Pilots On Furlough
- Thread starter linevans50
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To not be overly one-sided I'll agree with a couple of points.
1. Whoever made the decision to buy TWA was A. not very smart and B. incredibly short sighted. AA got greedy and paid the price. The purchase didn't doom the airline, but it is hurting it, badly. Hindsight is 20/20 though.
2. Delta's management is awful, I've actually interviewed with Delta and they are clueless. Delta, long and short term, is in far more trouble than AA. I certainly agree with you that if manegement doesn't demand productivity, it won't get it.
Let me explain some of the thinking behind managements decisions:
1. AA had 11 fleet types orginally because Bob Crandell wanted to match every route with the best amount of seats to maximize revenue. In the late 80's and into the 90's this worked very well. Unfortunately the market has changed in a way that revenue management just isn't as capable of predicting demand and maximizing revenue. AA management is trying simplifing the fleet to reduce costs and is trying to change the fare structure/revenue management process right now. Its difficult and takes time, but you should see it, probably by the end of the year.
2. As has been covered earlier SWA hedged because they had a willing counter party, before AA got the concession agreements no one would deal will AA. Now AA can and does enter into futures contracts that allow us to hedge our fuel costs.
3. AA buying TWA had nothing to do with their ability to hedge their fuel costs.
4. Employee ownership would be great for AA. AA needs more than anything an incentive for the unions to help make the airline work. Once you see things as an owner with a vested interest in somethings success, the ineffencies become painfully obvious.
5. AA can't afford to go to one fleet type, they can't buy the planes, besides that you can't fly to Japan on a 737, at least not yet. You just can't change things like fleet type overnight, in the future I assure you that you will see viewer fleet types, probably close to four for AA.
6. Um, no. Amazingly enough it is cheaper to buy new 777s and 738s than it is to continue flying older less fuel efficient planes. AA isn't paying for these planes in cash, they're most likely seller financed at a nice low interest rate. If anything AA needs more new planes.
7. The idea that AA management is trying to pump up the stock price because they are getting rich is incredibly wrong. The vast majority of options that upper management has is at a strike price of 20 or more dollars per share, the options are worthless at 11 bucks. These "golden Parachutes", who tells you this stuff? 90% of AA upper management could leave tomorrow for higher paying jobs, they don't need AA to survive or be successful. Union members tend to look at management and assume they are as stuck as themselves. They're not! If you want to get rich, AA is not the place to work, the magement that is there, is there because they want to see AA successful.
I have a couple of questions about things that I see all the time on this board that I just plain don't understand.
1. When you say the company doesn't treat you right what does that mean? What do you want the company to do for you? Union people always complain about the company not taking care of them, why?
2. Why is it that every decision that upper mangement makes taken as an attack on the unions? Ever thought that AA makes a decision based on reasoning other than what will piss off the union?
1. Whoever made the decision to buy TWA was A. not very smart and B. incredibly short sighted. AA got greedy and paid the price. The purchase didn't doom the airline, but it is hurting it, badly. Hindsight is 20/20 though.
2. Delta's management is awful, I've actually interviewed with Delta and they are clueless. Delta, long and short term, is in far more trouble than AA. I certainly agree with you that if manegement doesn't demand productivity, it won't get it.
Let me explain some of the thinking behind managements decisions:
1. AA had 11 fleet types orginally because Bob Crandell wanted to match every route with the best amount of seats to maximize revenue. In the late 80's and into the 90's this worked very well. Unfortunately the market has changed in a way that revenue management just isn't as capable of predicting demand and maximizing revenue. AA management is trying simplifing the fleet to reduce costs and is trying to change the fare structure/revenue management process right now. Its difficult and takes time, but you should see it, probably by the end of the year.
2. As has been covered earlier SWA hedged because they had a willing counter party, before AA got the concession agreements no one would deal will AA. Now AA can and does enter into futures contracts that allow us to hedge our fuel costs.
3. AA buying TWA had nothing to do with their ability to hedge their fuel costs.
4. Employee ownership would be great for AA. AA needs more than anything an incentive for the unions to help make the airline work. Once you see things as an owner with a vested interest in somethings success, the ineffencies become painfully obvious.
5. AA can't afford to go to one fleet type, they can't buy the planes, besides that you can't fly to Japan on a 737, at least not yet. You just can't change things like fleet type overnight, in the future I assure you that you will see viewer fleet types, probably close to four for AA.
