Part 2
When looking at the specific labor issues that Dawg and Kev and others continually raise, let me highlight and break out a few basic principles that govern DL’s labor relationship TODAY.
Some of these are brutally honest but they need to be said if we are going to address the issues… they are MY observations but I believe they are accurate.
First, like it or not, but DL recognizes that the pilots are the most critical group to allow DL to achieve its strategic and financial objectives. DL has clearly made the decision that it will increase the pay of pilots where it needs to in order to achieve its objectives… and no longer believes that every pay raise the pilots get should be matched in percentage terms by raises among other workgroups as it once did. DL decided w/ the NW merger to obtain agreement w/ the pilots before the merger. There is a different relationship between DL and the pilots today than there is w/ other workgroups… brutal as it may sound, that is the reality.
Second, DL does not really want to create an environment for most employees to stay around for a 30 year career as was once the norm in the industry. No offense to any employee or group, but most airline jobs do not require a 30 year length of time to obtain proficiency nor is there any significant incremental benefit in having a 30 year employee over a 10 year employee. However, even among topped out, FT employees, the cost of that employee soars in the final 10 years or so of a 30 year career due to health care costs and retirement obligations (less so now that DB plans are not offered). DL has aggressively offered early out packages to incentify high seniority people to leave but, make no mistake, that DL is not incentifying any employee to stay to the full 30 year, age 52 or higher career that was once the norm. That principle is significantly at odds w/ union objectives. The 5[sup]th[/sup] and 6[sup]th[/sup] week of vacation were removed in part to make it less and less comfortable for DL employees to settle in for that last 10 years while continuing to see increased benefits.
Third, DL is not the least bit focused on protecting future jobs at the expense of losing its ability to compete long-term. DL is highly focused – and has done a better job of protecting CURRENT employee jobs than other airlines that have tried to meet union objectives to protect CURRENT and FUTURE jobs – yet have failed at both at other airlines in comparison to DL.
Fourth, DL’s labor model is built around labor flexibility and has been before Dawg or Kevin – or I – ever worked there. DL has used flexible staffing models including RR YEARS before other airlines could unions to agree to such strategies. Flexible staffing is not going away and will likely only increase as DL creates an even “more flexible” flight schedule which does not create the same need for staffing year round and from one day to the next as existed for years.
Those are the harder principles to digest but there are positives as well.
Fifth, DL has done a better job of creating a partnership w/ its employees than have many other airlines. DL mgmt’s engagement of the employees to buy the Spirit of Delta and then to fight off the US takeover attempt is the stuff most CEOs dream about. DL’s relationship w/ its employees including its unionized pilots is head and shoulders better than at other carriers because DL tries to keep them involved in the issues regarding the company that matter to employees in a more direct and communicative relationship than perhaps any other network airline does. DL regularly surveys its employees and knows what concerns them, helping to address employee concerns and counter the notion that a union is necessary to fix problems.
Sixth, DL creates a mindset of efficiency that drives its ability to win in the marketplace. As Kev notes, DL is insourcing at ACS just as it does in Tech Ops. Being larger drives efficiency and can make the difference in making an operation more competitive financially. DL employees, including in Tech Ops, understand the drive for efficiency and how that makes the difference in whether they not only keep their work but often times insource work that might be done elsewhere.
Seventh, DL focused on higher base salary than on benefits, contrary to what most unions negotiate in contracts. Higher salaries impact 100% of employees. Benefits are not used equally by all employees. Benefits are also generally cumulative and continue to increase even for topped out employees. DL does not want to see employee costs continue to increase and serve as a reward for senior employees to stay for a career – see above. DL’s benefits are in line with the airline industry or large corporations in the US.
Eighth, DL has succeeded at shifting more and more compensation to profit-sharing…. Yes, Dawg, DL’s total compensation will not top WN’s this year but when you factor in the possibility that DL profit sharing could surpass all other carriers for several years in a row, then profit sharing really does have the potential to not only incentify employees to make the company’s plans work – but also significantly to close the gap w/ the highest paid carriers, some of which like WN have no choice but to pull back on their current very generous compensation packages.
