of one list, they will divest as Continental, their regional first or move flying around.

Scope is for the most part a dead issue for this century.