Any "Latest & Greatest" about Delta?
04-28-2014 | 07:27 AM
Gets Weekends Off
Joined: Oct 2010
Posts: 922
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From: Decoupled
That's one side of the story. Here's the other:
Concessions in C12 enable the higher utilization you're referring to. A partial list:
- summer bid periods form 31 to 30 days--major concession
- must fly more until full (up to ALV+15) (granted, this concession was partially offset by a higher guarantee)
- up to 7 short calls (a giveback after just negotiating for 6)
The company can now man for lean months and flex for heavy months...thanks to concessions in C12.
Concessions in C12 enable the higher utilization you're referring to. A partial list:
- summer bid periods form 31 to 30 days--major concession
- must fly more until full (up to ALV+15) (granted, this concession was partially offset by a higher guarantee)
- up to 7 short calls (a giveback after just negotiating for 6)
The company can now man for lean months and flex for heavy months...thanks to concessions in C12.
04-28-2014 | 07:27 AM
Can't abide NAI
Joined: Jun 2007
Posts: 12,078
Likes: 15
From: Douglas Aerospace post production Flight Test & Work Around Engineering bulletin dissembler
Outsourcing costs more?
Originally Posted by Michael Boyd
Airline Labor Costs: A Whole Lot More Than Hourly Rates
Last month, the president of Boyd Group International was honored to have been invited to provide an outline and discussion of emerging airline industry trends to the board of directors at Southwest Airlines.
Naturally, among the many areas covered was the issue of labor costs. Southwest - to its credit - has some of the highest-paid employees in the industry. This leads some of the veneer analysts in the financial world to conclude that the airline has a prima face labor cost disadvantage. At the discussion with the board, the following "industry heresy" was put on the table. Heresy, because it runs counter to "what everybody knows," which tends to threaten the status-quo thinking.
Fact: Labor Rates Do Not Concretely Equate To Labor Costs. It's easy to compare hourly wage rates for most airline classes and crafts. It's less easy, but possible to compare the costs of various labor structures at airlines. And any high school kid or media reporter can pull down BTS data and make a fool of himself by assuming the cost comparisons between airlines are valid.
True airline "labor costs" are the expense of getting the job done. It is not whether the airline-employed ramp agent is paid $25 an hour, or whether it's farmed out to subcontractor with staff being paid $15 an hour. It's the total cost of getting, say, the bag from the check-in counter, to planeside, onto the aircraft, off at the passenger's destination, and delivered to the claim area. Successfully. Efficiently. On-Time. Without tire tracks across the front of the Samsonite.
Outsourcing May Be The Only Path, But... To many of the financial analyst types, some of whom wouldn't know a bag tag from a Starbucks receipt, the dollars spent on raw labor and benefits are the only costs to consider. But in the airline industry, how the job is done, and - critically - the quality and efficiency of the work - is the true cost. Unfortunately, standard accounting practice doesn't give any mechanisms to track the total comparative costs of in-house labor v outsourcing.
To be sure, outsourcing may be less expensive when all is considered - that is true. But as it stands today, there are virtually no systemic mechanisms in airline accounting to fully encompass all of the metrics involved. For a simple example: the difference between treating passengers as customers, as opposed just processing them. (Not that this isn't a situation that takes place daily where there is no outsourcing, but it's a lot more likely when the person dealing with the passenger has no skin in the game, career-wise.)
At the baseline, it can be (generally) assumed that an airline employee (if professionally treated and directed) will at least have the opportunity to have more incentive and pride in her work compared to a low-paid contract worker who knows that this career path will last only until the contract is re-bid in a year or two.
It's not always the case, but regardless of protestations from the budget department to the contrary, that factor alone - having no future at the airline - has some additional costs built into the outsourced $15 wage rate. One is the natural tendency not to go the extra mile in doing the job - because the outsource system provides no incentive to do so. Another is the fact that some of the outsourced staff are there only until something better opens up. So, regardless of the work ethic of the outsourced employee (which could be excellent) there is no career in the job - and that has consequences.
It's Not Sophisticated Or Difficult Work, Right? Another argument for outsourcing is that many of these jobs are, well, menial. Like, what does it take to load a bag? Answer: a lot. Running a ramp operation is not like a chain gang. Staff are working on time-certain deadlines. They are working within a coordinated set of movements of airplanes, passengers, baggage and cargo. They are working around and operating ground equipment - tugs, belt loaders, baggage carts, etc. (a.k.a. "aircraft-seeking devices" to those of us who have managed ramp operations.) They are not shoveling coal into a furnace: they are loading the property of customers onto and off of multi-million dollar airplanes.
One Late Departure And Poof! Go The Labor Savings. The A4A just estimated that a delay costs an airline $78 a minute. A couple of minutes can really eat into that great saving of farming out the ramp work. Anybody who's managed an airport ramp can today probably see lots of "$78s" going out the door from time to time at almost any outsourced hub ramp.
