AM was a bad investment for the company and I am sure that they would give just about anything to go back and undo that decision. Mexico is done for the foreseeable future. Tainted alchohol, crime, corruption, murder, cartels, caravans, nobody wants to vacation in Mexico right now. It is going to take them quite a while to recover from their newly created image.

Here is the problem with JG’s Email: if we were doing our own international (Mexico) flying and our growth was organic over the past few years, this logic would make total sense. Sure, we pull some 737/A320s off of CUN, SJD, etc. and put them on AUA, MBJ, etc.

However the tangled web that our JV has created means that we spent a significant amount of money ($620 million of OUR MONEY-because we are all stakeholders, right?) to OWN 49% of a failing product/airline. In other words Delta placed a $620m bet and as of right now they’re/we are losing the bet. Instead of playing by the house rules (JV/SCOPE complince) they just simply ignore them and then apologize later. This is not a one time event, it’s becoming accepted practice.

I like the move to the Caribbean!! I think it is a very smart move. How it was done is not OK. You cannot ignore PWA language/block hour requirements. It is not our fault that this $620 million gamble did not pan out.

 

Is all cross-border flying subject to the JV? If not, that may explain the confusion.

 

My scenario was hypothetical but follows the line of reasoning you suggested when you said it's not so bad for management to allow the balance to drop below contractual levels. I'd rather DAL didn't invest in a turd of a JV with AM, then we wouldn't have to worry about production balances. AM would be a competitor we'd crush and eventually we'd do all the flying to Mexico which the market could withstand.

 

When JG said AM has cutback over twice we have, he never said between Mexico-->USA. That could mean between Mexico and Canada/Venezuela/Brazil, or even domestic Mexican routes. He's just highlighting the demand issue in Mexico, not our JV production balance. We violated the floor because we shifted SJD/CUN flights to the Caribbean.

I'm okay with a broader global JV solution. Trying to get these sorted out one by one at the pace we're JV-ing, allows the company too much initial grace time to do whatever they want post setting schedules. Then we are working in arrears, with the company having all the incentive to drag out negotiations. In the mean time they can adjust CAPEX to not invest in our own fleet, while our JV partners ink new orders to capture the growth (with us having seats on their board no less).
If we can get more universal JV language, they will have to deal with the JV partner/fleet planning/pilots before they set the schedules. Yet if we do a global JV LOA giving the company some flexibility to shift stuff around, we'd better be careful. We need to make sure their "flexibility" is never lower than neutral to the pilots. No swapping flights to Brazil for the Bahamas, etc.

 

Spot on. Well said

 

The penalty for Delta violating our contract is not great enough to keep them from the violation..Pretty simple..More cost effective for them to violate the contract.

 

I especially loved the part in today’s broadcast where he stated they saw opportunities, thought about the PWA, then did whatever they felt like because actually going back and doing the math wasn’t important enough for them.... but PWA compliance is definitely going to be a priority from now on. This time we mean it. Hmmm

So... next question. If they didn’t bother to do the math then who discovered the violation? If it was the Union, then why no comms yet? If it was the company knowingly violating this... that’s messed up and people should be angry. If it was indifference/incompetence and discovered after the fact, well then some adult supervision needs to be put in place.

 

This^^^^^^^

VERY careful

 

Saturn,

The Delta PWA already has scope limits on codeshares new Joint Ventures. It is these provisions Delta has been violating and these provisions Delta would like to have removed from our PWA.

For brevity, I will just hit the high points.

1 E. 2. a. through c. limits how many seats Delta can sell on a partner's jet. The goal is to force Delta to fly a Delta jet when there is sufficient passenger demand to support our mainline equipment. By limiting sales to 40% of the partner's jet we deprive them revenue UNLESS that flying is done by our own jets with a Delta crew. Using an AM E190 as an example: Delta could sell 39 seats to Delta passengers on an E190. At 40 seats the flight would have to operated by Delta.

1 E. 8. Year to Year our block hours must be the same from nation to nation (Mexico to US and back) measured over a three month period AND Delta must fly 75% of the revenue share of our growth. This is what is currently short on the US-Mexico flying referenced by Capt. Graham. Mexico was a very seasonal market for us with a lot of winter and spring break flying. We under-flew the block hours compared to last year.

An argument can be made that our scope is working when it catches management not doing enough Delta flying. I do not know why we would be in any hurry to remove these requirements.

If management wants to remove 1 E. 2. a. to c. and 1 E. 8. the best way to do that is simply to negotiate the Aeromexico JV that John Malone had tee'd up in 2016. The current ALPA position is reasonable (matching what the company told the US DOJ; a flying split of 60/40 and an equal split of the growth)

 

Management is having to learn to deal with a dysfunctional union.

Traditionally we monitored and reported scope compliance using a variety of sources including our own OAG data feed. We would compare the company's data to this industry standard. Monthly reports were sent to the MEC Administration from the Scope Compliance Chairman and COMPLETE Quarterly reports measuring every single metric of our scope was reported to the Delta pilots within minutes of the briefing to the MEC. Despite a huge increase in staffing and funding, our MEC Admin is not completing the basic compliance task.

Management - Network's only mandate has been to make the most amount of money they can. They typically only calculated compliance after the fact when they compiled the data to report to our MEC. They are slightly more proactive with managing sales to comply with 1 E. 2., but sometimes they don't. Sometimes non compliance comes as a complete surprise to them.

It is perhaps easiest to understand this if you look at the company's management hierarchy; from top to bottom:

Board
CEO
President / Network (sometimes the same person)
Network
Flight Operations
Labor Relations

Labor Relations deals with grievances, including scope grievances. They are far down the hierarchical food chain and have no power over Network to change things. Even Flight Operations does what they are told by network/President/CEO. They can say whatever they want, they will fly the schedule network hands down.

Now, if you follow the money, the JV agreements themselves are "metal neutral" which means they have language to prevent each carrier from favoring their home team. Each airline network management must use the correct airplane (size, capability, capacity) that makes sense for the route - not favoring Delta or Aeromexico (in this case) If push comes to shove, the carriers will violate their pilot working agreements to maintain their JV relationships.

One answer would be to have a VERY high level interdisciplinary meeting to discuss compliance on a frequent basis. What Jim Graham talks about is exactly the change I've been trying to get implemented through numerous resolutions and policy manual changes. This meeting could work, if it is properly staffed with folks who can understand the numbers well enough to obtain proactive compliance.

The network guys will think this meeting is a complete waste of their time. It will take CEO buy in to make that work.