Originally Posted by
BenderRodriguez
Block hour modification question for discussion. I am hearing the pro TA people espousing the virtues of this in the event of a downturn and somewhat admitting that in a positive environment it is not as good as the language we have now (Although they come up a little short of saying exactly that.) In a sense I agree with them that if AF/KLM stops flying 747s and replaces them with 330s (kind of like what we are doing) that the block hour metric is better because we wouldn't have to start parking routes. 2 things come to mind on this.
When we pulled down flying in the Atlantic, AF/KLM did not which is primarily what resulted in the company being out of compliance. What this tells me is that our contract is not binding on AF/KLM, but rather only to the company's response to how THEY operate. This can be good, but more often than not is is a detriment to our Atlantic flying. First the bad.
We saw this in the form of our pulling down Atlantic flying with no reciprocity from AK/KLM. The other shoe would be if AF/KLM pulls down flying and then DAL "honors" our contract and does the same with OUR flying. Why should DAL be bound to do this? More importantly, why WOULD they want to? Honestly, I can't find any reason why they would unless there is something in the way the revenue sharing works out that because of our costs it is less profitable to DAL to carry more flying on our side of the ledger. Maybe that explains why we didn't continue to match the AF/KLM flying instead of pulling it down.
If we go to this block hour thing, we still have the same basic problem in that nothing we do will affect AF/KLM's operations, and what we have now done is given the company an out to drop our portion immediately to 49% with no upside guarantee. They say that "there is nothing to prevent the company from flying more than 50%" but there is nothing to compel them to do so either. As a matter of fact, since we are probably more "expensive" than AF/KLM pilots, that would make the margins from shared revenue from AF/KLM bigger than the portion of profits that DAL must share with them. In other words, (and obviously), doesn't it make more sense in a revenue sharing contract to have the lowest cost entity doing the lion's share of the work? Since we would have "the richest contract in aviation" that most certainly wouldn't be us.
So how do we fix this?
I think contracts that only allow the one way check valve to work in a downward vector are doing nothing for us in this regard. Notice I said "only" Those check valves need to ratchet UP our share of the flying rather than allow it to go down. We currently are flying (53%) of the block hours in this arrangement. Why do we open the valve and allow that number to go down, immediately? Take the snapshot, and keep it where it is. From this point forward, we fly 53% of the block hours. If AF/KLM stops flying across the Atlantic altogether, too bad for them. We ratchet up to 100%. This contract is about OUR interests, not AF/KLM's interests. I couldn't care less about them any more than I care about AAL or SWA.
Just my 2 cents.
The EASK metric and the 1.5% bandwith from 50% were put in our PWA to protect our downside as well as capture upside.
The concept is valid and works.
Because of our fleet makeup compared to the Europeans, the EASK metric hurts us when JV flying is pulled down and benefits us when JV flying is increased.
- The Europeans smallest gauge on the Altantic is the 330.
- Their biggest gauge is the A380.
- Our biggest gauge is the 747.
- Our smallest gauge is the 757.
Even if Delta switches to all 330 flying across the Atlantic we have an advantage using EASK because every A380 is worth two A330s.
Unless Delta buys A380 or 777-300s to replace our 747s on Transatlantic routes the current EASK measurement will gain us more than the block hour measurement.
Over the past few years, capacity has been increased across the Atlantic by all players, but once again Delta is lagging 2-4 times behing the rest of the industry when it comes to capacity growth.
With our current agreement this approach of flat to tepid growth becomes untenable. Every year going forward Delta will be out of compliance, not just because our growth laggs the European JV partners, but because we have accumulated a 3-year EASK deficit. Switching to Block hours now, negates the protection our current agreement provides and discards this accumulated EASK debt.
We just finished a 3-year lookback and 1-year cure period on March 31 2015. Going forward every March 31 is where our current PWA language finally pays off. We have an annual look-back. And every April 1 we look-back 3 years to see where we're at.
We just had to wait 4 years to make use of our PWA language the company ignored. If we switch the language now, and allow a new 2-year window to open, (1 year look-back, followed by 1-year cure) we will have to wait until 2017 before we can use the new language. With the company's track record and the grievance settled for $30M it would be legally and financially imprudent to change the agreement now. The $30M alone is the equivalent of a 1.2% pay increase and we even have the past precedent to show when it comes to future grievances. If you're really counting, that 1.2% also needs to be backed out of our 2016 and beyond C2015 pay rate increases.
Switching to the new TAJV block-hours metric and measurement will:
- Discard our accumulated past EASK flying debt
- Locks in our disproportionate block-hour downside from the EASK metric
- Fails to capture our disproportionate block-hour upside from EASK
- Opens a new 2-year compliance window
- Prevents future annual grievances and the associated financial benefit for Delta pilots
If you need any more evidence to see that this is a bad deal, take a look at what category the instructor LEC rep puts this in when it comes to pros and cons. Then look up what function he held prior to being LEC rep (hint codeshare).
Last thought:
The current EASK language in our contract was hard fought for. We had to give some things up to get it. If we don't let it work as intended we lose both the upside from our current language and the quids that got us the language.
Cheers
George
P.S. As for Alitalia, tht's just a distractor. Delta is on record saying Alitalia stays in the TAJV with a 2022 expiration date. The 2017 pull out is for the European JV Alitalia has with AirFrance on inter European routes.