Airline Fares Increase in January as Labor Costs Rise

[WeAAsles]

Other airline heavyweights like American Airlines AAL, United Continental UAL and Southwest Airlines LUV soon followed suit. This was the first price hike across the industry since June 2015. Soon after, another round of price hike was observed later in the month.
 
The twin price hikes have apparently made air tickets costlier by up to $12 (round trip). Although this appears uncalled for given that oil prices have remained weak, increased airfares seem to be the tool resorted to by carriers to counter rising labor costs. Fourth-quarter 2015 results of Delta, United Continental, Southwest Airlines and Alaska Air Group ALK demonstrate the fact that expenses related to salaries, wages and related costs are currently the largest cost component for carriers, having relegated fuel expenses to the second position.

https://finance.yahoo.com/news/airline-fares-increase-january-labor-191207225.html

 

[WeAAsles]

Nice to hear airlines passing along their Labor costs to the passengers after all these years. No more subsidizing Joe Fatty and his big gulp flying his plump rump across the Continent for $99 Round Trip.

 

[MetalMover]

Nice to hear airlines passing along their Labor costs to the passengers after all these years. No more subsidizing Joe Fatty and his big gulp flying his plump rump across the Continent for $99 Round Trip.

And yet people STILL to continue to fly regardless of increasing fares....Kind of ironic the OPPOSITE was preached for years demanding airline workers concede traditionally hard-fought for pay and benefits.
But now that there are only 4 MAJOR carriers controlling most of the market, we won;t see the airlines to eager to concede anything to us.

 

[WeAAsles]

And yet people STILL to continue to fly regardless of increasing fares....Kind of ironic the OPPOSITE was preached for years demanding airline workers concede traditionally hard-fought for pay and benefits.
But now that there are only 4 MAJOR carriers controlling most of the market, we won;t see the airlines to eager to concede anything to us.

 
Deutsche Bank also estimates, though, that industry wage costs rose 11%, or $909 million, in the latest period, after a year-over-year increase of $964 million in the third quarter. "We are expecting this cost line to experience above- average growth over the next several years as union contracts are renegotiated," Deutsche Bank said.
 
Credit Suisse expects 2016 to be the seventh consecutive year of industry profitability, marking the longest positive cycle in U.S. airline history. But, in a research note, it also observed that in the last extended up-cycle in the late 1990s, "generous labor contracts led to rising wage expenses that weighed heavily on industry profitability after the cycle turned in 2001."
 
The union coalition that represents 30,000 mechanics and ramp workers at American Airlines Group Inc., the largest carrier by traffic, made its stance clear last month at the start of talks on a joint contract: "It was these workers who sacrificed when times were bad and made it possible for American to not only survive but now thrive. It's high time they receive their just rewards...Nothing less will suffice."
 
American has said it wants its employees to have industry-leading contracts. This would be the last big group to get a post-merger joint contract, giving the carrier cost certainty for the next several years, a spokesman said.

American's expenses for wages and benefits in the first nine months of 2015 rose 11% from the prior-year period to $7.1 billion. Fuel, formerly its biggest cost, fell about 40% to $5.8 billion.

Read more: http://www.nasdaq.com/article/airlines-rising-labor-costs-in-focus-ahead-of-earnings-20160116-00011#ixzz40wBYUaJb

 

[WeAAsles]

"American has said it wants its employees to have industry-leading contracts. This would be the last big group to get a post-merger joint contract, giving the carrier cost certainty for the next several years, a spokesman said."

You give me a good solid BASE wage with modest yearly increases plus good benefits and some SCOPE enhancements and you can lock me in all the way till I retire for all I care.

 

 

 

[WeAAsles]

IAM's Forward-Thinking Negotiations Strategy at Southwest Results in Windfall of Cash for IAM Members
When IAM members at Southwest Airlines ratified their most recent contract in December 2014, they not only received wage increases, lump sum payments and other improvements, they also ratified IAM negotiated protections against falling behind other Southwest employee groups who were still in negotiations.
IAM leadership and negotiators smartly bargained a "true-up" clause, which requires that IAM-represented Customer Service Agents and Customer Representatives receive the same percentage wage rate, lump sum and variable bonus increases as Southwest Ramp, Operations, Provisioning and Freight Agents receive. This negotiated wage and economic protection maintains IAM members’ wage rates ahead of their internal counterparts for the duration of their Agreement, which becomes amendable in December, 2018.
“IAM members at Southwest Airlines have been and continue to be critical component of that carrier’s success and are fully deserving of the benefits of their IAM contract,” said General Vice President Sito Pantoja. “I’d also like to thank the IAM Negotiating Committee for having the vision to ensure IAM members at Southwest would never fall behind and will continue to lead the way at the carrier."
“We knew where the industry was going and negotiated a contract that ensured IAM members’ compensation remained at the top at Southwest Airlines,” said IAM District 142 President Dave Supplee. “IAM members at Southwest can expect another well-deserved raise and lump sum payment because of their IAM contract."
Coupled with the increasing wage rates, IAM members at Southwest will also receive an addition to the 2014 lump sum bonus (distribution will be the same as in 2015) and an accelerated Return on Invested Capital (ROIC) bonus—equal to 2.5 percent of 2015 earnings—to be paid within 90 days.
These “true-up” calculations are being finalized and will be forwarded to the membership as soon as possible.
The IAM represents approximately 6,000 Passenger Service and Reservations Agents at Southwest.
For more info on the IAM at Southwest Airlines, click http://www.iamdl142.org/southwest/

 

[MetalMover]

 
"American has said it wants its employees to have industry-leading contracts. This would be the last big group to get a post-merger joint contract, giving the carrier cost certainty for the next several years, a spokesman said."

