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Old 06-07-2010 | 04:22 PM
  #66  
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Default IRS "Same Desk Rule" and Mergers

Originally Posted by Justdoinmyjob
Actually, this argument has been made about Comair and before that, ASA. In the end, no, they are not employees of Delta. As much as some people want to believe it, according to the FAA and IRS, they are not employees.
Not so. After Comair was purchased by Delta, Comair pilots "hired" by Delta found they could not roll their 401k's into Delta's plans. Why? HR cited the IRS's "Same Desk Rule" which essentially says there's been no separation of employment within an "affiliated employer network."

The solution was to amend all the plans to permit plan to plan roll-overs within the same "affiliated employer network" which again, can only be done if the affiliated employers were all part of a larger entity. As further evidence of commonality, Delta's 2001 pilot agreement required Delta management to amend Delta, ASA's, and Comair's plans accordingly.

As for the rest of it, the FAA has no say over whether or not the companies are truly "separate", they only oversee operating certificates. Pointing to the separate operating certificates isn't compelling as every alter ego has its own operating certificate or it wouldn't be a potent alter ego in the first place.

Only ALPA, management, and the NMB can make such a determination and we all know where management stands. So the ball is really in ALPA's court to (1) determine for itself a single-carrier exists and (2) to make a compelling case before the NMB, unless of course it wishes to purchase management's voluntary recognition of a single-carrier.

Unfortunately, the giant dead fish on the table is the lack of poltical will-power on ALPA's part to approach Delta management or the NMB on this issue. Worse, in failing to do so, ALPA is simultaneously undermining any argument that CMR, CPZ, or MSA constitute a single-carrier as most of the NMB's single-carrier litmus tests are based principally on management's command and control.

Therefore, since Mesaba's management cannot not issue orders to Compass or Comair management, there's no way to argue Comair and Mesaba are common carriers without arguing in effect that Delta, Compass, Mesaba, and Comair are all a common carrier.

That of course is where it gets political and a big reason why ALPA is loathe to seek single-carrier determinations between "regional" wholly owned subsidiaries.
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