KarlB737
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The Crisis At Delta: One Pilot's Point Of View

Tue Apr 18, 2006 7:11 am

Courtesy: Atlanta Business Chronicle

The Crisis At Delta: One Pilot's Point Of View - 3 Page Article

http://www.bizjournals.com/atlanta/stories/2006/04/17/editorial4.html
 
PanAm747
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RE: The Crisis At Delta: One Pilot's Point Of View

Tue Apr 18, 2006 7:43 am

The pilot was even brave enough to sign his name. God bless him for standing up and pointing out what is wrong with so much in the American economy - Upper level management with nothing to lose out for a short term dollar.

Some companies succeed because they take a long term strategy. Does anyone really believe that the CEO shuffle at airlines and other big industries will result in any stability for the industry?

Golden parachutes should be illegal. If a person has nothing to lose in whether the company succeeds or fails, what motivation do they have to even try?

Do we remember the story of the person who worked at Delta for nine months (without accomplishing much, as I recall) who left with free first class travel for life? That's just morally wrong.

And I'm off my soapbox now.
Pan Am:The World's Most Experienced Airline - P(oor) S(ailor's) A(irline): San Diego's Hometown Airline-Catch Our Smile!
 
Alitalia744
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RE: The Crisis At Delta: One Pilot's Point Of View

Tue Apr 18, 2006 7:45 am

Quoting PanAm747 (Reply 1):
Do we remember the story of the person who worked at Delta for nine months (without accomplishing much, as I recall) who left with free first class travel for life? That's just morally wrong.

DL is trying to void that.
Some see lines, others see between the lines.
 
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PA110
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RE: The Crisis At Delta: One Pilot's Point Of View

Tue Apr 18, 2006 8:02 am

I'm sorry, this editorial is naive and simplistic. The author's suggestion that the carrier should have raised fares to meet (existing) costs would have only created a greater crisis than exists now. This type of mindset completely ignores the fundamental changes that took place in the past decade.

  • The advent of the internet. For the first time, travel managers and travelers alike could compare costs without the aid of a travel agent. Business managers could see just how much allegiance to a particular airline was costing them over taking the lowest fare in the market. Airlines seriously underestimated how price driven the business traveler would be, given free and unfettered access to the information.

  • The economic downturn that started before 9/11. Business travelers were already starting to balk at paying the extortionary rates all legacy carriers used to justify their outdated pricing structure.

  • The entry of strong, well run, low cost carriers, and their ability to attract employees at a vastly reduced pay scale.

  • The failure of both labor and management to recognize that these changes were going to be long term, and the unwillingness to adjust proactively to meet these challenges head on.


For the retirees, it totally sucks to lose the pension you were promised, and for these folks, the government should step in and find a way to protect the retirees pension and benefits.

For current employees, life is messy and competition gets ugly. There are millions of Americans who don't have company funded defined benefit pensions. Most of us have to make do on our own. Sure, it's not what they promised you when you signed on, but the changes in the airline industry are fundamental, deep and painful.

The fact that LCC carriers have no problem attracting people willing to do the same (or more) for a lot less money is really the marketplace at work - determining the true value of any given job in this industry.

Labor unions love to blame management, and management loves to make sacrifices on the back of labor - but the bottom line is that both groups are equally to blame. If both groups had recognized the changes and reacted faster, they wouldn't be nearly in as deep as they are now. With the price of fuel, they would still be in trouble, but not nearly as bad as they are now.

[Edited 2006-04-18 01:05:37]
It's been swell, but the swelling has gone down.
 
luv2fly
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RE: The Crisis At Delta: One Pilot's Point Of View

Tue Apr 18, 2006 8:10 am

Quoting PA110 (Reply 3):
I'm sorry, this editorial is naive and simplistic. The author's suggestion that the carrier should have raised fares to meet (existing) costs would have only created a greater crisis than exists now. This type of mindset completely ignores the fundamental changes that took place in the past decade.



The advent of the internet. For the first time, travel managers and travelers alike could compare costs without the aid of a travel agent. Business managers could see just how much allegiance to a particular airline was costing them over taking the lowest fare in the market. Airlines seriously underestimated how price driven the business traveler would be, given free and unfettered access to the information.


The economic downturn that started before 9/11. Business travelers were already starting to balk at paying the extortionary rates all legacy carriers used to justify their outdated pricing structure.


The entry of strong, well run, low cost carriers, and their ability to attract employees at a vastly reduced pay scale.


The failure of both labor and management to recognize that these changes were going to be long term, and the unwillingness to adjust proactively to meet these challenges head on.



For the retirees, it totally sucks to lose the pension you were promised, and for these folks, the government should step in and find a way to protect the retirees pension and benefits.

For current employees, life is messy and competition gets ugly. There are millions of Americans who don't have company funded defined benefit pensions. Most of us have to make do on our own. Sure, it's not what they promised you when you signed on, but the changes in the airline industry are fundamental, deep and painful.

The fact that LCC carriers have no problem attracting people willing to do the same (or more) for a lot less money is really the marketplace at work - determining the true value of any given job in this industry.

Labor unions love to blame management, and management loves to make sacrifices on the back of labor - but the bottom line is that both groups are equally to blame. If both groups had recognized the changes and reacted faster, they wouldn't be nearly in as deep as they are now. With the price of fuel, they would still be in trouble, but not nearly as bad as they are now.

You have so hit the nail on the head it deserves repeating!

People take note, this is the best analogy of the airline industry as a whole.
You can cut the irony with a knife
 
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LN-MOW
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RE: The Crisis At Delta: One Pilot's Point Of View

Tue Apr 18, 2006 8:11 am

Quoting PA110 (Reply 3):
For the retirees, it totally sucks to lose the pension you were promised, and for these folks, the government should step in and find a way to protect the retirees pension and benefits.

Wrong. Thay haven't been promised their pension - they have paid for it. It's not the Government's responsibility to bail DL out - it's DL's. DL management have stolen this benefit from the people who have paid for it.
- I am LN-MOW, and I approve this message.
 
rwsea
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RE: The Crisis At Delta: One Pilot's Point Of View

Tue Apr 18, 2006 8:13 am

There are some good points in the article, but it kind of grasps me as "same old tune".

When pilots chose their profession, they made the choice to be a worker on the front-lines. They knew they probably wouldn't earn millions per year. In the past DL has paid its pilots competitive wages with other pilots in the US - It has paid them what they are worth. It has also paid its management competively with management at other companies. Again, it has paid them what they are worth.

Pilots and union employees in general continue to whine about what they get in comparison with management. But it begs the question: if life is so unfair and the poor little pilots are suffering at the hands of big bad management, why didn't they take the management route instead?
 
AA717driver
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RE: The Crisis At Delta: One Pilot's Point Of View

Tue Apr 18, 2006 8:16 am

Maybe the Government would be more interested in fixing the pension problem if Congress' pensions were also at risk instead of guaranteed (I mean REALLY guaranteed).

Same for SSI and health care. As long as the people making the rules are imune to the problems, nothing will get fixed.TC
FL450, M.85
 
saturn5
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RE: The Crisis At Delta: One Pilot's Point Of View

Tue Apr 18, 2006 8:43 am

This article left me disappointed. I was expecting some juicy details, behind the scenes 'dirty laundry' of Delta Airlines but instead I got the same tired lithany of old arguments. He correctly states that high management compensation packages are out of line, that Delta management made mistakes and that basically .. everyone else is to be blamed but pilots. Yet we know that highly inflexible labor contracts share a significant portion of this blame. Not only very one sided story but also a very boring letter I might add.
 
