Delta/NW Merger
03-21-2008, 08:21 AM
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Delta/NW Merger
A Sacred Cow in the Cockpit
By Steven Pearlstein
Friday, March 21, 2008
The airlines are in one of their funks again. The price of jet fuel is skyrocketing, a softening economy is beginning to cut into demand and executives are warning of yet another round of losses and layoffs.
It remains something of a mystery why this industry, almost uniquely, can't figure out a way to charge enough to cover its costs, hedge against spikes in input prices, and remain flexible enough to accommodate the inevitable ups and downs of the economy without reflexively running to the government or bankruptcy court for relief.
One argument the industry makes is that there is still too much capacity, despite the fact that every flight you go on these days seems to be filled or nearly so and fares have risen noticeably in recent years. To the degree there is overcapacity, one suspects it has more to do with the perverse ways in which the major carriers compete, by creating networks of feeder flights that lose money and hubs that make money only if they so dominate the traffic going in and out of major cities that they can drive competitors from the market.
But there is no getting around the fact that the airlines also suffer from unions that, 30 years on, still haven't fully accepted the reality of a deregulated marketplace where the interests of consumers come before those of employees. There's no better proof of that than the apparent collapse of the merger of Northwest and Delta because of the inability of their pilots unions to find some way to combine their seniority lists.
By tradition, and union contract, seniority is sacred for airline pilots. It decides who gets to be a captain and who a copilot and who gets to fly which planes -- the key determinants of pay. And seniority is the main factor in establishing which city pilots are based in, which routes they fly, when they get to take vacations and which ones are laid off when times are tough.
No surprise then, that when airlines merge and try to consolidate the pilot seniority lists, there can be lots of disruption. Some pilots tell of being bumped back to copilot, suffering a $100,000 drop in income. Others tell of the indignity of having to fly a boring old 737 from Chicago to Orlando after several years of glory commanding a 747 back and forth to London. And imagine how it must feel, after 20 years in the business and several rounds of forced "givebacks," suddenly to be required to work on Christmas or Thanksgiving because a new colleague from what was once another airline has been flying longer than you.
You might think that given the generous pay top pilots earn relative to the number of days they work, and given the precarious financial nature of the industry, pilots would be willing to show some flexibility to assure the long-term success of their companies. You might think that would be especially true in the case of Delta and Northwest, which have offered pilots a nice raise, an ownership stake and a seat on the board of directors if the merger goes through.
But you'd be wrong.
Or perhaps you might think that members of the same national union could negotiate in good faith with each other, with the help of experienced and impartial mediators, to come up with a fair method of combining seniority lists.
Wrong again.
The top Northwest pilots tend to have more seniority than the top Delta pilots because so many senior Delta pilots took a buyout offer before Delta's recent bankruptcy filing. The next senior Delta pilots, who are now flying the big planes and the best routes years before they expected to, are determined not to lose seniority to their more experienced Northwest counterparts.
Meanwhile, some of the junior Northwest pilots, looking ahead, have noticed that when a big group of their senior colleagues retire in five years, they might not be able to move into coveted routes because a big group of Delta pilots have more tenure.
Mediators have proposed any number creative ways to combine seniority lists while minimizing some of these dislocations and disappointments. Since Northwest and Delta don't fly all the same planes, for example, separate seniority lists could be maintained for the most desirable 747s and 777s.
And there are ways to assure pilots flying certain routes that they can't be bumped even by someone with more seniority. In cases where one carrier's pilots tend to be older and more senior, you could agree to "feather" the seniority lists so that the combined list starts with the most senior Northwest pilot, followed by one or two of the most senior Delta pilots, followed by the next most senior Northwest pilot, and so on.
But after months of closed-door talks, no combination of these ideas has proven acceptable to either group.
None of this should come as a surprise. Nearly two years after the supposed merger of US Airways and American West, the two are being run largely as separate operations because the pilots cannot agree on how to combine their seniority lists. Not only are the unions fighting in court, but some US Airways pilots have filed a petition to oust the Air Line Pilots Association as their official union after it backed a compromise plan hammered out by an arbitrator.
The basic problem here isn't just the selfishness and shortsightedness of airline pilots. The problem is with seniority itself, and how it forces airlines to operate in ways that are irrational or unproductive.
Think about it. If pilots and copilots have the same training, and all that distinguishes them is that one has 10 years of service with the same company and the other 15, then by what logic should one be paid $100,000 more than the other?
Or, for that matter, why should tenure be the primary determinant of which pilots get ahead rather than, say, measurable differences in flying skills, ability to deal with customers and colleagues, and demonstrations of commitment to the company? That's the way it is done at most companies in most industries.
While we're at it, what's wrong with mixing things up a bit so that every pilot gets to fly at least some of the more desirable routes or some of the more desirable planes for which he or she is qualified, regardless of seniority? Surely there's a way to design schedules so more junior pilots don't have to work on every holiday while senior pilots work on none.
The reason it's so hard for airlines to find a fair and rational way to combine pilot seniority lists is there is nothing fair and rational in the way seniority is used. It causes a disconnect between performance and reward, discourages movement of employees between and within companies, creates a corrosive caste system that breeds resentment among junior employees and an overblown sense of entitlement among those who are most senior.
Airline customers, employees and shareholders would all be better off if the industry spent less time and energy figuring out how to combine seniority lists and more time on how to eliminate them.
By Steven Pearlstein
Friday, March 21, 2008
The airlines are in one of their funks again. The price of jet fuel is skyrocketing, a softening economy is beginning to cut into demand and executives are warning of yet another round of losses and layoffs.
It remains something of a mystery why this industry, almost uniquely, can't figure out a way to charge enough to cover its costs, hedge against spikes in input prices, and remain flexible enough to accommodate the inevitable ups and downs of the economy without reflexively running to the government or bankruptcy court for relief.
One argument the industry makes is that there is still too much capacity, despite the fact that every flight you go on these days seems to be filled or nearly so and fares have risen noticeably in recent years. To the degree there is overcapacity, one suspects it has more to do with the perverse ways in which the major carriers compete, by creating networks of feeder flights that lose money and hubs that make money only if they so dominate the traffic going in and out of major cities that they can drive competitors from the market.
But there is no getting around the fact that the airlines also suffer from unions that, 30 years on, still haven't fully accepted the reality of a deregulated marketplace where the interests of consumers come before those of employees. There's no better proof of that than the apparent collapse of the merger of Northwest and Delta because of the inability of their pilots unions to find some way to combine their seniority lists.
By tradition, and union contract, seniority is sacred for airline pilots. It decides who gets to be a captain and who a copilot and who gets to fly which planes -- the key determinants of pay. And seniority is the main factor in establishing which city pilots are based in, which routes they fly, when they get to take vacations and which ones are laid off when times are tough.
No surprise then, that when airlines merge and try to consolidate the pilot seniority lists, there can be lots of disruption. Some pilots tell of being bumped back to copilot, suffering a $100,000 drop in income. Others tell of the indignity of having to fly a boring old 737 from Chicago to Orlando after several years of glory commanding a 747 back and forth to London. And imagine how it must feel, after 20 years in the business and several rounds of forced "givebacks," suddenly to be required to work on Christmas or Thanksgiving because a new colleague from what was once another airline has been flying longer than you.
You might think that given the generous pay top pilots earn relative to the number of days they work, and given the precarious financial nature of the industry, pilots would be willing to show some flexibility to assure the long-term success of their companies. You might think that would be especially true in the case of Delta and Northwest, which have offered pilots a nice raise, an ownership stake and a seat on the board of directors if the merger goes through.
But you'd be wrong.
Or perhaps you might think that members of the same national union could negotiate in good faith with each other, with the help of experienced and impartial mediators, to come up with a fair method of combining seniority lists.
Wrong again.
The top Northwest pilots tend to have more seniority than the top Delta pilots because so many senior Delta pilots took a buyout offer before Delta's recent bankruptcy filing. The next senior Delta pilots, who are now flying the big planes and the best routes years before they expected to, are determined not to lose seniority to their more experienced Northwest counterparts.
Meanwhile, some of the junior Northwest pilots, looking ahead, have noticed that when a big group of their senior colleagues retire in five years, they might not be able to move into coveted routes because a big group of Delta pilots have more tenure.
Mediators have proposed any number creative ways to combine seniority lists while minimizing some of these dislocations and disappointments. Since Northwest and Delta don't fly all the same planes, for example, separate seniority lists could be maintained for the most desirable 747s and 777s.
And there are ways to assure pilots flying certain routes that they can't be bumped even by someone with more seniority. In cases where one carrier's pilots tend to be older and more senior, you could agree to "feather" the seniority lists so that the combined list starts with the most senior Northwest pilot, followed by one or two of the most senior Delta pilots, followed by the next most senior Northwest pilot, and so on.
But after months of closed-door talks, no combination of these ideas has proven acceptable to either group.
None of this should come as a surprise. Nearly two years after the supposed merger of US Airways and American West, the two are being run largely as separate operations because the pilots cannot agree on how to combine their seniority lists. Not only are the unions fighting in court, but some US Airways pilots have filed a petition to oust the Air Line Pilots Association as their official union after it backed a compromise plan hammered out by an arbitrator.
The basic problem here isn't just the selfishness and shortsightedness of airline pilots. The problem is with seniority itself, and how it forces airlines to operate in ways that are irrational or unproductive.
Think about it. If pilots and copilots have the same training, and all that distinguishes them is that one has 10 years of service with the same company and the other 15, then by what logic should one be paid $100,000 more than the other?
Or, for that matter, why should tenure be the primary determinant of which pilots get ahead rather than, say, measurable differences in flying skills, ability to deal with customers and colleagues, and demonstrations of commitment to the company? That's the way it is done at most companies in most industries.
While we're at it, what's wrong with mixing things up a bit so that every pilot gets to fly at least some of the more desirable routes or some of the more desirable planes for which he or she is qualified, regardless of seniority? Surely there's a way to design schedules so more junior pilots don't have to work on every holiday while senior pilots work on none.
The reason it's so hard for airlines to find a fair and rational way to combine pilot seniority lists is there is nothing fair and rational in the way seniority is used. It causes a disconnect between performance and reward, discourages movement of employees between and within companies, creates a corrosive caste system that breeds resentment among junior employees and an overblown sense of entitlement among those who are most senior.
Airline customers, employees and shareholders would all be better off if the industry spent less time and energy figuring out how to combine seniority lists and more time on how to eliminate them.
03-21-2008, 08:39 AM
#2
Gets ALL Days Off
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Posts: 958
did you know there are other forums on this website besides MAJOR. If you scroll down (use your mouse, if you have no mouse use the down arrow key) you will find there are more than 20 other forums. Its fun, its easy, your friends can do it, you can do it too.
03-21-2008, 01:14 PM
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Posts: 19,262
Boy, talk about factually incorrect. I would love the author to show me a single contract where Captains get 100,000 more then copilots or even close to those numbers. Most Captains now barely break 100,000. Copilots must be working for free!
03-21-2008, 05:32 PM
#4
Gets ALL Days Off
Joined APC: Mar 2007
Position: Sit down comedian.
Posts: 958
Originally Posted by sailingfun
Boy, talk about factually incorrect. I would love the author to show me a single contract where Captains get 100,000 more then copilots or even close to those numbers. Most Captains now barely break 100,000. Copilots must be working for free!
Even worse, there are far more important issues the Washington Post could be writing about... like how the airlines are cutting jobs while executives collect millions of dollars in bonuses. This seniority article was absurd.
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