U.S. Airline Industry Must `Restructure or Die,'' Aviation Week & Space Technology Reports

[Busdrvr]

[blockquote]
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On 11/20/2002 947 PM Speedbird wrote:


However, I will say that you're fighting an uphill battle in your defense of unionized collective bargaining practices of this industry over the last 20+ years. Right now the vast majority of objective people looking into this morass see union demands for "industry-leading" contracts, without any coupling to the economic realities of this cyclical industry, as a big part of what ails this industry.

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[/blockquote]

Sorry Spedbird, I don't see the new ERP II wages at UAL that has LOWER WAGE RATES THAN 1994, BEFORE INFLATION as out of control pattern bargaining. the problem with wage rates is the propensity of otherwise unemployable pilots and mechanics who are willing to sell the profession out for a few stock options and a reach around from the latest iteration of Lorenzo or the Yahoo who ran People Express.

 

[Speedbird]

LDKIAM:

The info I posted was a recap of AW&ST's editorial to the thread topic (Nov 18th issue). I am not a management type, so I can't say that I am in complete agreement of their proposal.

However, I will say that you're fighting an uphill battle in your defense of unionized collective bargaining practices of this industry over the last 20+ years. Right now the vast majority of objective people looking into this morass see union demands for industry-leading contracts, without any coupling to the economic realities of this cyclical industry, as a big part of what ails this industry.

Besides your argument blaming management for its perpetual foot-dragging could be mitigated by a process of negotiation that would cap it with a definite deadline for reaching an agreement.

IMO, this will be the biggest hurdles to improving long-term viability of the traditional major carriers, as the industry goes forward. Industry-wide, labor is not united in this important area and that schism will grow as the haves and have-nots fortunes widen over time. Bottom line the status quo cannot continue with how labor and management have blugeoned each other in the collective bargaining process since deregulation.

 

[autofixer]

Busdvr, You hit the nail on the head...unemployable pilots and mechanics. This is why (as an unemployable pilot and mechanic) I am leaving the industry. I will not be dictated to by bumbling management anymore (or idiot captains who can't fly near as good as I after I have been at the airline 16 years). For goodness sake, this guy who used to run Midway is going over to Delta to run their newest low cost operation. What kind of track record does he have? He is like the pilot who can't pass a type ride, or a mechanic who can't understand how to do a turbine build-up after he passes his writtens. Don't be helpless! Go out their and make your own way. I am loving it! I can't tell you the last time I said that about aviation. Who is it, PineyBob who says, the price of freedom is risk. Oh so true!

 

[chipmunn]

LDKIAM & USAirBoy330:

Earlier in this thread I asked what your opinion was of the Aviation Week & Space Technology article above. However, you must have missed my question. Regardless, what's your opinion regarding the article and whether or not the U.S. Airline Industry Must Restructure or Die?

Chip

 

[N628AU]

There goes Boof again, IAM good, company bad. You remind me of that Chris Rock character from Saturday Night Live, Nat X, host of the The Dark Side. Always complaining the man is out to get him. You went into this industry knowing it your position was union, and knowing how the RLA act works. If you want to work under a contract expiration date, why don't you go apply somewhere else in CLT, may I suggest Continental Tire?

What so many like you fail to understand, is that only a profitable company will lead to ultimate job security. The IAM and the other big labor unions have hamstrung this company for years and now it is time to pay the piper. Stupid work rules like separate bid areas for the same job classification, mechanics doing R&D, crews sitting while reserves are called in due to a round trip cancellation, ramp, customer service, utility, and catering all separate with no cross utilization are the true cost problems. Labor is as much to blame for the current disaster this company is as the mismanagement of Colodny, Schofield, and WolfGang. So far, I can only see two mistakes that Dave has made. First, failing to pay more attention to revenue streams, or at publicly show he was. Second was trying to work with the unions, which only seemed to get cost savings on paper, instead of hitting the work rules to achieve a true competitive cost structure. Like so much more work gets done in maintenance with that 30 minute longer shift to make up for an unpaid lunch. The week of vacation given up will only be taken out by most employees in sick time, which leads to overtime or lost productivity due to the fact you cannot plan for it.

If Dave would have said this is your new contract, accept or we abrogate, and just addressed the wasteful work rules, he would have been called every name in the book (which is happening anyway, so what's the loss), but so much more would have been accomplished. No, he tried to do the right thing, and I applaud his efforts trying. What he probably failed to understand, was even if he gave all the unions a raise, fired every manager good or bad, worked for free, and tripled the fleet size and revenue, people around this joint would still bash him.

 

[Down Range]

[FONT class=ImportantWords]
[P]
[BLOCKQUOTE][BR]----------------[BR]On 11/21/2002 12:22:30 AM chipmunn wrote:
[P]LDKIAM & USAirBoy330:[BR][BR]Earlier in this thread I asked what your opinion was of the Aviation Week & Space Technology article above. However, you must have missed my question. Regardless, what's your opinion regarding the article and whether or not the U.S. Airline Industry Must Restructure or Die? [BR][BR]Chip [/P]----------------[/BLOCKQUOTE]
[P][/P]
[P][FONT face=Times New Roman size=1]It would appear that the masses are not as recpetive as you would like Mr.Munn.[/FONT][/FONT][/P]

 

[LDKIAM]

628AU, you do not have a clue, were you part of the IAM in 1992? I dont think so. Were you part of the IAM in 1995 thru 1999? I dont think so. What you fail to see is that the company agrees to what is in a contract also. Mechanic and Related have been unionized since 1949 at US Airways and many people before you and I have fought to achieve what we have.

I was around in 1992 when good ole us air, raped all the non-union people and took just about everything they had. Were you around then? Back in 1992 the Customer Service Agents and Fleet Service employees were non-union, the company unilaterally imposed new conditions on them once the pilot group accepted concessions. They lost their sick time, vacation, OJI time, thier pension was frozen and they no longer had a defined contribution plan, they company took 40% of the full time employees and made them part time, cutting there hours from 40 to 25 a week, therefore making them pay several hundred dollars a month for family medical insurance, in CLT you had to have had at least 13 years with the company in order to maintain full time status, they took away the Express work from them causing mass layoffs, contracted out mail and frieght causing loss of revenue and jobs, imposed pay cuts on them, all the while when you had employees on the property with less then three years that the company could not impose new work rules on them because they were unionized.


And I do not know any job or industry that provides job security these days. Go ask all these companies that move their production overseas and pay there workers like a dollar an hour and ask them why we as consumers still pay the same price for the goods when they were paying someone in the US $15 an hour to produce the same product.

Also the work done by planners and mcu can be be farmed out to Airbus of Boeing, maybe Dave should have gotten those jobs since you make more then utility or stock clerks.

From Airbus:
Airbus provides high quality, customised technical data compliant with the latest ATA (Air Transport Association) standards and available on CD-ROM, as digital data in SGML format or through Airbus on-line services.
This service:
Defines, produces and supplies technical data products and services for Airbus aircraft support;
Familiarises operators with technical data products and services;
Supports operators on a daily basis in the use of technical data products and services.

Airbus Materiel Support operates as a service centre, providing materiel and related services to the Airbus aircraft fleet worldwide. It ensures the supply and availability of Airbus spares worldwide, and provides order desk services for all maintenance needs. In addition, it offers on-site spares assistance, combined with full spare parts data and provisioning support.

Airbus maintains a worldwide distribution network with several strategically located Materiel Distribution Centres in Hamburg and Frankfurt in Germany, in the Washington D.C. area in the United States, in Singapore and in Beijing.

Airbus has established a materiel support website for customers, enabling them to access the following information:

Part information, price, availability, location and lead-time.

Part number interchangeability.

Purchase order status reports.

Shipping details of ordered parts.

Information on the Airbus spares supply chain.

Materiel customer support and contact details.

E-mail.



Materiel supply covers:

Proprietary parts

Raw and bulk materiel

GSE and line maintenance tools

Modification and repair kits

Vendor equipment

Airbus can assign a spares representative to a customer in order to provide logistic assistance at the time of entry into service or whenever the buyer requests assistance.

Airbus provides airlines with a full initial provisioning service, including pre-provisioning and provisioning conference, training and provisioning data. A customised recommended spares parts list (RSPL) is provided.

Airbus maintains a central data bank on which information concerning the Original Equipment Manufacturer (OEM) is collected. This may be used by customers for information regarding the support/repair/overhaul of concerned units.

At buyer's request, the Materiel Support Division will lease out items from a select range of Airbus proprietary units. This allows the lessee to temporarily replace a part removed from an aircraft for repair or overhaul.

Customised Lead Time (CLT) is a just-in-time delivery service, where Airbus guarantees an on-shelf stock of customer-planned proprietary parts at the nearest Airbus distribution centre. The customer does not need to hold the inventory, his spares requirements are delivered to his forwarder within two hours.

Airbus guarantees a maximum of 15 days' repair time for its proprietary parts.

A number of spares support options are available to customers. Airbus' experience and market knowledge can help optimise spares access costs.

Just look at Delta, they farm out some reservations work to Indai and Continental does the same to Mexico.

 

[Speedbird]

Busboy:

Spare me the ridicule about how jetBlue is bringing down the profession. You want to highlight ERP as your contribution to good labor relations and collective bargaining....go ahead and pat yourselves on the back. However, you're still remembered for the summer of 2000 as a prime example of what's wrong with unions and management in pattern-style bargaining. The only thing more ridiculous is my repsonding to your assinine posts. Out!

 

[ChairPrefRes]

Although nobody commented on SFB 's remarks here yesterday...The comments are very insightful on WN, and as most people in the know for WN... they are actually very understated...When WN walked into BWI , U pretty much deserted as fast a possible and although PHL would be a headache for any airline, I use history as a determining factor for future events...CLT and PIT are a good match on population for SWA and if U as much as hickups in these markets I predict WN could walk in and finish up U...This might be Dave's last stand...Rightsize to no size...

 

[LDKIAM]

Bwi has a large originating population CLT does not, it is the smallest of all the three hubs in regards to originating traffic, it is a connecting hub.

 

[sfb]

LDKIAM-

I don't think I ever said labor was unreasonable. But there is certainly a lot of featherbedding, going back decades to the regulated era, which truly is out of place in a modern, competitive industry (and this is certainly not exclusive to US Airways). Things like requiring mechanics instead of rampers for receive and dispatch, or flight attendants being called on the carpet because they tried to help pick up trash on an airplane during a tight turn.

Look, right now, WN and US have roughly the same number of employees (approximately 35,000). But WN generated 6.00 billion ASM's in October, compared to 4.68 billion ASM's at US Airways.

Is management responsible for those work rules or labor rates simply because they agreed to the contract? Well, no, not really, considering that the cost of a strike can be higher than the cost of the incremental wages or work rules over the life of the contract. Do you take a strike which will cost you $500 million or an undesirable 4-year contract which costs you $75 million/year over what you, as management, would like to pay?

Some people like to look back at the days of regulation as the good old days, but in reality, the industry was a heck of a lot smaller back in those days. If the industry were still regulated and fares had more-or-less kept up with inflation, the airline industry would be roughly 1/4 to 1/2 of its current size. You can't expect that the same number of people will fly when you increase fares.

I happen to think ChairPrefRes is right about CLT and PIT, though I don't think Southwest would enter those markets unless US were to pull either down dramatically. The Charlotte metro area is 20% larger than the Nashville area, and yet WN manages roughly 85 daily departures at BNA. BNA's traffic numbers are 50% higher than CLT's largely because fares are lower. Could a low-fare carrier muster 250 daily departures at PIT or CLT? No, but they could easily manage operations roughly half the size of the current US Airways hub at each (excluding the shorter express flights).

 

[Busdrvr]

[blockquote]
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On 11/21/2002 8:57:43 AM Speedbird wrote:

Busboy:

Spare me the ridicule about how jetBlue is bringing down the "profession." You want to highlight ERP as your contribution to good labor relations and collective bargaining....go ahead and pat yourselves on the back. However, you're still remembered for the summer of 2000 as a prime example of what's wrong with unions and management in "pattern-style" bargaining. The only thing more ridiculous is my repsonding to your assinine posts. Out!
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[/blockquote]

Gosh sped, not once in my post did I mention Jetblue! What makes you think I was refering to Jetblu? The unemployable part or the reach around? If either caused pain to you by hitting a nerve of truth, my apologies AND sympathies. Just curious though, how many other airlines offered you an interview? Any other job offers? Didn't think so...

