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Joined: 17 Jun 2005
Posts: 949
Location: Carmel, IN

Interesting article in airportbusiness.com about the general role of unions at the legacy airlines:

http://www.airportbusiness.com....jsp?id=3216&siteSection=3

I'm not a labor relations expert, so I don't have much additional knowledge about the auto industry unions that the article uses as an analogy. But it does seem to me that something's got to give at these legacy carriers.

My cousin is a pilot for UA, flying 757s and 767s, mostly on transcons and international routes. He's been doing it for nearly 20 years now, and he makes a darn good living. He's paid a really high salary, plus full benefits and a lucractive pension. He lives in south Florida and just hops on a plane on any airline when it's time to get to where he's going for work. And work is 15 days a month. It used to be 12 days a month. Plus, his wife, kids, parents, and inlaws get to fly anywhere on UA anytime for free in 1st/Biz class. Also, he gets like 15 "buddy passes" per year that he can give to anyone to fly anywhere at cost - which can get you to, say, Hong Kong for about $300 - in Business Class. So when you add up all the salary and bennies for one pilot, it probably costs UA around 400 grand per year to have him as their employee. And while the salaries aren't so grand for the gate agents, flight attendants, mechanics, baggage handlers, et. al., they still get health & insurance benefits, pensions, and all those free trips as well.

I don't know any pilots at discount carriers, but I suspect they make substantially less than my cousin and probably have a cash-value pension or 401(k) instead of a traditional defined-benefit pension. I read somewhere that all the growth in the U.S. airline industry for the past 15 years - all of it - has been at regional carriers or discount airlines. I don't know if that's totally true, but thinking about my own airline travel for the past 15 years, it certainly makes sense.

Something does have to give. The article keenly points out that even though U.S. airlines are protected from foreign competition (only domestic airlines can pick up pax at one U.S. airport and drop them at another, and a domestic airline can not be more than 49% owned by foreigners) and have these massive fortress hubs, that they still lose money by the boatload. In interview on CNBC this morning, the former CEO of American Airlines said we just have to have consolidation. The US-HP merger is a start, and I'll be interested to see how much cost cutting and consolidation of routes, aircraft, gates, etc., that they do. But more has to happen. Maybe NW and CO should finally get together completely. Heck, have UA buy DL and AA buy all the little guys or whatever. Ring the costs out of the system ---- and then let foreign competition in. There's no good reason why British Airways shouldn't be able to pick up pax in New York and fly them to Los Angeles. Or for Virgin to go from Miami to Seattle and then on to Tokyo. Or Singapore, or Qantas, or Lufthansa, of whichever airline to do this, so long as U.S. airlines are allowed to do the same in turn. But that's for another thread.

As for now, it'll be interesting to see if, as this article predicts, the NW strike is the last gasp of a dying business model.