<< Apologies in advance – truly – for the length >>
Reading through these discussions, hearing differing perspectives, listening to the alleged “deadly accurate” self-appointed experts, I invariably keep coming back to the same question: what was the alternative? It’s a simple question without a simple answer. In the now-almost-exactly-ten-years (as unbelievable as that seems) since the September 11, 2001 attacks, which U.S. airline’s business model do AAers here wish AA had followed, instead of the path AA actually did chart for itself?
I ask that because in all of this back-and-forth, getting down to the detail and minutiae of contract language and negotiations (for very good reason, of course, because it has a very real impact on peoples’ lives), it seems that it isn’t often considered what the alternative might have been.
Should AA have followed the Southwest model? AA would have made a killing mid-decade off fuel hedges, and that would have taken some pressure off labor costs – as it has at Southwest; every AA employee would be making
around 11% more today, on average. But, of course, there would be fewer AA employees. AA could have gone to all 737s and parked hundreds of other jets; closed up longhaul flying and concentrated only on domestic. No more high(er)-time bid sheets, purser pay, no more employees to support longhaul flying and widebodies, and of course no overhauls – those would all be outsourced. AA wouldn’t need as many flight attendants – especially when
average stage length is half as long, and the average flight attendant
works 25% more hours per month. In general, following the Southwest model, AA would have laid off still more employees to match Southwest’s legendary productivity which
produces 20% more capacity per employee. By my math, AA’s narrowbody-only fleet operating at Southwest’s productivity would mean around 6,500 fewer AAers.
Should AA have followed the model of JetBlue/Frontier/AirTran? That would of course have meant not just a frozen pension, but probably a dumped one. Productivity? Yep – AA sure would need a lot fewer people if they were
carrying double the passengers per flight attendant, and employing
1/6 the number of maintenance personnel per aircraft – so obviously overhauls would be done in El Salvador, Mexico, or at TIMCO, anywhere but TULE/AFW. AA certainly wouldn’t need pilots, since the ones they had would each be flying
15-30% more per month, and they would also be
getting paid 10-45% less for doing it.
Or perhaps AA should have followed the strangely-mythologized path of its failed network peers? Since 2001, Delta, Northwest, United and USAirways (twice) legally failed as going concerns, and thus they had to seek court protection from their creditors. If you or I had that happen to us, perhaps we would feel a bit ashamed about it, but it’s now a business strategy in the airline industry – like it or not. But that’s neither here nor there. During their (in some cases multiple) trips through bankruptcy, these airlines used the reorganization process to dramatically alter their business models, default on obligations and commitments, and abrogate contracts (including CBAs). And just what would AA have looked like if it had followed the same path?
Well, for starters, MBVs would be done at third parties and in foreign countries (think Hong Kong, Beijing, Seoul, El Salvador), so AA would have virtually eliminated its heavy maintenance employees as happened at several legacy carriers (a la Northwest/AMFA/2005). So there’s thousands of pink slips. (No wonder AA employs
roughly double the maintenance employees per airplane as other network carriers.) Now, it’s true, the few that remained
might be getting paid more (about
30% more on average at United, about 20% less on average at Delta). But, again – much like with Southwest – there would be a fraction of the people left collecting those potentially-higher wages (about
42% fewer people per airplane at Delta, or about 47% fewer people per airplane at United).
Then, of course, SCOPE would have been eviscerated.
Today 8% of AA’s system is Eagle; it’s 11% at United and 14% at Delta. There are today – by my count – roughly 150 United-branded and 230 Delta-branded large regional jets flying around. Eagle has 47. Think of all the former United 737 pilots and Northwest DC9/Delta 737 pilots whose flying is now done at SkyWest/Mesa/Shuttle America, etc. And all that reduced SCOPE APA would have given up “in defense of the profession” wouldn’t exactly have amounted to a windfall in compensation, either – seeing as the average AA pilot in 2010 made (total wages, salaries, benefits)
14% more than at Delta, 15% more than at United, and 31% more than at USAirways. And your defined benefit pensions? Well, needless to say, unlike at AA, odds are the pension would have been frozen (best case) or dumped altogether (worst case).
So – again – I guess my question is: which path would AA employees have preferred? Which other airline’s pilot contract would APA pilots rather be working under today, all things considered? Which other airline’s maintenance contract would TWU mechanics rather be working under today, all things considered? Which other airlines flight attendant contract would the APFA rather be working under today, all things considered?
I am not defending the many ridiculous decisions and stupid crap that goes on at AA. I know it – I’ve seen it – I don’t dispute it for one second. But, all that being said, even if Arpey got more stock options than you (which he did), and even if the shift supervisor at TULE is an incompetent and unethical moron (I’ve no doubt many are), aren’t you still better off – on balance – than most of the people who were doing the same job 10 years ago at other airlines? Overall, isn’t it fair to say that as bad as you’ve had it at AA, it may well have been worse at other carriers? In the spirit of union solidarity, isn’t it better that AA’s compensation is at or near the top among network carriers, and far above any low-fare airline except Southwest,
and AA still employs thousands more people that would otherwise have been laid off at any other U.S. carrier?
This is not about a race to the bottom, and I am not advocating that unions just roll over and give the company El Salvador wages and Chinese productivity – not for a second. But what I am suggesting is that when you look around the industry at your peers, perhaps that perspective offers a bit of a cautionary tale in trying to make ongoing negotiations with AA into some kind of moral crusade for the entire middle class. The deal AAers have gotten at AA has been far from perfect, but – overall – which other airline’s employees (especially the legacies) have gotten a closer-to-perfect deal?
And even beyond that, if you still really believe that you would have been better off at another airline, or in another industry, than – pardon the cliché – why not leave? I can’t count on both hands the number of people I know who have left AA and gleefully never looked back. If you are so unhappy with the situation at this point, why not leave? Why now insist on keeping the company uncompetitive with its low-fare and/or post-bankruptcy competitors, and potentially bringing the company and its other employees down? Or, at this point, is bringing the company down now the goal?
