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- Near-term pain will inevitably be shared as airlines fight for survival.
- Unlike previous crises, pilot groups are better aligned and well positioned to avoid deep cuts as legacy and low-cost pay disparities no longer exist.
- Scope clauses and furlough protections could see nuanced changes, however the wholesale relaxations witnessed in the prior two decades are unlikely.
Many who witnessed the effects of September 11, 2001 from the industry’s cockpits remain today, and with long memories. It’s been two decades since that last existential crisis hit the airlines and the recent return of red ink is once again a familiar sight, triggering memories of steep pay cuts, furloughs, and outsourced flying.
Similarities are obvious between the previous generation’s crisis and today’s COVID-19 pandemic of 2020, but it is important to acknowledge that the industry is not what it was in 2001 when it last wrestled with these questions.
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Probably the most notable difference, particularly for those who find employment in the industry, is the relative position of organized labor versus its weak position entering the post-9/11 world. In 2001, salaries and payroll at Delta Air Lines, for example, represented 45% of revenues. Today, less than 33% of revenues go toward salaries.
In the decade that followed the 2001 attacks, Delta, as well as at least nine other major airlines would file for chapter 11 bankruptcy protection. Billions of dollars would be lost, some airlines would cease to exist, and mergers of the remaining would forever change the landscape of the industry. In the midst of this, labor would endure painful reductions in compensation through the decade; drops in pay from which salaries have only recently recovered in recent years.
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Legacy airline pilot contracts were especially altered, affecting not only pay, but also pensions, work rules, and job protection through furlough and scope clauses. Legacy pilot contracts from 2000 were almost unrecognizable by 2010, understandably causing many to brace for the same in 2020.
As it began to realize in late 2001, the airline industry once again, has fundamental problems. This time, though, labor isn’t one of them.Continue Reading...
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