DesertAir
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RE: The Crisis At Delta: One Pilot's Point Of View

Tue Apr 18, 2006 8:52 am

I like the idea that both management and labor must work together. I have often thought that corporate culture needs a hard soul searching. The expensive office furniture, expense accounts, perks and bonuses and the layers of managers who manage managers. A good spring overhaul is needed. I work in the field of education and there is the same difficulty; teachers are told that they are the most important presence in education and are the last to receive new classroom furniture and other needs.
 
OttoPylit
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RE: The Crisis At Delta: One Pilot's Point Of View

Tue Apr 18, 2006 9:27 am

Quoting PanAm747 (Reply 1):
The pilot was even brave enough to sign his name.

Yep, and he will probably be recieving his pink slip the next time he tries to sign in for a flight. As I recall, he also talked to the AJC during the ALPA circus in front of Delta HQ. And Delta's policy, as well as most U.S. majors, is that you cannot speak about the company to the media. Only Delta's Public Relations department can do that. That includes editorial matter.

Quoting PanAm747 (Reply 1):
Do we remember the story of the person who worked at Delta for nine months (without accomplishing much, as I recall) who left with free first class travel for life? That's just morally wrong.

Actually, your referring to one of Leo Mullins cronies who he brought in with him in 1997. He was fired and his travel benefits, which he would have gotten after working at Delta, were voided. And then there is Delta's former CFO, Michelle Burns, who threatened to sue Delta because it is revoking her's, and all former DL execs, free life travel benefits.

Quoting PA110 (Reply 3):
This type of mindset completely ignores the fundamental changes that took place in the past decade.

Yea, most of these guys like to point fingers, but fail to see the truth.

Quoting PA110 (Reply 3):
The advent of the internet. For the first time, travel managers and travelers alike could compare costs without the aid of a travel agent. Business managers could see just how much allegiance to a particular airline was costing them over taking the lowest fare in the market. Airlines seriously underestimated how price driven the business traveler would be, given free and unfettered access to the information.


The economic downturn that started before 9/11. Business travelers were already starting to balk at paying the extortionary rates all legacy carriers used to justify their outdated pricing structure.


The entry of strong, well run, low cost carriers, and their ability to attract employees at a vastly reduced pay scale.


The failure of both labor and management to recognize that these changes were going to be long term, and the unwillingness to adjust proactively to meet these challenges head on.



For the retirees, it totally sucks to lose the pension you were promised, and for these folks, the government should step in and find a way to protect the retirees pension and benefits.

For current employees, life is messy and competition gets ugly. There are millions of Americans who don't have company funded defined benefit pensions. Most of us have to make do on our own. Sure, it's not what they promised you when you signed on, but the changes in the airline industry are fundamental, deep and painful.

The fact that LCC carriers have no problem attracting people willing to do the same (or more) for a lot less money is really the marketplace at work - determining the true value of any given job in this industry.

Labor unions love to blame management, and management loves to make sacrifices on the back of labor - but the bottom line is that both groups are equally to blame. If both groups had recognized the changes and reacted faster, they wouldn't be nearly in as deep as they are now. With the price of fuel, they would still be in trouble, but not nearly as bad as they are now.



Quoting RwSEA (Reply 6):
When pilots chose their profession, they made the choice to be a worker on the front-lines. They knew they probably wouldn't earn millions per year. In the past DL has paid its pilots competitive wages with other pilots in the US - It has paid them what they are worth. It has also paid its management competively with management at other companies. Again, it has paid them what they are worth.

Amen boys, amen! checkmark  checkmark  checkmark 

Quoting RwSEA (Reply 6):
But it begs the question: if life is so unfair and the poor little pilots are suffering at the hands of big bad management, why didn't they take the management route instead?

I would love to see an airline created by ALPA. That thing wouldn't even get off paper. If it did, I wonder if the pilots would be unionized, and by who. After all, they can't be unionized by ALPA. That would be a conflict of interest, and ALPA would be the big, bad management.




OttoPylit
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commavia
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RE: The Crisis At Delta: One Pilot's Point Of View

Tue Apr 18, 2006 9:44 am

Both sides deserve blame. It was hardly all the pilots union that caused Delta's current troubles, but, on the flip side, management is not completely culpible either.

Buoyed by Delta's relative strength after 9/11, and Delta's strong cash balance during the economic downturn of 2001-2003, Delta's management decided not to do much to fundamentally change their business model, and Delta's pilots chose not to accept the realities of the new cost environment and continue with their incredibly generous wages and benefits after their counterparts at American, United and other airlines gave up huge pay cuts relatively rapidly after 9/11 and the economic downturn.

Both fundamentally missed the opportunity to adapt to a new market reality when they had the chance to do it. And now, as a result, they are paying the price by having to sacrifice even more than they might have had they taken care of business.
 
PanAm747
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RE: The Crisis At Delta: One Pilot's Point Of View

Tue Apr 18, 2006 12:44 pm

Quote:
I work in the field of education and there is the same difficulty; teachers are told that they are the most important presence in education and are the last to receive new classroom furniture and other needs.

I work in the field of education as well!! And yes, there are many similarities between the high-up corporate mentality and high-up education field.

When budgets are tight, there is a cut-off point in education from which certain upper levels are immune. The only places that see cuts in funding are your children - not once has California's educational bureaucracy ever been cut. Those idols are sacred. It's just so much easier to blame teachers than attack the real problem.

I find it sad when a government entity OR a business decides it's easier to go to war with its own people than it is to actually try and solve a problem. Delta nearly self-destructed trying to prove this point. Until we stop this (and either get both sides talking), a lot of good work by a lot of good people is going to be for naught.
Pan Am:The World's Most Experienced Airline - P(oor) S(ailor's) A(irline): San Diego's Hometown Airline-Catch Our Smile!
 
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usdcaguy
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RE: The Crisis At Delta: One Pilot's Point Of View

Tue Apr 18, 2006 1:32 pm

Simplifares simply aren't fair, are they?
 
floorrunner
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RE: The Crisis At Delta: One Pilot's Point Of View

Tue Apr 18, 2006 3:14 pm

Quoting DesertAir (Reply 9):
I like the idea that both management and labor must work together.

This is the reason why many LCC's are so successful, particularly Southwest.
 
bravo45
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RE: The Crisis At Delta: One Pilot's Point Of View

Tue Apr 18, 2006 4:46 pm

Okay so I may not know everything about this crisis, but why don't you guys blaming this pilot bring out some arguements instead of ranting? Like how much did the management cut their own pay everytime they asked the pilots to etc.
You know why the management has never held a strike?? They don't need to unlike the pilots who do to make the truth known. I don't hear any of this in the media. Can these people ever be exposed? Had this pilot been lying, it would have been all over the place.
 
Simong
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RE: The Crisis At Delta: One Pilot's Point Of View

Tue Apr 18, 2006 5:52 pm

Isn't it the *American Dream* just like fast food and the overall perception of *save a buck* ..... the rich get richer and the rest get poorer. Sink or swim. everyone in the USA is infatuated with *cheaper* *cheaper* *cheaper* and then get insensed when jobs go overseas ...... yes those *Payless* shoes are made in Indonesia why do think you get them for $9.99 ? If more people were willing to pay $15.99 maybe more decent paying jobs with benefits could be had right at home in the good old US of A.
BA all the way !!!
 
CMHSRQ
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RE: The Crisis At Delta: One Pilot's Point Of View

Tue Apr 18, 2006 7:35 pm

Quoting PA110 (Reply 3):

You could also say the same thing for GM and Ford
The voice of moderation
 
FlyPNS1
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RE: The Crisis At Delta: One Pilot's Point Of View

Tue Apr 18, 2006 10:11 pm

Quoting PA110 (Reply 3):
The fact that LCC carriers have no problem attracting people willing to do the same (or more) for a lot less money is really the marketplace at work - determining the true value of any given job in this industry.

The problem with your logic is that LCC employees are NOT doing it for less. In many cases, they are doing it for more. Employees at places like WN, FL and F9 make more than many of their counterparts at the legacies. Believe it or not, LCC's aren't LCC's because of low labor costs.
 
ultrapig
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RE: The Crisis At Delta: One Pilot's Point Of View

Tue Apr 18, 2006 10:16 pm

Excellent points PA110. But the PBGC does guarantee pension benefit to a certain extent. The reason the Pilots are upset is that they have such big pensions that they exceed the PBGC guaranteed amounts.

Its very interesting to see the Pilot's reactionarypolicies. They oppose government intervention but they want the the government to protect their pensions-By the way this means have taxes paid by lower paid people supplement their pensions. Any have you noticed that while they have labor unions how frequently they cross other union picket lines.

I've said it before-there are many people who would like to fly commercial airliners-and I don't think its that much of an exaggeration to believe that if you set up a new airline tomorrow with new planes and advertised for pilots who would work for expense, no salary you'd get some people who wanted the job-would they be f people quitting legacy carriers no-but some people just want to fly and have an interest in aviation-just see how many a-nutters waste their time on this site like me.
 
congaboy
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RE: The Crisis At Delta: One Pilot's Point Of View

Tue Apr 18, 2006 10:19 pm

Quoting RwSEA (Reply 6):
Pilots and union employees in general continue to whine about what they get in comparison with management. But it begs the question: if life is so unfair and the poor little pilots are suffering at the hands of big bad management, why didn't they take the management route instead?

Right on. What I have said in other forums on this subject....pilots have pointed out that they have undergone years of training, dedicated their lives, and so on. Well, how long do you think it takes to obtain a senior management position? Ever heard of an MBA? That comes after four years of undergrad.

The other salient point to be made here is the lack of information the pilots and their union have about why the DL management is making their decisions and what it is based on. It's pretty easy to sit back and make judgements about what seems to be a crap decision, but just as hard as it might be for a finance VP to land a 767, how well would a pilot do in preparing cost savings initiatives and strategic business plans? It's tough to make a fine, safe landing at LGA on a windy, wintery day...and it is also tough to make the right calls in a business climate that has LCC's taking aim, fuel prices going nuts, trying to keep employees motivated, etc.
"Joey, you like movies about gladiators?"
 
worldtraveler
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RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 12:26 am

Good job, PA110 and Commavia.

I doubt that the readers of this business journal will be terribly swayed by a pilot that has it out for mgmt. The pilot could well be the loser based on DL’s employee-media guidelines.

Yes, DL was slow to recognize the need to dramatically change the business model and the damage could have been lessened had it been done earlier. However, even though ALPA touts their 1996 concessionary contract not once does DALPA admit that they were working under the richest contract in the history of aviation when 9/11 struck. It is always nice to think that we will be rewarded at some point in the future for making sacrifices today but there is no guarantee of that. Anyone would wants guaranteed, growing income best not apply to work for an airline. And those who are already there should realize it will be a long time before any guarantees can be made again.
 
FlyDeltaJets
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RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 12:42 am

All of this extreme corporate money throwing around happens in many of our corporations, and we say nothing or don't want to hear about it. That is until there is no more money. Now the lights come on and we say okay that enough. It shouldn't be that way. But then hindsight is always 20/20.
The only valid opinions are those based in facts
 
dl021
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RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 12:45 am

You can't raise prices when your competition is lowering them unless you have a market willing to pay higher prices for extra service. That market does not exist in sufficient quantity to make it feasible.

Grinstein and co have worked for little remuneration, and the pilots are blaming the failures of Mullin & Co. because they don't have any where else to go with their anger.

Pilots took the raise when revenues were starting to drop and they want salaries not profit sharing.

This pilot was throwing in one direction and not accepting any responsibility for the success of the airline, or for the two way street a strike would have represented. If all the pilots thought the way he did then ATL and Georgia would have lost tens of thousands of jobs with the pilots feeling no guilt.....luckily economics and the thought of paying their house mortgages on pizza delivery tips took over.

The former management was incompetent and should refuse to accept one more penny from Delta, if they had any morals. Anyone trying to get first class tickets for a failed 9 month tenure is an ass.

Everyone needs to look to the future.

Quoting PanAm747 (Reply 1):
Golden parachutes should be illegal.

They certainly should be considered to immoral to take. They're only good if the company is trying to get rid of you to save money while making profits that you helped to create.
Is my Pan Am ticket to the moon still good?
 
crash65
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RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 1:04 am

Yup, you people are so smart and have all the answers. The pilots are just overpaid, pampered, self righteous switch flippers. If it is printed in a newspaper and spoken by someone wearing a suit and tie it must be gospel, if it is written by a member of a union it must be sour grapes with a total lack of understanding of the business model. United and USAirways are so fresh out of bankruptcy and flush with exit financing that we can't tell yet if their "new" business models are actually viable, yet many of you seem to think you know better, and also seem to believe that because executive compensation is so high across the board it must be OK for these "MBA's" to earn (did I really say earn?) such grotesque rewards. Before there was a pilots union there were no rest or duty limitations, safety was secondary to launching the airmail into bad weather to make the schedule. Why didn't I take the management route? Because those that can fly the line. Those that can't go into the office. I'll put my certificates, type ratings, and 12000 hours against any Phd in terms of time spent studying, training, testing, and learning. There is a far greater sense of accomplishment walking away from an intact airliner with the same number of souls walking off it, that walked onto it, than there is by pushing away from a desk with an empty "in" basket. Honestly, I felt studying business in college was the easy route. My friends would sit in the library with a highlighter and a text book while I was working out equations in aerodynamics to the 8th decimal place. It was difficult and challenging but I loved it because it was real. Flying is tangible, no one can fake it or call it in from home, you have to put your own fanny on the line everyday and while financial rewards are nice the personal rewards are far greater. Pilots in general are highly self motivated and self critical, we are always striving to do it a little better and a little smarter. Despite some cocky behavior out of the flight deck that crap doesn't wash in the window seats. If you don't check your ego at the door your next "firm" landing or system abnormal will knock that crap out of your head and get it back in the game where it should be. But whining? Did you actually say whining? If you have struggled to climb the corporate ladder and fancy yourself as a future executive that is fine, but if you have never felt the sweat in your crotch wrestling a ship back to earth on a marginal weather day then you have no perspective, insight or experience to judge what we do, how we do it, or what monetary value should be placed on it. I will spare you the stories of having to sleep in my truck after work because I was too tired to drive from the airport, or having low blood sugar from the lack of food available (protein bars will get you only so far) and landing with the sweats and shakes. We sacrifice many nights away from home and endure testing and retesting and we are scrutinized in everything we do at and away from work, and dammit we expect to be compensated for those sacrifices. Many of you have pointed out that startups and LCC's have no trouble finding people to do the job for less and that is absolutely true. But there comes a point where the sacrifices even the LCC pilots make on a daily basis, leads them to the conclusion that, what the job entails and costs the individual, they deserve better than what they earn. SWA is the prime example, they are unionized and pay above the industry standard, yet are considered an LCC. They have the lowest management to employee ratio in the business and there executive compensation is far lower when compared to the avg employee pay on a percentage basis. The model has worked very well for them. Bottom line is this. When the weather goes down the tubes and the the holding patterns are stacking up as the fuel gauges creep towards zero, there are no 2 hour lunches, company cars, or lavish stock options. We stick with the ship and the situation and make very difficult decisions that can ultimately cost millions of dollars and affect 1000's of lives (an old boring mantra to the paper pushers but still true and relevant). If we don't walk away from that aircraft at the end of the day, with the airframe or occupants being intact and relatively healthy, there are tremendous repercussions in our lives and careers. We very likely will never be given the chance to do it again. I have never known a pilot to walk away from a smoking crater, to be rewarded with millions of dollars. Some of you have pontificated that pilots wouldn't understand or effectively deal with the complex issues of senior management because we don't have the education or experience. Well I submit that unless you have worked in the industry and had to fight the fight to have a decent lifestyle, you don't have perspective of our sacrifices and what should be considered appropriate compensation. Obviously you are all aviation enthusiasts, else why would you spend the time to come to this website and further more contribute to the discussions, bear in mind that without aviators this would be trains.net or trucks.net, so why do so many of you hold us in such low esteem? We defend our profession because very few outside it would. We acknowledge that we are above no one, but we are not beneath them either. We are trained to recognize hazards and if they cannot be avoided we do what we can to mitigate their effect. We are far from perfect and make mistakes, we learn through training and experience to use the tools around us and the people we work with, to manage those mistakes to prevent them from leading to something far more serious. We are goal oriented and have learned not to take things for granted because (it wasn't supposed to work out this way) can kill us. Flying can be a great metaphor for the business world and a metaphor for life. What aggravates us is that we expect others, aka management, to be held to the same standard. If they show no results or make things worse through poorly executed or foolish business plans, they should have to deal with the repercussions and share in the sacrifices. Now how can such an intelligent, diverse and enthusiastic crowd such as yourselves not see our logic and perspective in that?

-The preceding rant was the work of a union pilot at a legacy airline with 13 years airline experience, 19 years aviation experience, a BS in Air Transportation/Flight Technology including studies in aviation law, airport planning and management, aircraft design, and accident investigation.
 
TL8490
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RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 1:15 am

One of the fundamental values of the corporate world is that compensation of top managers must be tied to performance of the overall company....The best gauge for this performance is the stock price of the company. Yes, many boards of directors add other incentives like free travel but stock prices drives the lion share of any high level executive. Watch the CEO's of any large company on CNBC they will all mention stock price at least 5 times during any interview.

The reason for that statement is to help everyone...but especially the pilots understand the pay rates that on the surface seem really out of wack... are actually a result of cashing stock options in most cases.

It is excessive but, is usually a reward for increasing the value of the company over a multi year period of time.
 
commavia
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RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 1:24 am

Quoting Crash65 (Reply 24):
The pilots are just overpaid, pampered, self righteous switch flippers.

A bit simplistic, no?

Quoting Crash65 (Reply 24):
If it is printed in a newspaper and spoken by someone wearing a suit and tie it must be gospel, if it is written by a member of a union it must be sour grapes with a total lack of understanding of the business model.

Even more simplistic, no?

Quoting Crash65 (Reply 24):
Honestly, I felt studying business in college was the easy route.

Well, did you every study business in college? I can say, at least from my personal experience, that I certainly don't regard it as the "easy route" by any stretch of the imagination.

Quoting Crash65 (Reply 24):
Flying is tangible, no one can fake it or call it in from home, you have to put your own fanny on the line everyday and while financial rewards are nice the personal rewards are far greater.

Well, if done right, business can also have tangible results -- like giving thousands of people jobs, providing a valuable service to customers, and delivering a return on investment to shareholders. And, if done right, you can't fake it or call it in from home either.

Quoting Crash65 (Reply 24):
Well I submit that unless you have worked in the industry and had to fight the fight to have a decent lifestyle, you don't have perspective of our sacrifices and what should be considered appropriate compensation.

I know plenty about the sacrifices airline employees have made in the last few years.

But the thing that some self-described "union [pilots]" at "legacy [airlines]" still don't seem to get, at least from my perspective, is that it is not the airline, or its management team, that is setting these wages. It's the free market. Sure, Delta's management can play hardball, and demand huge pay and benefit cuts, knowing full well that they will ultimately end up compromising with the union somewhere in the middle, but they are only doing their jobs -- delivering on shareholder value. And, if Delta is losing billions of dollars, partly as a result of Delta's pilots getting paid well above the going market (not company, but market) price, then something is going to have to give. Either Delta is going to have to cut somewhere else, Delta's pilots are going to have to give more back, or Delta is going to have to cease to exist. It's simple economics.

I don't think anyone honestly says that Delta pilots should have to give up more of their compensation "just because." While we can perhaps disagree on how much is a fair amount to give up -- although, how can anyone determine what the fair amount of money Delta makes should be? -- I think that everyone (including Delta's pilots) recognize that the economic equation has fundamentally changed. If JetBlue is paying its pilots less money, to work more hours, something just has to give.
 
cxb744
Posts: 219
Joined: Wed Apr 05, 2006 7:31 am

RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 1:43 am

This is a pilot's point of view after all. As the saying goes, "listen to both sides and somewhere in between lies the truth."

He does make some good points:
A) No fuel hedging - In the immediate past this seems to be Delta managements biggest slip up.

B) Kick backs to Delta CEO's as the airline approaches BQ - Hmmmm . . . I think I've smelled this rat before at . . say . . United.

C) Buy aircraft, and options, totaling 300 planes - On the verge of BQ, I would have thought sticking with your existing fleet, or cutting back as need be would be more appropriate.

D) Cutting 43% of the existing workforce - Anyone know, honestly, how many middle and upper management people have been let go in the same time period?


AND he missed the mark on some:

A) Cannot increase prices - As PA110 said very well, you cannot increase prices and "fly" your way to profitability. It's the game of the airline industry, one airline tries to increase it's fares, if the others follow, YEAHHH!!!! But if they don't, back down your fares go so you can maintain load factor.

B) Stock buy back - This falls under the category of "Good Idea at the Time." A lot of companies do this when they are making big profits. It means not having a wide field of shareholders to please when something like BQ comes up.

C) When Delta's CEO retired in 1997, he got a retirement package which, at the time, was well deserved because he had led the company to profitability. Now should it be readjusted, just like everyone elses pensions under BQ - Absolutely.

This whole tussle is about pride , on both sides. The pilots have 5 years of built up anger at management for what they see as ripping the company off. Management doesn't want to be seen as being run by the pilots union.

Let's hope whatever this new deal being worked out it will hold. Because as the writer stated at the end, the economy and people of ATL will take the brunt of losing Delta.
MW
What is it? It's A 747-400, but that's not important right now.
 
starrion
Posts: 972
Joined: Sat Jul 19, 2003 1:19 pm

RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 1:46 am

"One of the fundamental values of the corporate world is that compensation of top managers must be tied to performance of the overall company....The best gauge for this performance is the stock price of the company."

"It is excessive but, is usually a reward for increasing the value of the company over a multi year period of time."


A good point. Executives who increase the stock price and improve the performance of the company are extremely well-compensated. What about the executives who fail to do those things? Why are they also very well compensated? The author of the article is also asking why the executives pensions are covered, why they are still getting stock bonuses and why perks are still offered. All this in spite of some of the awful management decisions that have brought the company to where it is.

The CEO of my company turned ours around from the brink of bankruptcy, lowered our debt and returned us to profitability. I don't know what he gets paid but he's worth it.
Knowledge Replaces Fear
 
commavia
Posts: 9744
Joined: Mon Apr 25, 2005 2:30 am

RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 1:47 am

Quoting CXB744 (Reply 27):
No fuel hedging - In the immediate past this seems to be Delta managements biggest slip up.

Well, if Delta's experience was anything like the experience at other legacy carriers, the airline was likely forced to sell its fuel hedges (which constitute a non-tangible asset with probable future benefits) in order to stabilize their balance sheets after 9/11. Had they not sold their hedges, Delta might have had to ask its employees for even more back now, as selling the hedges stabilized the balance sheet -- a more long-term financial instrument -- whereas it caused fuel prices to rapidly increasing, having an impact on the more short-term income statement.
 
rwsea
Posts: 2423
Joined: Sun Jan 30, 2005 2:23 pm

RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 1:57 am

Quoting Bravo45 (Reply 15):
Okay so I may not know everything about this crisis, but why don't you guys blaming this pilot bring out some arguements instead of ranting? Like how much did the management cut their own pay everytime they asked the pilots to etc.
You know why the management has never held a strike?? They don't need to unlike the pilots who do to make the truth known. I don't hear any of this in the media. Can these people ever be exposed? Had this pilot been lying, it would have been all over the place.

Management at DL has taken huge paycuts. The CEO is working for $200k per year - look for another company of DL's size and see a CEO making that little. The management at this company has taken paycuts similar to those proposed for all employee groups, including the pilot group.

Quoting FlyDeltaJets (Reply 22):
All of this extreme corporate money throwing around happens in many of our corporations, and we say nothing or don't want to hear about it. That is until there is no more money. Now the lights come on and we say okay that enough. It shouldn't be that way. But then hindsight is always 20/20.

Obviously you don't have a very strong grasp of the corporate entity. The board of directors is responsible for hiring and firing management, and setting compensation for management. Many important management decisions must still be approved by the board of directors. The shareholders directly elect the board of directors to represent their interests. You talk about all this "extreme corporate money throwing", but at the end of the day it gets traced back to the wishes of the shareholders, because they put the board of directors there that is responsible for management. Management and the board of directors of any corporation are responsible solely to the shareholders.

Quoting Crash65 (Reply 24):
yet many of you seem to think you know better, and also seem to believe that because executive compensation is so high across the board it must be OK for these "MBA's" to earn (did I really say earn?) such grotesque rewards

Again, in a capitalist society, market forces dictate what someone's labor is worth. The market has dictated what management's labor is worth, and it's a helluva lot more than the market has dictated the pilots' labor to be worth. Tough, but it's just the way it goes.
 
access-air
Posts: 1576
Joined: Thu Sep 21, 2000 5:30 pm

RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 2:07 am

Quoting PA110 (Reply 3):
The advent of the internet. For the first time, travel managers and travelers alike could compare costs without the aid of a travel agent. Business managers could see just how much allegiance to a particular airline was costing them over taking the lowest fare in the market. Airlines seriously underestimated how price driven the business traveler would be, given free and unfettered access to the information.

I actually e-mailed Mr Rosenkranz and pointed out this very serious mistake initiated by Delta in 1996 of selling consumer direct and taking away Agent Commisions but ironically turning around and rebating customers that very same 10% they once paid a travel professional. Now we see the result and Delta and every other airline is having to bow down to the El-Cheapo general public minded individuals that think they should get something for nothing.
Guess what? We are now all getting exactly what we are paying for....Nothing for Northing....
You would never bypass a dentist to do your own dental work.....You would never bypass a doctor to treat an illness or to try and treat yourself... You certainly wouldnt try and represent yourself in a legal matter and bypass an attorney. So why would you bypass a travel agent and book something on your own spending large amounts of money?
Any reputable travel agent will do his or her best to get the best deal for you.....they will also use their personal experiences to give you first hand information that cannot be found in any textbook or on some nasty bitch session travel advisory website....Ive looked at those and they are all written by people that are expecting the world and wanting to pay only $99 to get it.
Okay, I will now step off my soap box....

Cheers!!

Access-Air
Remember, Wherever you go, there you are!!!!
 
cxb744
Posts: 219
Joined: Wed Apr 05, 2006 7:31 am

RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 2:07 am

Quoting Commavia (Reply 29):
Well, if Delta's experience was anything like the experience at other legacy carriers, the airline was likely forced to sell its fuel hedges (which constitute a non-tangible asset with probable future benefits) in order to stabilize their balance sheets after 9/11. Had they not sold their hedges, Delta might have had to ask its employees for even more back now, as selling the hedges stabilized the balance sheet -- a more long-term financial instrument -- whereas it caused fuel prices to rapidly increasing, having an impact on the more short-term income statement.

The artilce states, "In early 2004, at a time when oil and fuel prices were beginning to increase significantly, Delta executives decided to settle all of its fuel hedge contracts ahead of their scheduled settlement dates. Unfortunately, with no fuel hedges in place, the company's fuel bill over the next 10 months was $820 million higher due to rising prices."

Seems like this to falls under the "Good idea at the Time" category.
What is it? It's A 747-400, but that's not important right now.
 
congaboy
Posts: 258
Joined: Fri Jan 20, 2006 3:48 am

RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 2:12 am

Quoting Crash65 (Reply 24):
Well I submit that unless you have worked in the industry and had to fight the fight to have a decent lifestyle, you don't have perspective of our sacrifices and what should be considered appropriate compensation.

Actually, Crash, I do work in the industry, and do understand your life, dedication, and talents. I have many acquaintances that are DL pilots, so its not that I make my comments lightly, and certainly with any disrespect. I do very much appreciate your ability to land us safely hundreds of times, and admire the passion you exhibit in your post...its clear you have alot of pride in the work you do...in fact, to you its not "work". But DL is a corporation, and I make the comments that I do because in the end, they are a business, existing to not only serve their customers, but to maintain profitability.
"Joey, you like movies about gladiators?"
 
crash65
Posts: 55
Joined: Tue Dec 16, 2003 3:36 am

RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 2:31 am

Quoting Commavia (Reply 26):
A bit simplistic, no?

Yes.

Quoting Commavia (Reply 26):
Even more simplistic, no?

Yes again, I was fuming pretty good and although I was being overly simplistic, it was the general tone of what I percieve from many of the posts on this and other threads. It was more of an intro to my thought process than a statement of fact.