 

[LDKIAM]

US is bringing in more work because it is cost effective and we do a better job then a contract mechanic and the sabre tech A&Ps were found innocent and did not even lose their license.[BR][BR]Does WN send mechanics to all the component vendors also? [BR][BR]
[P][SPAN class=t]Southwest Airlines Signs Maintenance Agreement with Rockwell Collins[/SPAN][BR][SPAN class=tt]Thursday September 26, 5:26 pm ET[/SPAN] [BR][SPAN class=t2]Collins Aviation Services Selected to Provide Additional Maintenance Repair[/SPAN]
[P]
[DIV class=ar]CEDAR RAPIDS, Iowa--(BUSINESS WIRE)--Sept. 26, 2002--Southwest Airlines has selected Rockwell Collins to provide avionics maintenance repair and technical support on its fleet of aircraft.
[P]Under the 5-year agreement, Collins Aviation Services (CAS) will provide avionics repairs for all Rockwell Collins equipment on Southwest Airlines' fleet of Boeing 737 Classics. The fixed-price repair agreement guarantees Southwest Airlines a specified number of avionics spares to ensure dispatch availability, decreasing turnaround time and administrative effort for the airline. Maintenance repair work will be done at the Rockwell Collins Service Center in Dallas, Texas.
[P]Collins Aviation Services' global network of more than 60 locations provides repair and overhaul of avionics equipment for commercial, business and military operations. Additional logistics capabilities include on-board services, service parts, training services, technical information services and technical services.
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[/DIV]It is about jobs, and you have no scope language to protect yours!

 

[LDKIAM]

There are only 27 maintenance stations out of over 200 cities where we fly. If you knew how you operated getting rid of R&D would not cause that many job losses because every airplane every day has to have required checks done by a us airways mechanic, there are ETOPS procedures that must be done every day on the european flights. [BR][BR]Also WN farms out 75% of their maintenance to employees who have no stake to that airplane, WN has 3 mechanics per airplane and US has 15, that is because we do our own overhaul of the airplanes and the majority of the components. That is why WN is in the process of bringing more work in house, therefore causing their unit costs to go up. WN has 400 airplanes with 1,200 mechanics, US has 300 airplanes with 4,000 mechanics. Take jetblue, they farm out almost their entire maintenance work, just like Valujet did and you saw what happened to critter jet.

 

[N421LV]

[blockquote]
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Also WN farms out 75% of their maintenance to employees who have no stake to that airplane,
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[/blockquote]

Oh Puhleazzzz! Even if they are not on WN's payroll, contract mechanics are still liable for any work they do to a WN plane. Just ask the terminated/jailed SabreTech employees, whose fingerprints were on the Valuejet DC9, how little stake they really had to that airplane!

[blockquote]
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WN has 3 mechanics per airplane and US has 15, that is because we do our own overhaul of the airplanes and the majority of the components.
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[/blockquote]

That may also explain why your costs are out of control.

[blockquote]
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That is why WN is in the process of bringing more work in house, therefore causing their unit costs to go up.
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[/blockquote]

Uh, wrong again. As the airline gets larger there are economies of scale that begin coming into play. Work is being brought in house, but only after a cost/benefit analysis proves that it will save $$$$$ vs. out-sourcing.

[blockquote]
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WN has 400 airplanes with 1,200 mechanics, US has 300 airplanes with 4,000 mechanics. Take jetblue, they farm out almost their entire maintenance work, just like Valujet did and you saw what happened to critter jet.
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[/blockquote]

I can't speak for JB, but WN has been successful for a long time with extensive contract maintenance because whenever a plane is at TRAMCO or wherever for heavy checks, several WN mechanics are there on-site to specifically look over the shoulder of those performing the work to ensure quality. Like anything else, the key is effectively managing your subs. Some companies do this better than others.