"Money for Everybody”
In addition to the TA’d sections, the LOAs and MOUs, and the Grievance Settlement Agreements, a few sweeteners have been added in Sections 3 (Compensation) and 5 (Traveling Expenses). First, there is a 3 percent increase to the hourly pay rates in the first year, and another 3 percent in the second year. I choose to use the word “increase” instead of “raise” for two reasons. First, as the number is roughly equivalent to average Consumer Price Index inflation, it only represents an ability to purchase the same goods and services at their inflated prices, not an ability to purchase more goods and services. A true raise would allow you to purchase more goods and services, not just the same goods and services at inflated prices. Second, as the date of the pay increase is moved “to the right” from October to March, the slope of the graph of our pay rates remains the same, but the line itself shifts to the right, leaving a gap in income that extends to eternity. The gap created by delaying an increase in pay rates from last October (when our current CBA became amendable, and when we would have received a pay increase based on the previous schedule) until February 2011 is ostensibly filled by the 1 percent lump-sum payment. I say ostensibly as the lump sum is calculated as 1 percent of calendar year 2010 earnings. Some of you may recall having suffered from deflated income during half of that calendar year under the implementation of §4.A.2.b. Many of you have suffered, and suffer still today from being excessed from higher-paying crew positions. I personally find it insulting that a lump-sum payment would be based on that income. But that only represents the income gap created this year. There is nothing to offset the gap which will be created next year and every thereafter as a result of shifting the date of the pay rate increases to the right.
I almost forgot about the 20¢ bump in hourly per diem. I almost forgot because it’s still well south of what our brothers in brown receive, and it doesn’t even start until July. To say the least, I’m underwhelmed. While I won’t turn my nose up at $4.80 per day, I don’t see it going very far in Narita or Paris, and I can’t see it being a determining factor in choosing to support this TA.
The Foreign Duty Assignment Letter of Agreement (FDA LOA)
Finally, the elephant in the room: the Foreign Duty Assignment Letter of Agreement. Let me begin by saying I believe having pilots geographically based in locations where we have or expect to grow large segments of our international business is a good thing, for the Company and for the pilots. We want to be in the cockpits when our freight is being flown, even between international locations which are not specifically protected by any scope language. I am in favor of growing our business, and keeping it reliable and flexible. I want to be able to respond to rapidly changing markets and weather conditions. That which makes our Company more profitable makes our futures more secure, and makes our compensation more important. That being said, Foreign Duty Assignments should not impose hardship on our pilots—we should be compensated appropriately.
This FDA LOA is a step in the right direction as far as improving the benefits to the pilots. Increases in monthly rental stipends, the addition of an education benefit, and protection against currency exchange fluctuations are big improvements for the pilots in those FDAs, and that makes them improvements for us all. The FDA re-mail program might not sound like much, but to the pilots in Hong Kong, it’s a big improvement—and that makes it a big improvement for us all. Removing the Company’s ability to inversely assign special temporary vacancy awards is an improvement for us all, finally codifying what the system chief pilot had promised us would be the policy.
The Deadhead by Surface Transportation section of the FDA LOA will no doubt be controversial. Having flown from Paris to Frankfurt and having taken the train from Paris to Frankfurt, I would, given the option, take the train. Given the limits on the city pairs where train transportation can be scheduled, and given that the deadhead on a train creates a deviation bank, I believe the section represents an improvement for the pilots. The limits on ground transportation between Hong Kong and Guangzhou (and back) and the deviation bank value of those deadheads represent big improvements for the pilots.
A new feature of this FDA LOA is a mechanism for a pilot to leave the FDA without a bid award to another crew position. Under this arrangement, a pilot can elect to leave the FDA, and the Company must provide ITU training or a base transfer date. There are only three catches. First, there has to be a junior pilot activated and currently holding the non-FDA crew position that pilot holds. If the pilot in question happens to be on the bottom of the seniority list, he’s out of luck. Second, the process can take up to 180 days to play out, and it can only be invoked after the pilot has been at the FDA for three years, turning the two-year commitment into a three-and-a-half–year assignment. Finally, from the time the pilot gives notice, six months prior to the requested exit date, until the pilot begins training or is transferred, up to 180 days after the requested exit date—that’s a year total for those of you who are counting—the pilot is restricted from participating in vacancy postings. I’m not sure if the risk is worth the reward.
Finally, I want to draw your attention to Paragraph L: Maximum Duration of Assignment to an FDA in a European Union Country and Subsequent Bidding Limitations. This paragraph replaces a short, vague paragraph in the original FDA LOA which consisted of a single sentence: “Should an FDA have a maximum stay time limitation established by the host governmental authority, the Company shall advise the Association as to how it intends to transition pilots to this restriction without abrogating seniority as articulated in the CBA.” With the new language in this LOA, we now know that such a restriction on residency does exist, and we now know how the Company intends to deal with it. Under U.S. International Social Security Agreements, the United States and “partner” countries establish “totalization agreements.” These agreements eliminate dual social security taxation where a worker from one country (the United S) works in another country (Germany) and is required to pay social security taxes to both countries on the same earnings. The “detached-worker rule” allows an employer (FedEx Express) to send an employee (the pilot) abroad (to Germany) on temporary assignment and pay only U.S. social security taxes, but it only applies to employees whose assignments are expected to last five years or less. If FedEx Express were to send a pilot to Germany for more than five years, the Company and the pilot would only have to pay German social security taxes. (In no case would they have to pay both U.S. and German social security taxes.)
This provision must be considered in conjunction with tax equalization, since both are components of the FDA LOA, but not in Section 6 of the CBA. Under tax equalization, the cost of paying German social security taxes would be transparent to the pilot—any increase in cost would be offset by “plus ups” to keep his tax burden at the same level as it would have been were he living in the United States. (Remember, that’s the whole idea behind tax equalization.) However, the cost would not be transparent to the Company. Because of tax equalization, the Company would bear any increase in cost to the employer, and the Company would bear any increase in cost to the employee. Then the Company would bear the cost of the tax equalization “plus ups.” Limiting the length of the assignment ensures that the pilot and the Company pay only U.S. social security taxes. This “maximum duration” provision, therefore, eliminates the Company’s exposure to these increased costs.
On the whole, I believe the FDA LOA is an improvement for the pilots, and I believe it is a benefit to the Company. Apart from the safety programs included in this TA, I believe the FDA LOA represents the best part of the TA.
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