Quoting Commavia (Reply 26):
Well, did you every study business in college? I can say, at least from my personal experience, that I certainly don't regard it as the "easy route" by any stretch of the imagination.

No but I almost went into actuarial science until I realised after 3 years I could actually study aviation and persue it. I was surrounded by friends that were all in the business school and while I'm sure the curriculum was difficult, it seemed that there course and homework were far less difficult or time intensive than mine. I know this is a matter of perspective but I did get a taste of mech engineering and math majors before I transferred and declared AirTrans/Flight Tech. On top of all of the classroom and homework the actual flight training was alot of additional time and effort that they didn't have to contend with either. Don't misconstrue me as seeming elitist, "look how hard we worked", it is more defensive in the respect that an airline pilot is usually required to have some form of 4 year degree, and the qualifications, certifications, and flight time requirements to get an interview let alone a job. Yes I am aware of the difficulties of the business world, I have friends and neighboors and I had a life before aviation (food service, construction, computer tech, retail sales) We are not born ariline pilots and, note to management, we weren't born yesterday either.

Quoting Commavia (Reply 26):
Well, if done right, business can also have tangible results -- like giving thousands of people jobs, providing a valuable service to customers, and delivering a return on investment to shareholders. And, if done right, you can't fake it or call it in from home either.

I agree. My frustration is where are the thousands of airline jobs, where is the return on investment on my employee stock purchase plane shares "I'm an employee and an investor", but WOW look at the bonuses, the severance packages, the guaranteed retirement plans while the rest of our earned retirement is eviscerated. That is the injustice that boils our blood.

Quoting Commavia (Reply 26):
I know plenty about the sacrifices airline employees have made in the last few years.

It is one thing to read about it or know of someone that is going through it, but imagine giving half or more of your life to it, and seeing what it has become.

Quoting Commavia (Reply 26):
Either Delta is going to have to cut somewhere else, Delta's pilots are going to have to give more back, or Delta is going to have to cease to exist. It's simple economics.

That is a very common management mantra and while I would not argue about the necessity of some cuts (the first round was needed no doubt) I will argue that cutting and shrinking to profitability is not the answer at this point. If you look at Delta's RASM (Revenue per Available Seat Mile) it is way below the industry average. In the neighborhood of 2+ Billion a year. Cutting labor is low hanging easy fruit picking, fixing the revenue stream should be the focus but you would hardly ever hear about it while there is more to be squeezed from the employees. Pilots being the highest paid are the easiest to target.

Quoting Commavia (Reply 26):
If JetBlue is paying its pilots less money, to work more hours, something just has to give.

JBLU is not currently profitable and not expected to be this year. This is why many of us say labor is not the problem, it is the business model. The airline industry is driven by revenue, that is why some MBA's will slash fares (simplifares) to stimulate short term revenue, but ultimately they put profits at risk, and in the case of Delta they gambled and lost big time.

[Edited 2006-04-18 20:03:38]
 
SeeTheWorld
Posts: 1090
Joined: Sat Dec 31, 2005 2:46 am

RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 2:51 am

Quoting PA110 (Reply 3):
I'm sorry, this editorial is naive and simplistic. The author's suggestion that the carrier should have raised fares to meet (existing) costs would have only created a greater crisis than exists now. This type of mindset completely ignores the fundamental changes that took place in the past decade.



The advent of the internet. For the first time, travel managers and travelers alike could compare costs without the aid of a travel agent. Business managers could see just how much allegiance to a particular airline was costing them over taking the lowest fare in the market. Airlines seriously underestimated how price driven the business traveler would be, given free and unfettered access to the information.


The economic downturn that started before 9/11. Business travelers were already starting to balk at paying the extortionary rates all legacy carriers used to justify their outdated pricing structure.


The entry of strong, well run, low cost carriers, and their ability to attract employees at a vastly reduced pay scale.


The failure of both labor and management to recognize that these changes were going to be long term, and the unwillingness to adjust proactively to meet these challenges head on.



For the retirees, it totally sucks to lose the pension you were promised, and for these folks, the government should step in and find a way to protect the retirees pension and benefits.

For current employees, life is messy and competition gets ugly. There are millions of Americans who don't have company funded defined benefit pensions. Most of us have to make do on our own. Sure, it's not what they promised you when you signed on, but the changes in the airline industry are fundamental, deep and painful.

The fact that LCC carriers have no problem attracting people willing to do the same (or more) for a lot less money is really the marketplace at work - determining the true value of any given job in this industry.

Labor unions love to blame management, and management loves to make sacrifices on the back of labor - but the bottom line is that both groups are equally to blame. If both groups had recognized the changes and reacted faster, they wouldn't be nearly in as deep as they are now. With the price of fuel, they would still be in trouble, but not nearly as bad as they are now.

That was, indeed, absolutely awesome. You nailed it, and that's exactly what has happened.
 
SeeTheWorld
Posts: 1090
Joined: Sat Dec 31, 2005 2:46 am

RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 2:57 am

Quoting FlyPNS1 (Reply 18):
The problem with your logic is that LCC employees are NOT doing it for less. In many cases, they are doing it for more. Employees at places like WN, FL and F9 make more than many of their counterparts at the legacies. Believe it or not, LCC's aren't LCC's because of low labor costs.

Yes, and they are more productive either in hours they work or work rules. Stop trying to oversimplify the situation by only comparing hourly rates. The devil is in the details, and the LCC employees are far more flexible in their work rules than the legacy carriers. Labor costs ARE part of the reason LCCs are low cost. Inform yourself!!!
 
crash65
Posts: 55
Joined: Tue Dec 16, 2003 3:36 am

RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 3:00 am

Quoting RwSEA (Reply 30):
Again, in a capitalist society, market forces dictate what someone's labor is worth. The market has dictated what management's labor is worth, and it's a helluva lot more than the market has dictated the pilots' labor to be worth. Tough, but it's just the way it goes.

I really don't disagree with the gist of what you are saying, and I certainly don't expect to be compensated at or near executive level. That said, I think it is deplorable that in recent years executives are not held more accountable for poor performance. To be lavished and protected for losing less is a hard pill to swallow, but to see the rewards they reap as they are shown the door for failure is an insult.

Quoting RwSEA (Reply 30):
Management and the board of directors of any corporation are responsible solely to the shareholders.

I agree with your statement, I don't agree with a corporate culture based on shareholder value. I know I know, where are you going to get the money to borrow and pay for infrastructure without the shareholders. I'm not in denial with the way the system works, I just long for the simpler times when running a company meant providing something of the best quality possible, and taking care of your employees and rewarding good performance. Taking care of the employees that take care of you always seemed to make sense to me. It's not that the old carrot and stick philosophy doesn't work, I just don't think anyone downtown knows where the carrot is anymore. Given the mistakes Delta has made, weather it was too slow to react to changes in the airline environment, or gambling on Song and Simplifares, they destroyed shareholder value not the pilots.

Quoting Congaboy (Reply 33):
But DL is a corporation, and I make the comments that I do because in the end, they are a business, existing to not only serve their customers, but to maintain profitability.

I sincerely appreciate your thoughts prior to this quote, thank you. Yes I agree they must maintain profitability but I contend that constantly beating down the workforce with less incentive and more obstacles, and pointing all of the fingers in the press, is not the way to go about the process of fixing what is really wrong at Delta or any other airline. I would feel the same way if it were the mechanics, flight attendants, csr's, ....Leadership and accountability should come from the top and that is really all I ask for.