You give me a good solid BASE wage with modest yearly increases plus good benefits and some SCOPE enhancements and you can lock me in all the way till I retire for all I care.

 

 
 

Wait until they get to the meat and potato articles before you start polishing off that golden nest egg.

 

[WeAAsles]

Wait until they get to the meat and potato articles before you polish off that golden egg.

I'm not fooling myself in the slightest that they're not looking to try and get more productivity. Productivity does have a cost that effects the bottom line and we know that the bean counters probably have that figure down to the red cent.

But the actual Labor costs are still going up and that means more for you and I to sock away to get out of here when we want.

 

[AA-MRO.COM]

At the rate this company is going I see nothing but bitterness on the horizon. Doug and his boyz sure know how to blow smoke on those town hall rodeos. YEEEEHAAAAAW
I aint seen sheet in my paycheck...

 

[robbedagain]

If AA TRULY WANTED TO HAVE Highest PAID employees  then why hire an a hole name Glass

 

[Traymark]

IAM's Forward-Thinking Negotiations Strategy at Southwest Results in Windfall of Cash for IAM Members
When IAM members at Southwest Airlines ratified their most recent contract in December 2014, they not only received wage increases, lump sum payments and other improvements, they also ratified IAM negotiated protections against falling behind other Southwest employee groups who were still in negotiations.
IAM leadership and negotiators smartly bargained a "true-up" clause, which requires that IAM-represented Customer Service Agents and Customer Representatives receive the same percentage wage rate, lump sum and variable bonus increases as Southwest Ramp, Operations, Provisioning and Freight Agents receive. This negotiated wage and economic protection maintains IAM members wage rates ahead of their internal counterparts for the duration of their Agreement, which becomes amendable in December, 2018.
IAM members at Southwest Airlines have been and continue to be critical component of that carriers success and are fully deserving of the benefits of their IAM contract, said General Vice President Sito Pantoja. Id also like to thank the IAM Negotiating Committee for having the vision to ensure IAM members at Southwest would never fall behind and will continue to lead the way at the carrier."
We knew where the industry was going and negotiated a contract that ensured IAM members compensation remained at the top at Southwest Airlines, said IAM District 142 President Dave Supplee. IAM members at Southwest can expect another well-deserved raise and lump sum payment because of their IAM contract."
Coupled with the increasing wage rates, IAM members at Southwest will also receive an addition to the 2014 lump sum bonus (distribution will be the same as in 2015) and an accelerated Return on Invested Capital (ROIC) bonusequal to 2.5 percent of 2015 earningsto be paid within 90 days.
These true-up calculations are being finalized and will be forwarded to the membership as soon as possible.
The IAM represents approximately 6,000 Passenger Service and Reservations Agents at Southwest.
For more info on the IAM at Southwest Airlines, click http://www.iamdl142.org/southwest/

So why didn't they do a "true up" in the mechanics deal at LUS, to go along with an industry leading wage?
They played ball with the company instead of getting an industry leading contract , and they were in Section 6 negotiations, no excuse, they failed at LUS.

 

[700UW]

So why didn't they do a "true up" in the mechanics deal at LUS, to go along with an industry leading wage?
They played ball with the company instead of getting an industry leading contract , and they were in Section 6 negotiations, no excuse, they failed at LUS.

Because the company didnt want to negotiate a stand alone CBA as the merger was announced.
 
The IAM informed their members of what was going on and decided to get a bridge agreement with improvements and then go into JCBA negotiations.
 
But this has been posted over and over, but let me repost it once again:

 

[SIZE=12pt]So fast forward to 2008 when the IAM was able to reach a Transition Agreement with the HP merger, which the IAM was successful in bringing back 50% of Airframe Overhaul in-house, from 2005-2008 US had unlimited outsourcing and put a formula in place to ensure US was in compliance with 50% of billable hours of airframe in-house.[/SIZE]
 
[SIZE=12pt]The first Section 6 negotiations since bankruptcy didn’t occur until 2011 or 2012, and while in negotiations US wouldn’t budge so we had to go into Mediated Negotiations with a mediator from the NMB.[/SIZE]
 
[SIZE=12pt]Then the merger was taking place and the company wanted to stop Section 6 Negotiations and proceed into JCBA negotiations with the IAM and TWU.  The IAM learned its lesson on doing that at UA/CO which failed the members. So the IAM with the backing of the TWU refused to go into JCBA negotiations before the IAM was able to reach a Section 6 agreement.[/SIZE]
 
[SIZE=12pt]So because of the merger and the impending JCBA negotiations going to take place, the IAM was able to reach a bridge agreement to get them into JCBA talks, so the IAM informed the members of the new tactic of a bridge agreement as the company wasn’t willing to budge and the Mediator explained to the company they were going down the path of bad faith negotiations.  So a bridge Section 6 CBA was agreed to and ratified by the members.[/SIZE]
 
 

 

[Traymark]

So instead of using the leverage of Section 6, they just said,
" oh ,ok Mr Parker , whatever you please.
See you in 2016 or so for a JCBA."

 

[700UW]

Do you think the NMB would release them to strike?

 

[jimntx]

I doubt it.  They refused to release the flight attendants after the company failed to even show up for an NMB-mandated arbitrated negotiation session.  Flight attendants tried to use that as a "not negotiating in good faith" argument for release, but the NMB didn't see it that way.  I don't know what it would take to demonstrate bad faith if one side doesn't even show up, and that's not seen as bad faith.