Lots of Opportunities For Running Up The Real Labor Tab. Give it a thought: what's the cost of just one bag not loaded on the right airplane? What is the cost of not having the right bag removed at an intermediate point on the aircraft routing? What's the cost of handling passengers who missed their connection because the RJ arrived late, and the outsourced ramp staff either had no idea, or no incentive to hustle off the "carry on" from the rear bin? What's the cost of a ticked-off business traveler facing a creeping three-hour departure delay, when none - none - of the outsourced "customer service" staff have any idea why the flight isn't leaving on time? (Not a hypothetical, by the way.)
Not that these events are by nature inevitable to the practice of outsourcing. But, logically, they are more likely than on a ramp operated by motivated (and that's sometimes problematic) team of airline employees. Therefore, the true savings of outsourcing key tasks are not fully identified.
Necessary, But Not Always As Cost-Effective As It's Cracked Up To Be. Let's face it. Increased outsourcing is a now a key - and probably in many cases, necessary - part of the operation of airlines in the US. In the EU and Asia, it's been SOP for decades. It is also a reality that in many cases wage rates and work rules have skyrocketed the cost of airline operations, leading to the option of just farming out as much as possible.
But there is a set of costs that in some cases may well make the practice a lot less economical than the $10 per hour (or whatever) difference cost-effective.
Quality has a cost.
Last month, the president of Boyd Group International was honored to have been invited to provide an outline and discussion of emerging airline industry trends to the board of directors at Southwest Airlines.
Naturally, among the many areas covered was the issue of labor costs. Southwest - to its credit - has some of the highest-paid employees in the industry. This leads some of the veneer analysts in the financial world to conclude that the airline has a prima face labor cost disadvantage. At the discussion with the board, the following "industry heresy" was put on the table. Heresy, because it runs counter to "what everybody knows," which tends to threaten the status-quo thinking.
Fact: Labor Rates Do Not Concretely Equate To Labor Costs. It's easy to compare hourly wage rates for most airline classes and crafts. It's less easy, but possible to compare the costs of various labor structures at airlines. And any high school kid or media reporter can pull down BTS data and make a fool of himself by assuming the cost comparisons between airlines are valid.
True airline "labor costs" are the expense of getting the job done. It is not whether the airline-employed ramp agent is paid $25 an hour, or whether it's farmed out to subcontractor with staff being paid $15 an hour. It's the total cost of getting, say, the bag from the check-in counter, to planeside, onto the aircraft, off at the passenger's destination, and delivered to the claim area. Successfully. Efficiently. On-Time. Without tire tracks across the front of the Samsonite.
Outsourcing May Be The Only Path, But... To many of the financial analyst types, some of whom wouldn't know a bag tag from a Starbucks receipt, the dollars spent on raw labor and benefits are the only costs to consider. But in the airline industry, how the job is done, and - critically - the quality and efficiency of the work - is the true cost. Unfortunately, standard accounting practice doesn't give any mechanisms to track the total comparative costs of in-house labor v outsourcing.
To be sure, outsourcing may be less expensive when all is considered - that is true. But as it stands today, there are virtually no systemic mechanisms in airline accounting to fully encompass all of the metrics involved. For a simple example: the difference between treating passengers as customers, as opposed just processing them. (Not that this isn't a situation that takes place daily where there is no outsourcing, but it's a lot more likely when the person dealing with the passenger has no skin in the game, career-wise.)
At the baseline, it can be (generally) assumed that an airline employee (if professionally treated and directed) will at least have the opportunity to have more incentive and pride in her work compared to a low-paid contract worker who knows that this career path will last only until the contract is re-bid in a year or two.
It's not always the case, but regardless of protestations from the budget department to the contrary, that factor alone - having no future at the airline - has some additional costs built into the outsourced $15 wage rate. One is the natural tendency not to go the extra mile in doing the job - because the outsource system provides no incentive to do so. Another is the fact that some of the outsourced staff are there only until something better opens up. So, regardless of the work ethic of the outsourced employee (which could be excellent) there is no career in the job - and that has consequences.
It's Not Sophisticated Or Difficult Work, Right? Another argument for outsourcing is that many of these jobs are, well, menial. Like, what does it take to load a bag? Answer: a lot. Running a ramp operation is not like a chain gang. Staff are working on time-certain deadlines. They are working within a coordinated set of movements of airplanes, passengers, baggage and cargo. They are working around and operating ground equipment - tugs, belt loaders, baggage carts, etc. (a.k.a. "aircraft-seeking devices" to those of us who have managed ramp operations.) They are not shoveling coal into a furnace: they are loading the property of customers onto and off of multi-million dollar airplanes.