6. Um, no. Amazingly enough it is cheaper to buy new 777s and 738s than it is to continue flying older less fuel efficient planes. AA isn't paying for these planes in cash, they're most likely seller financed at a nice low interest rate. If anything AA needs more new planes.
7. The idea that AA management is trying to pump up the stock price because they are getting rich is incredibly wrong. The vast majority of options that upper management has is at a strike price of 20 or more dollars per share, the options are worthless at 11 bucks. These "golden Parachutes", who tells you this stuff? 90% of AA upper management could leave tomorrow for higher paying jobs, they don't need AA to survive or be successful. Union members tend to look at management and assume they are as stuck as themselves. They're not! If you want to get rich, AA is not the place to work, the magement that is there, is there because they want to see AA successful.
I have a couple of questions about things that I see all the time on this board that I just plain don't understand.
1. When you say the company doesn't treat you right what does that mean? What do you want the company to do for you? Union people always complain about the company not taking care of them, why?
2. Why is it that every decision that upper mangement makes taken as an attack on the unions? Ever thought that AA makes a decision based on reasoning other than what will piss off the union?
Cleared Direct
Member
- Sep 18, 2002
- 64
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Can Airlines Pin Their Woes On Labor Costs Alone?Oneflyer said:
Aviation Daily 05/19/2004
Labor costs, labor costs, labor costs. That's the drum airlines have been beating for nearly three years as they desperately try to restructure and win concessions from workers to stay competitive with growing low-cost carriers (LLCs).
It may come as a surprise to some network carrier executives, however, that cutting labor costs will not lift their carriers out of perennial red ink to the solid ground of a low-cost operation. According to a new analysis by The DAILY and partner Eclat Consulting, low-cost carriers like Southwest actually pay some of the highest wages in the industry, but they have an efficient all-around business model. Southwest has had 52 straight quarters of profitability.
Other network carriers, such as US Airways, which went through one bankruptcy and are now screaming for more concessions from labor, had the highest non-labor unit costs of the 12 U.S. carriers in the study. Perhaps the problem dwells deeper than hourly wages. A basic point that seems to be lost is that many airlines' business models -- and not merely wage rates -- drive losses.
The DAILY and Eclat discovered that Southwest devotes 41% of total expenses to labor, more than any other carrier except Delta and 10% to 15% more than other low-cost carriers. Southwest's Boeing 737 pilots are the industry's third-highest paid, ramp workers and mechanics rank highest and flight attendants rank fifth-highest despite nearly two years without a raise due to stalled contract negotiations.
These wage scales contrast sharply with other low-cost carriers, such as JetBlue, America West and AirTran, which consistently pay lower wages than legacy carrier counterparts. Yet Southwest continues to be competitive with other LCCs in total unit costs, paying less than eight cents per available seat mile.
In terms of labor unit costs, the efficiency of the Southwest model is clearly evident from the data. Despite its high nominal wage rates and the high percentage of costs associated with labor, Southwest's labor cost of 3.2 cents per ASM is lower than that of all traditional network carriers except Continental, which pays 2.78 cents.
One reason for this is the more efficient use of labor, which is a byproduct of a business model built on high aircraft utilization, short turn times and better crew scheduling.
"Labor costs must of course be managed, but not in isolation." said John Donnelly, Eclat managing consultant. "The mantra of high labor costs must transition to one of fundamental change if the industry is to achieve sustainable profitability."
The fact remains that Southwest still pays a significantly higher labor CASM than other LCCs that use similar efficiencies. While these airlines take advantage of the lower wage rates as well as lessons learned from the Southwest model, the data show that the game is still about all expense lines, not just labor.
Couldn't agree more with this article. How does Southwest have the highest % of labor costs yet the lowest labor CASM? Productivity.
How do you get productive? You schedule F/A and Pilots to work more hours with only the minumium amount of rest. The unions scream about that.
You schedule tighter turn times. The TWU screams about that. The facts are that AA is doing all of what this article mentions, the only limitation is that SW employees have been doing it since they started and AA employees have been used to a much easier ie. less productive work environment.
Changing the mind set of the senior employees both management and union is AA's biggest challenge, not changing the type of planes they fly.
How do you get productive? You schedule F/A and Pilots to work more hours with only the minumium amount of rest. The unions scream about that.