Ninth, DL uses a traditional management leads- workers follow model of relating to employees. Robert Reich in the EA video noted then and it is still true today that there is an uncomfortable relation that is created when expecting labor to assume mgmt roles or for mgmt to give up some of its traditional roles. ESOPs are great – but the airline industry has shown they have never worked. The video touted that, under the ESOP, operations were run w/o supervisors – but labor couldn’t adapt one more time to the financial realities that occur. That is exactly what happened with UA as well. ESOPs work great to create an environment of cooperation and address financial issues in the short-term but they are based on labor contracts which in the airline industry are very rigid and very difficult to change w/o great pain. DL has retained a largely mgmt-led company with labor participation in knowing what mgmt is thinking. Mgmt tries to create win-win situations for DL employees – as WN has done w/ its employees –but no one should think that DL or WN are employee led companies… they are led by mgmt.
Kevin raises the autonomy issue A LOT. I don’t know all of the details of the way NW operated but it was regarded to be one of the more entrepreneurial of airlines WRT to frontline autonomy. It was the exception. Few other carriers operate the way NW did, including DL. NW managed to create a culture that uses that value; DL has not and will not. I’m glad you enjoyed it, Kev, but it very likely will not be seen at DL or most other airlines.
Those are some key principles that govern the way DL runs… some are my opinions from years of watching DL but most are concrete, documented principles that DL has stated are core to the way it operates.
Make no mistake that there was a cultural divide that existed between DL and NW when the merger occurred and continues to remain in the minds of some PMNW people, including Kev.
I understand why he and others think the way they do, but it is also very real that DL’s model and principles do work and DL is not about to give up a working model – or specific components of it – in order to create a model that has NOT worked at many other carriers. The chances of DL changing the fundamental principles above are VERY SMALL.
I have gone to this detail to discuss key principles because it addresses many of the same issues that keep coming up over and over again but here are a key specific issues …
Specific issues
The NE Shuttles are a dying breed. I participated in the launch of the Delta Shuttle in Sept 1991 and the business is very different. DL has tried to adapt to make the DL Shuttle viable but the chances are high that DL and US cannot both continue to support the BOS-LGA-DCA Shuttles for many more years. DL had the option of moving the Shuttle at LGA to the combined DL/US terminals but customers said they want the convenience of the Marine Air Terminal and the Shuttle has remained a separate operation. The Shuttle is now a non-mainline operation using Ejets. It isn’t terribly surprising that certain parts of the ground operation are not operated by mainline employees. The Shuttle also practically includes the LGA-ORD which is also an Ejet operation.
The closure of the DFW hub happened very quickly right before DL’s BK and DL did in fact use the “biggest tools” it had at its disposal to cut costs even though DFW was a hub before. DFW remains a large non-focus city station for DL but it used the same staffing models DL would have had at any other station of that size at the time.
Kevin keeps the issue of the ramp very active on this and other forums but the reality is that DL has not changed its philosophy regarding the ramp since 7.5. DL has honored the PMNW medium city below wing mainline staffing in large part because DL doesn’t want to risk unionization compared to the cost savings.
DL’s commitment to retain the list of medium sized/non-hub non-focus cities that NW and IAM agreed to staff w/ mainline employees does not change what DL did or will do at its own similarly sized cities. The cost disadvantage of using mainline employees at those cities is much smaller than it was before the RR program was introduced, but the reality is that there are legacy paid (topped out FT) employees like Kev in some cities that make more than any contract employee ever will. Those cities – MIA, RDU, CLT, DFW – run well as they are but there is no reason to think that DL will increase its costs to open more mainline cities to DL ramp.
Almost all of DL’s international growth has been done post deregulation and in almost all cases, DL has contract employees both above and below wing. DL acquired a large group of employees in Germany with the Pan Am FRA hub but paid the fees and penalties (to the employees and to the governments) necessary to terminate those employees when DL restructured the PA operation. NW’s operation at NRT was largely built pre-deregulation and staffed w/ mainline employees who remain. DL and NW both have used partners to swap work since the creation of the joint ventures.
DL’s insourcing – whether in ACS or Tech Ops – comes because DL is using the capabilities it already has to maintain its own operation to provide services for a profit to other airlines.
RRs ARE DL employees…. Calling them “outsourced” is factually wrong, plain and simple. There are many employees in the US who do not have benefits; DL happens to have a blended benefit model – some job classifications get little to none such as RRs; PT employees get a bit more; FT employees have the full benefits package. Again, that notion is contrary to union negotiating tactics but it is IN LINE with what other companies offer.
DL does offer some of the most generous pass benefits in the industry including to EVERY employee type and to DCI employees … but notably Kevin does not use his pass benefits and does not consider those benefits to be of value even though it is precisely those pass benefits that are sufficient to incentify many people to work for DL. DL knows the labor market and also offers pay and benefits, even to RRs, that is sufficient to bring in enough people willing to work for what DL offers.
I don’t really get involved in the arguments about which union is better. Every one of them has done good things and succeeded in some situations while missing the mark in others. The real question is whether ANY of them can provide a superior employment package than what DL provides to its own employees who are not represented by unions. So far, DL employees who are in non-union groups have chosen to remain that way except for one or two small groups such as the meteorologists, IIRC.
Yes, Dawg, I have said multiple times that I write things here that I would not say in person… but that doesn’t mean I wouldn’t challenge a former AMFA member about the strategies of their union which did result in the loss of all jobs in a contest that NW ultimately won. In fact, I sat on an int’l flight in the past year next to a former NW-AMFA mechanic who now works for another airline and he has no hard feelings about what took place and acknowledges that the union did not fully estimate NW mgmt’s resolve.
Part of the reason why I continually say that Dawg and Kev do not represent the mindset of most employees is because they do not. Kev works in a PMNW station that would not have been staffed by DL mainline below wing based on DL’s post 7.5 staffing policies. Kev, you also appear to expect to be able to obtain the same job opportunities and protection in non-hub stations as DL offers in large/hub stations. DL ACS employees have understood for decades that progression has almost always meant spending time in a hub in order to move to FT and gain seniority. For many DL ACS employees, working in a small station as a full-time employee has come at the end of your career, somewhat as a reward for all the other crap that was endured for decades, moving around the country and working in large stations. That is not unique to DL in the airline industry. Expectations that small station opportunities should be the same as in large stations is not a value DL has ever embraced.
While there are clearly mechanics who would like to return to airframe maintenance, there are far more than have adapted to doing the work DL does want to keep – such as engine maintenance. The fact that DL treats those mechanics with kid gloves should not surprise you… that is where DL wants to focus its overhaul efforts.
I absolutely believe it is possible for frontline employees to change things at DL FROM THE inside. No, you are not going to walk into the GO and expect everyone to stop and listen to what you think should be done. But there are MANY DL employees who effect change using the mechanisms that DL has put in place ALONG WITH some outside of DL’s control (informal coworker to coworker relationships). But what I can assure both of you, Kev and Dawg, is that any employee who comes w/ a pro-union agenda will not be given the opportunity to be a part of the formal company-sanctioned change processes. It shouldn’t surprise you that DL is fiercely committed to its business model for reasons I noted above… They will not provide opportunities to any pro-union employees to influence other employees. You wouldn’t find that at any other non-union company and I’m not sure why you expect DL would give you the opportunity to effect change based on your pro-union platform.
What should be abundantly clear is that I have laid out a very firm belief that DL has a business model that works, that it has refined over time to meet ITS needs, which does provide a superior employment experience to the vast majority of employees who would work within whatever system they are given, and DL has no intention of changing the fundamentals of its model above.
DL execs DO interact with frontline employees far more than exists at other stations and frontline employees continue to have opportunities to constructively share their opinions with those who make things happen. DL does engage its employees in major employee-related policy exercises. I participated in several during my time at DL. They still do the same thing today.
Finally, let me reaffirm once again that the expression of my opinions is not a personal attack on anyone. I do happen to know Kev and thus know a bit more about the way he operates as a person than other people. But I have the same respect him for him as I do for Dawg and others. Dawg and Kev are both obviously intelligent, articulate, and passionate. I have long believed that it is possible to have very different opinions about key things with people and still interact as friends. That remains my belief.
I have spent A LOT of time writing today because I continue to believe that Dawg and Kev and others have enormous potential to accomplish what they want and improve the situation for DL employees – but there remain significant misunderstandings about DL’s key values – or a failure to acknowledge them and work within them.
I would only be too glad to see Kev and Dawg and others succeed at transforming DL – but I also know full well that they won’t succeed until they understand what has made DL succeed and why any transformation must take place within those values.