One Late Departure And Poof! Go The Labor Savings. The A4A just estimated that a delay costs an airline $78 a minute. A couple of minutes can really eat into that great saving of farming out the ramp work. Anybody who's managed an airport ramp can today probably see lots of "$78s" going out the door from time to time at almost any outsourced hub ramp.
Lots of Opportunities For Running Up The Real Labor Tab. Give it a thought: what's the cost of just one bag not loaded on the right airplane? What is the cost of not having the right bag removed at an intermediate point on the aircraft routing? What's the cost of handling passengers who missed their connection because the RJ arrived late, and the outsourced ramp staff either had no idea, or no incentive to hustle off the "carry on" from the rear bin? What's the cost of a ticked-off business traveler facing a creeping three-hour departure delay, when none - none - of the outsourced "customer service" staff have any idea why the flight isn't leaving on time? (Not a hypothetical, by the way.)
Not that these events are by nature inevitable to the practice of outsourcing. But, logically, they are more likely than on a ramp operated by motivated (and that's sometimes problematic) team of airline employees. Therefore, the true savings of outsourcing key tasks are not fully identified.
Necessary, But Not Always As Cost-Effective As It's Cracked Up To Be. Let's face it. Increased outsourcing is a now a key - and probably in many cases, necessary - part of the operation of airlines in the US. In the EU and Asia, it's been SOP for decades. It is also a reality that in many cases wage rates and work rules have skyrocketed the cost of airline operations, leading to the option of just farming out as much as possible.
But there is a set of costs that in some cases may well make the practice a lot less economical than the $10 per hour (or whatever) difference cost-effective.
Quality has a cost.
Where's Slowplay? Lets sharpen our pencils.
04-28-2014 | 07:44 AM
Gets Weekends Off
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From: 7er
04-28-2014 | 07:58 AM
Gets Weekends Off
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From: A350
I get that and that is what a lot of us do, but follow me on this for a second.
Say you want to try and make some extra $$$ for the month. You put in a GS for a 2 or 3 day trip. The guy 1 number senior to you gets a 4 day GS worth 22:00. A few hours later you get a 2 day that pays 10:30.
The next week you still feel like working for a little more $$$ so you put in the same preference for a 2 or 3 day GS. Up pops a nice 17:00 3-day and it goes to the guy one number senior to you on his 2nd GS. An hour later another 10:30 2 days shows up and it's yours.
At the end of the month you both did 2 GS's. The guy right above you has 39 hours of GS pay and you have 21. If we had a system that assigned them based on GS hours instead of the actual number of GS's you would have ended up with 27:30 and he would have ended up with 32:30. You would have gotten the 3 day he would have gotten the 2 day.
I know there are a lot more variables that come into play, it just evens out the amount of hours and takes the luck of the crappy trip showing up for any given person out of the equation. If you take the crappy one, you will get another one before the lucky guy who gets the goldmine.
Say you want to try and make some extra $$$ for the month. You put in a GS for a 2 or 3 day trip. The guy 1 number senior to you gets a 4 day GS worth 22:00. A few hours later you get a 2 day that pays 10:30.
The next week you still feel like working for a little more $$$ so you put in the same preference for a 2 or 3 day GS. Up pops a nice 17:00 3-day and it goes to the guy one number senior to you on his 2nd GS. An hour later another 10:30 2 days shows up and it's yours.
At the end of the month you both did 2 GS's. The guy right above you has 39 hours of GS pay and you have 21. If we had a system that assigned them based on GS hours instead of the actual number of GS's you would have ended up with 27:30 and he would have ended up with 32:30. You would have gotten the 3 day he would have gotten the 2 day.
I know there are a lot more variables that come into play, it just evens out the amount of hours and takes the luck of the crappy trip showing up for any given person out of the equation. If you take the crappy one, you will get another one before the lucky guy who gets the goldmine.
04-28-2014 | 08:09 AM
Gets Weekends Off
Joined: Jul 2007
Posts: 2,562
Likes: 106
From: Road construction signholder
I get that and that is what a lot of us do, but follow me on this for a second.
Say you want to try and make some extra $$$ for the month. You put in a GS for a 2 or 3 day trip. The guy 1 number senior to you gets a 4 day GS worth 22:00. A few hours later you get a 2 day that pays 10:30.
The next week you still feel like working for a little more $$$ so you put in the same preference for a 2 or 3 day GS. Up pops a nice 17:00 3-day and it goes to the guy one number senior to you on his 2nd GS. An hour later another 10:30 2 days shows up and it's yours.
At the end of the month you both did 2 GS's. The guy right above you has 39 hours of GS pay and you have 21. If we had a system that assigned them based on GS hours instead of the actual number of GS's you would have ended up with 27:30 and he would have ended up with 32:30. You would have gotten the 3 day he would have gotten the 2 day.
I know there are a lot more variables that come into play, it just evens out the amount of hours and takes the luck of the crappy trip showing up for any given person out of the equation. If you take the crappy one, you will get another one before the lucky guy who gets the goldmine.
Say you want to try and make some extra $$$ for the month. You put in a GS for a 2 or 3 day trip. The guy 1 number senior to you gets a 4 day GS worth 22:00. A few hours later you get a 2 day that pays 10:30.
The next week you still feel like working for a little more $$$ so you put in the same preference for a 2 or 3 day GS. Up pops a nice 17:00 3-day and it goes to the guy one number senior to you on his 2nd GS. An hour later another 10:30 2 days shows up and it's yours.
At the end of the month you both did 2 GS's. The guy right above you has 39 hours of GS pay and you have 21. If we had a system that assigned them based on GS hours instead of the actual number of GS's you would have ended up with 27:30 and he would have ended up with 32:30. You would have gotten the 3 day he would have gotten the 2 day.
I know there are a lot more variables that come into play, it just evens out the amount of hours and takes the luck of the crappy trip showing up for any given person out of the equation. If you take the crappy one, you will get another one before the lucky guy who gets the goldmine.
The bottom line is that our negotiators have a finite number of issues to deal with and associated negotiating capital. Unless your reps get a lot of particular feedback on this issue, it probably isn't worth changing a system that most guys tend to be happy with.
04-28-2014 | 08:18 AM
No longer cares
Joined: Mar 2008
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From: 767er Captain
That's one side of the story. Here's the other:
Concessions in C12 enable the higher utilization you're referring to. A partial list:
- summer bid periods form 31 to 30 days--major concession
- must fly more until full (up to ALV+15) (granted, this concession was partially offset by a higher guarantee)
- up to 7 short calls (a giveback after just negotiating for 6)
The company can now man for lean months and flex for heavy months...thanks to concessions in C12.
Concessions in C12 enable the higher utilization you're referring to. A partial list:
- summer bid periods form 31 to 30 days--major concession
- must fly more until full (up to ALV+15) (granted, this concession was partially offset by a higher guarantee)
- up to 7 short calls (a giveback after just negotiating for 6)
The company can now man for lean months and flex for heavy months...thanks to concessions in C12.
And while we are at it, how many ALV +15 months have you flown so far?
04-28-2014 | 08:54 AM
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Certainly the biggest one. It gives each pilot two fewer days off in the summer months.
Again, in return for the higher guarantee. FWIW, we had six short calls at Delta since 2001.
Not quite. They do not have to be quite so overstaffed in the lean months as before, but they still must carry some extra. The silver lining in that is that a pilot who is on the bubble of being able to hold a regular line will often now be able to do so, rather than being forced to reserve each winter.
04-28-2014 | 08:57 AM
Gets Weekends Off
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From: right for a long, long time
That's one side of the story. Here's the other:
Concessions in C12 enable the higher utilization you're referring to. A partial list:
- summer bid periods form 31 to 30 days--major concession
- must fly more until full (up to ALV+15) (granted, this concession was partially offset by a higher guarantee)
- up to 7 short calls (a giveback after just negotiating for 6)
The company can now man for lean months and flex for heavy months...thanks to concessions in C12.
Concessions in C12 enable the higher utilization you're referring to. A partial list:
- summer bid periods form 31 to 30 days--major concession
- must fly more until full (up to ALV+15) (granted, this concession was partially offset by a higher guarantee)
- up to 7 short calls (a giveback after just negotiating for 6)
The company can now man for lean months and flex for heavy months...thanks to concessions in C12.
Bold is incorrect.
Under C2012, you are "Full" when you reach res. Guar...usually ALV-2:00 (or even less)
Before C2012, you were "Full" when you reached ALV or were within 2:00 of ALV because of DPM of 2:00.
Training did nothing fill up faster and lower your "Full" limit prior to C2012. Now it has a direct impact by lowering your "Full" and also replacing reserve days instead of pro-rating them. That means at least 2 extra days off each year.
Old PWA:
Res pay 70:00
Full when within ALV minus 2:00.
New PWA:
Res Pay 72:00-80:00
Full when within ALV minus 2:00-4:00
There is some myth out there that reserve pilots were done at 70:00 prior to the new PWA. That is not the case... Reserves were PAID 70:00 unless they flew above that up to the ALV.
Now: Reserves are paid 2-10 hours MORE than that whether they credit above 70:00 or not and they get up to 2 more true days off per month.
Reserve being a "massive concession" just isn't true. It is significantly better under the new PWA.
04-28-2014 | 08:58 AM
Straight QOL, homie
Joined: Feb 2012
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From: Record-Shattering Profit Facilitator
04-28-2014 | 09:05 AM
Can't abide NAI
Joined: Jun 2007
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From: Douglas Aerospace post production Flight Test & Work Around Engineering bulletin dissembler
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