You schedule tighter turn times. The TWU screams about that. The facts are that AA is doing all of what this article mentions, the only limitation is that SW employees have been doing it since they started and AA employees have been used to a much easier ie. less productive work environment.
Changing the mind set of the senior employees both management and union is AA's biggest challenge, not changing the type of planes they fly.
Oneflyer, you don't have a clue about the airline business and the more you talk the more evident it becomes. At first I thought you're a management shill, but even a lousy manager has more knowledge of the nuances of hub and spoke, and point-to-point airlines. You also don't understand a thing about pilot crew rest rules or the consequences of pilot fatigue.
The pilots want productive schedules. BUT, what's happening now is fly a leg in the morning, then sit around for 4 hours to fly another, then sit and fly another. So you get 6 hours flying time, but your workday is 12-14 hours. Lots of sit time. I'll wager that SW pilots work fewer days per month than AA pilots do. Management won't schedule efficiently because they don't have to. And in case you don't know it, AA is a hub and spoke airline because they serve a myriad of destinations and not a cherry picker like SW or JetBlue. Even the best management isn't going to be able to mesh all the gears as fast as a point-to-point airline like SW or JB.
The pilots want productive schedules. BUT, what's happening now is fly a leg in the morning, then sit around for 4 hours to fly another, then sit and fly another. So you get 6 hours flying time, but your workday is 12-14 hours. Lots of sit time. I'll wager that SW pilots work fewer days per month than AA pilots do. Management won't schedule efficiently because they don't have to. And in case you don't know it, AA is a hub and spoke airline because they serve a myriad of destinations and not a cherry picker like SW or JetBlue. Even the best management isn't going to be able to mesh all the gears as fast as a point-to-point airline like SW or JB.
Winglet, you don't seem to know as much about this as you claim, either. This "cherry-picking" isn't really any different from what the legacy carriers would be doing if they were growing rather than shrinking. If you are growing, you don't just randomly choose where to fly, you carefully choose. Or, if you don't, then you're a bad planner.
Of the LCCs, only WN is truly a point-to-point carrier. The others haven't grown large enough to appreciably run a point-to-point system. They're just starting to get big enough for it to make some sense.
But, yes, ultimately the hub system is inefficient in many respects. However, unless you can get more than about 165,000 passengers per year in a given market, you cannot cost-effectively serve that market. Thus was born the hub system, as a means of growing into new markets that don't meet the 165,000 threshold. WN never had to do this, because they didn't start out the size of AA and UA.
So, if you're a legacy carrier, what do you do? Naturally, there are basic efficiencies that need to be gained, such as having FAs do the cleaning. Reduce fleet diversity (three Boeing types or two Airbus types should effectively cover the gamut). Reduce turn times by rolling the hubs. Overfly the hubs for markets that can support it. Reduce yield management overhead by simplifying the fare structures.
I'm sure there are other changes that can be made; the above list is just off the top of my head.
Of the LCCs, only WN is truly a point-to-point carrier. The others haven't grown large enough to appreciably run a point-to-point system. They're just starting to get big enough for it to make some sense.
But, yes, ultimately the hub system is inefficient in many respects. However, unless you can get more than about 165,000 passengers per year in a given market, you cannot cost-effectively serve that market. Thus was born the hub system, as a means of growing into new markets that don't meet the 165,000 threshold. WN never had to do this, because they didn't start out the size of AA and UA.
So, if you're a legacy carrier, what do you do? Naturally, there are basic efficiencies that need to be gained, such as having FAs do the cleaning. Reduce fleet diversity (three Boeing types or two Airbus types should effectively cover the gamut). Reduce turn times by rolling the hubs. Overfly the hubs for markets that can support it. Reduce yield management overhead by simplifying the fare structures.
I'm sure there are other changes that can be made; the above list is just off the top of my head.
The funny thing is that us f/a's at AA HAVE been cleaning our planes for over 10 years now. i flew Jetblue last week and as a courtesy nonrevs help clean the airplane. They do exactly what we have always done but they also ave a few cabin service who come on and finish it off by vacuuming1
It is really time to stop blaming labor, I would love to be flying efficeiently but as long as I remember AA has us sit for the maximum that our Unions have allowed!
I have been cleaning the airplanes, would you like me to start fueling them also?
When are you armchair quarterbacks out there going to stop spouting your crap and admit that it is gross mismanagement! :angry:
It is really time to stop blaming labor, I would love to be flying efficeiently but as long as I remember AA has us sit for the maximum that our Unions have allowed!