-Incidentally I do not fly for Delta, I do share their frustrations and pain. Its a dog eat dog world and I'm wearing milk bone... (we've all heard it before)
 
SeeTheWorld
Posts: 1090
Joined: Sat Dec 31, 2005 2:46 am

RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 3:09 am

Quoting Crash65 (Reply 24):
-The preceding rant was the work of a union pilot at a legacy airline with 13 years airline experience, 19 years aviation experience, a BS in Air Transportation/Flight Technology including studies in aviation law, airport planning and management, aircraft design, and accident investigation.

You forgot a "chip on your shoulder" and "an axe to grind." No one ever said life was fair. Welcome to the real world.
 
goaliemn
Posts: 320
Joined: Fri Sep 02, 2005 9:46 pm

RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 3:21 am

Quoting Bravo45 (Reply 15):
You know why the management has never held a strike?? They don't need to unlike the pilots who do to make the truth known.

Everyone is taking cuts. Management doesn't strike. If someone who isn't union doesn't like their job, they look for another one. Union people expect the job to be there for them, and rather than move on, they want to make an example and take down the company.

Something I've never understood about unions. If a job is so bad, move on.
 
B777ER
Posts: 431
Joined: Mon Jun 21, 2004 3:35 pm

RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 3:30 am

Late at night when the winds are howling, the rain is falling and visibility is down to a few hundred feet, you can thank the Delta pilots who ensure your family arrives safely at their destination.  Yeah sure

A bit melo-dramatic to say the least. Like they would not ensure your familys safety if they take a bigger pay-cut or because the airline was mis-managed? Idiot.
 
deltamike172
Posts: 62
Joined: Sun Mar 04, 2001 2:52 pm

RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 5:22 am

You know what is really ironic?

When everyone talks about how SWA and jetBlue are the only airlines making money, and they debate why....and then they defend other airlines and companies in general for making "good business decisions" when they cut everyone's pay and benifits and then wonder why they still can't make money. For example, I know that businesses are in it to make money, and should, but sometimes its not as easy as cutting a few jobs and getting the pilots to give some money back.

Employers who treat thier employees like crap, and cut thier pay, and bitch and moan about unions being evil, are so ignorant themselves, I can't help but be offended by the idiocy.

There are three main reasons I can think of why the two aforementioned airlines are sucessful compared to other airlines:

1. They fly a very simple fleet of similar aircraft.

2. They fly lower frequency schedules.

3. They treat thier employees with respect.

Notice how I never mentioned "provide great customer service" (I have never had a good experience on SWA) or "be nice to stockholders". That is becuase your employees are the most important part of your company, if you treat them well, they will work hard and the company will do well. Yet, no one gets it. People are stubborn, and they insist on holding on to what they have been duped into thinking is the Free Market Capitolistic way. Its NOT all about the upper managment over here with the money, and the slaves flying the airplanes over here complaing and being a nusiance.

I can't help but cringe when the FAA Adminstrator says that Air traffic controllers should be paid wages "comperable to other government professionals". Are you freaking kidding me. ATC (and on the same token, pilots) should NOT be making the same money as someone in a desk job. Imagine "forgetting to include your TPS report" equates to "mid-air". Yeah, they don't deserve the money. They have no responsibility (the reason the management gets all the money right). Sure, whatever.

Ya know why people don't just become managers? Becuase they don't WANT to be managers. They want to actually accomplish something. They work hard. They are doing what they always wanted to do....fly.

So, next time you hear some stupid crap about cutting costs and making smart business decisions, just laugh it off. Its like the joke about the second engine on an airplane....it just takes you the scene of the accident. In this case, cutting costs is the just the distraction that leads to the bankcrupcy.

DM
 
commavia
Posts: 9744
Joined: Mon Apr 25, 2005 2:30 am

RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 5:52 am

Quoting Crash65 (Reply 34):
My frustration is where are the thousands of airline jobs

Southwest, AirTran, Frontier, JetBlue, et al.

Quoting Crash65 (Reply 34):
It is one thing to read about it or know of someone that is going through it, but imagine giving half or more of your life to it, and seeing what it has become.

Trust me, I know about it. I know people who have experienced it. I have seen it very up-close. I know how paintful and difficult it is, and I certainly don't wish it on anyone.

Quoting Crash65 (Reply 34):
JBLU is not currently profitable and not expected to be this year

It is a h*ll of a lot less unprofitable that Delta.
 
User avatar
airzim
Posts: 1214
Joined: Wed Jun 20, 2001 7:40 am

RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 6:00 am

Quoting SeeTheWorld (Reply 35):
Quoting PA110 (Reply 3):
I'm sorry, this editorial is naive and simplistic. The author's suggestion that the carrier should have raised fares to meet (existing) costs would have only created a greater crisis than exists now. This type of mindset completely ignores the fundamental changes that took place in the past decade.



The advent of the internet. For the first time, travel managers and travelers alike could compare costs without the aid of a travel agent. Business managers could see just how much allegiance to a particular airline was costing them over taking the lowest fare in the market. Airlines seriously underestimated how price driven the business traveler would be, given free and unfettered access to the information.


The economic downturn that started before 9/11. Business travelers were already starting to balk at paying the extortionary rates all legacy carriers used to justify their outdated pricing structure.


The entry of strong, well run, low cost carriers, and their ability to attract employees at a vastly reduced pay scale.


The failure of both labor and management to recognize that these changes were going to be long term, and the unwillingness to adjust proactively to meet these challenges head on.



For the retirees, it totally sucks to lose the pension you were promised, and for these folks, the government should step in and find a way to protect the retirees pension and benefits.

For current employees, life is messy and competition gets ugly. There are millions of Americans who don't have company funded defined benefit pensions. Most of us have to make do on our own. Sure, it's not what they promised you when you signed on, but the changes in the airline industry are fundamental, deep and painful.

The fact that LCC carriers have no problem attracting people willing to do the same (or more) for a lot less money is really the marketplace at work - determining the true value of any given job in this industry.

Labor unions love to blame management, and management loves to make sacrifices on the back of labor - but the bottom line is that both groups are equally to blame. If both groups had recognized the changes and reacted faster, they wouldn't be nearly in as deep as they are now. With the price of fuel, they would still be in trouble, but not nearly as bad as they are now.

That was, indeed, absolutely awesome. You nailed it, and that's exactly what has happened.

Not exactly. Let's call it the "Perfect Storm."

1) The internet did something way more fundamental to airline pricing; it made it transparent. It eliminated the need for travel agents because historically they were the only ones with the information. Normally you had to call Airline A, B and C to get their rates which were generally the same, because before the internet, pricing could be competitively matched, allowing the airlines to indirectly price fix. This has little to do with business traffic because the data doesn't support any of those assertions. While there is always some corporate drop off in economic cycles, business people still flew on cheap fares when they would have flown on more expensive ones. Again transparency ruined price fencing. Couple that with LCC having equal visibility to the majors on the search engines, LCC's expanding beyond the typical 500 mile segments etc. In killed the golden goose.

2) Pension and Health care costs. People always ask why LH and BA are not in these straits but NW and DL are. Well a gigantic liability for the airlines are pensions and significant increases in health care costs. These cost in Europe are normally assumed by the State. Not in the US. These two things are killing the balance sheets and making it very difficult to leverage the company any further

3) Retirements. Within in next 10 years the US majors are going to lose tons of pilots to the 60 age rule. This will have two effects, a) saddle the legacy airlines with huge pension loads (assuming nothing else changes) and b) create a huge wage premium for hiring new pilots at the LCC's. jetblue and Southwest and Continental and American are all going to be competing for a very small pool of trained pilots. Why would you work for jetBlue making less money and longer hours when you can work for Continental or American? Cost are rising here they come?

4) Pricing structure. In all simulation and real life pricing models, the only one that works in the long term is a stratified pricing structure based on different fencing guidelines. Period. You have to do Revenue Management. jetBlue is still trying to figure this out and they finally hired someone after a year of having the vacant position and also moving it to New York from SLC because they finally figured out that was important. Yes this means rising fares, yes this means Saturday night stay requirements, yes this means network O&D optimization. They're all going back to this model why? Because it works.
 
IslandHopperCO
Posts: 220
Joined: Tue Dec 09, 2003 12:09 pm

RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 6:11 am

>In June 2000, after years of record profits, the pilots signed a new four-year agreement. Some would say the raises provided in the contract were overly generous. Others would argue the raises were long overdue.

After reading this, I knew the pilot was using his fat union pay (highest in the industry with that 2000 contract) to smoke rock. Get a clue.

>In this case, cutting costs is the just the distraction that leads to the bankcrupcy.

How can they avoid bankruptcy without cutting costs? Delta execs are the lowest paid in the airline industry already...time for YOU to take salaries set by the market. You and the opinion article writer need to take a class in economics. I'm so sick of primadonna pilots sinking my favorite airlines.
 
bucky707
Posts: 954
Joined: Sat Aug 19, 2000 2:01 am

RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 6:17 am

Quoting IslandHopperCO (Reply 44):
Delta execs are the lowest paid in the airline industry already...time for YOU to take salaries set by the market.

Delta execs should be the lowest paid in the industry, they have done the worst job.
 
AirEMS
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RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 6:37 am

During this period, these same executives went on a huge spending spree. According to the 2004 annual report, capital expenditures during 2002-03 were $3.5 billion. This included the acquisition of 100 CRJ aircraft.

In February 2004, Delta agreed to purchase "32 CRJ-200 aircraft for delivery in 2005 with options for 250 more."

With over $20 billion in debt and a cash burn rate of more than $10 million per day in 2004-05, is it wise to purchase aircraft analysts say have the highest operating costs in the industry?


Just me thinking out loud on this one..... I thought that CRJ's have low operating costs vs. A 737 or the 319 and 320 lines? Is this more of a seat revenue cost? Someone help me out here...

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PA110
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RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 7:21 am

Good additional analysis, except for the following:

Quoting Airzim (Reply 43):
This has little to do with business traffic because the data doesn't support any of those assertions. While there is always some corporate drop off in economic cycles, business people still flew on cheap fares when they would have flown on more expensive ones.

When I left the airlines, I went to work for a succession of corporate travel agencies. I could not believe how much money corporations threw away needlessly on business travel. Everyone flew on full unrestricted full-Y fares. The corporate travel managers were advised, but couldn't see first hand that they would save hundreds of thousands of dollars on coast-to-coast round trips if their employees took lower penalty fares - even if passengers had to pay a change fee or two. The airlines were raking in huge revenue on these corporate profligate spenders.

The internet brought transparency to business travel as well, and the huge spending on unrestricted full Y fares came to a crashing halt. Yes, there are still a few that still purchase unrestricted fully Y, but they are a fraction of what once existed.
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rdwelch
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RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 7:23 am

Quoting AirEMS (Reply 46):
Just me thinking out loud on this one..... I thought that CRJ's have low operating costs vs. A 737 or the 319 and 320 lines? Is this more of a seat revenue cost? Someone help me out here...

You're right in that the CRJs have a lower operating cost but a less desirable CASM, Cost for Air Seat Mile (I think that's it, as opposed to RASM or Revenue for Air Seat Mile) Less revenue on the plan even with the lower operating cost.

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crash65
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RE: The Crisis At Delta: One Pilot's Point Of View

Wed Apr 19, 2006 7:26 am

Quoting SeeTheWorld (Reply 38):
You forgot a "chip on your shoulder" and "an axe to grind." No one ever said life was fair. Welcome to the real world.

I was very much in the real world when I watched the world trade center burn from the L2 cockpit window of a 737, waiting on the EWR ramp to fly to DCA. I was very much in the real world as I scrambled to call my friends at United to make sure they weren't part of a smoking ditch in Shanksville or under tons of rubble at ground zero. I've been through one chapter 7 and one chapter 11, two furloughs, I've seen paycuts, longevity freezes, food stamps and unemployment lines. I know what is fair and I am well versed in the real world. What I don't have is a lot of patience for a bunch of weekend quarterbacks that think they know what it is like in my world, and when I try to shed some light on it I'm accused of being delusional with a vendetta. The real world doesn't exist in soundbites on CNN or in Forbes magazine, it's out there in the airport in the stench of thousands of tired sweaty passengers, trying to get home. Do I have a chip on my shoulder? Yes I suppose I do. Do I have an axe to grind? More like a scimitar.

Quoting Commavia (Reply 42):
Southwest, AirTran, Frontier, JetBlue, et al

Southwest far exceeds Delta in regards to pilot pay, Airtran's payrate in the 737 is higher than Delta, Frontier at 12 years pays better in a comparable sized aircraft, JetBlue....only six years old, leveraged to the hilt at variable interest rates, growing at a mind numbing speed and costs are out gaining revenues without considering fuel (doesn't give one a very warm fuzzy to read a JBLU SEC 10k...while your at it, look at all of the executive stock transactions recently)
http://www.nasdaq.com/asp/quotes_sec...thname=&page=filings&selected=JBLU

At any rate, the point is all of the airlines you name actually pay a little better than Delta, so how is it the fault of the "primadonna pilots" (thanks IslandHopperCO)

Quoting IslandHopperCO (Reply 44):
>In June 2000, after years of record profits, the pilots signed a new four-year agreement. Some would say the raises provided in the contract were overly generous. Others would argue the raises were long overdue.

After reading this, I knew the pilot was using his fat union pay (highest in the industry with that 2000 contract) to smoke rock. Get a clue.

Uhhhhhh, they have a clue, in 2004 they gave back more than they got with that 2000 contract, to the tune of 1 billion a year. Check out
http://www.willflyforfood.cc/Payscales/PayScales.htm
to see just how Delta pilot pay compares to your favorite so called LCC and remember the new concessions aren't in place yet.

Quoting IslandHopperCO (Reply 44):
time for YOU to take salaries set by the market. You and the opinion article writer need to take a class in economics. I'm so sick of primadonna pilots sinking my favorite airlines.

I'm sure most Delta pilots would take the payraise you are suggesting. A class in economics, ok, but in the meantime a recommend you look at Delta's sec filings and pay special attention to the RASMs and yields and how they compare to other companies in the sector. As for being a prima donna? Well I'm known for being generally a pretty nice guy, not too vain and when I'm not being bombarded with half truths about things I know I'm pretty agreeable as well.