I have been cleaning the airplanes, would you like me to start fueling them also?
When are you armchair quarterbacks out there going to stop spouting your crap and admit that it is gross mismanagement! :angry:
planemech669
Member
ROFLMAOSTCOneflyer said:
You can not be serious asking that question here in this forum, can you?
LaBradford22
Advanced
- May 15, 2003
- 206
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I'm gonna take a wild ass guess and say that it was sarcasm...
planemech669
Member
Agreed.Mach85ER said:
You have to have both. You have to have business sense and "plane" sense to make and airline work.
NONE of the airlines have a top executive staff with that kind of experience.
The golden age of aviation had those kind of people. Today, those in charge of running our largest transportation infrastructures might just as well be laying on the living room floor and looking up at a ceiling fan saying "Airpane! Airpane!"
Well, Mwiess, what is inaccurate about what I said? I said that JB and SW are cherry-pickers. THEY ARE. AA is largely a hub and spoke airline. IT IS. Of COURSE, most startups are cherry-pickers. If all airlines operated that way, it'd be interesting to see what kind of air transportation system DIDN'T have in this country.
As far as Oneflyer goes, I was ROTFLOL too . . . . and I don't think he's joking with that last comment. He knows about as much about the airline business and leading people as he does about labor relations . . . . which is about zero.
As far as Oneflyer goes, I was ROTFLOL too . . . . and I don't think he's joking with that last comment. He knows about as much about the airline business and leading people as he does about labor relations . . . . which is about zero.
jimntx
Veteran
Mweiss, perhaps you haven't been reading the news (just kidding). SWA flight attendants have gotten sick and tired of cleaning the planes for free. It's one of the major sticking points in their current contract negotiations. If the flight attendants prevail on this point in their new contract, I can assure you that you will see cleaning crews appear at SWA stations. They will contract it out like a lot of airlines have done to minimum wage workers rather than pay the flight attendants to do it.mweiss said:
And, as AASTEW has already pointed out AA flight attendants do clean the planes. Granted it's not every leg, but they are doing a good bit of the cleaning during the day.
AA is already "rolling the hubs"--resulting in somewhat better utlization of a/c. However, they are still building schedules for flight attendants and pilots that require that they sit for 4 hours in that hub between flights. SWA utilizes their flight attendants all day everyday. I would guess that the efficiency calculations look much better at SWA where flight attendants have a 12-hour duty day, and are flying for 8 of those hours than at AA where a flight attendant may have a 14 hour duty day and only be doing actual flying for 6-7 of those hours (or even less). The "evil" unions have pointed out this inconsistency to the company time and time again, but the company refuses to see or admit that there is a problem with scheduling.
Or, how about a pilot schedule that I know of. Before I was furloughed, I flew on a SAN-DFW leg with a cockpit crew who had the following day 1 of a 3-day trip.
Day one: 1. Deadhead from LAX to SAN on AE. (There was a DFW-based cockpit crew at the layover hotel in SAN who had been there for 18 hours, but still had 12 hours to go on their layover.)
2. Work SAN-DFW.
3. Work DFW-SNA.
4. Layover for 17 hours (need I point out that this is at their home base, on the clock with per diem being paid). Coincidentally, both Capt and FO lived in Orange County. No wonder they bid this line. They were getting paid by the company to eat dinner at home with their wives and kids. AND, 2 empty hotel rooms in Orange County were being paid for by AMR.
JFK-LAX "overflies" DFW. LGA-SEA "overflies" ORD. DFW-HNL "overflies" LAX. PHX-ORD "overflies" DFW. There are any number of these examples. Granted, it's not true "point to point" because in every case the origin or the destination is an AA hub, but that's not what you said.
When the computer sets up sequences for both f/a's and pilots its set up to make up the most in-expensive trips for AA. Turns would be the most in-expensive but it would be impossible to have the bid sheets be all turns. Another factor is what the cost of the layover is. Another is pay and credit. When you factor all this and I'm sure there are many more factors sometimes you will get a seq that seems inefficient. Sometimes they will have Intl crews doing a domestic leg. But if the seq would create alot of pay and credit and was an expensive layover for a domestic crew then it would be more effiecient for an International crew to do the trip even though they make more money per hour. The difference is still cheaper for the company even if the crews don't cancel their rooms as in the case you described in SNA.jimntx said:
