This pay raise is not a union vs non-union issue…
When the DL/NW merger was announced, DL had already obtained agreement from the pilots to combine their workforces quickly – which was possible because both pilot groups were represented by the same union. That was not true of any other labor group and thus the representation elections which have now ended. As in many mergers, companies give labor (unionized or not) increases as the company is able to achieve its strategic objectives. Mergers are inherently messy… the PMDL and PMNW pilots allowed DL to begin achieving the pilot parts of the strategic benefits of the merger fairly quickly.
Because DL has a long history of trying to provide pay raises to pilot and non-pilot personnel, it was a given that there would be a non-pilot pay raise at some point. Since there are some efficiencies that come to DL as part of completing the representation process, DL could justify passing along some of those savings to employees.
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Changing pay during a representation election is something about which the NMB has ruled interference in the past. Whether DL could have changed pay more than they did will remain unknown but they did argue that the pay raise they gave was based on their pre-merger principle of bringing PMDL people up to industry average pay rates. The NMB did not see that raise as interference but it is very possible others could have been…..
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Nonetheless, the representation issues have been settled and there is little value in looking back any longer at what might have been….
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What the conclusion of the representation process did was to allow DL to focus on building strategically what it needs to compete.
Deregulation has been an absolutely brutal process but as the changes in the industry wind down, it can be seen that some companies have adapted better to deregulation than others.
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WN is clearly one of the true success stories of deregulation. While born pre-deregulation, they used deregulation to expand into many unserved markets and by successfully challenging established network carriers in markets when those carriers were unable to adapt to the changes that deregulation brought.
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Case two is CO which did not initially adapt well to deregulation… after a couple failed attempts at finding themselves and with the help of BK, CO became a high quality, business focused airline that found opportunity particularly to build EWR into a global hub such as NYC had never really seen. CO’s only downfall is that they had no ability to grow beyond their predominantly IAH and EWR based network – and thus their success laid the groundwork for a UA merger….. UA itself paid a high price in BK and transformed very slowly but essentially succeeded at transforming and is now well positioned as a superior global carrier, thanks in large part because of CO’s contributions which helped rebuild much of the dominance UA once had but gave up during its restructuring.
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Enter DL, which had a strong pre-deregulation era history of having above-average profitability, which also translated into above average compensation for its employees. However, DL spent much of the first 25 years of deregulation unable to figure out what it was supposed to be. With 9/11 and the months that followed, it became apparent that DL’s historic strength of being predominantly a domestic connecting airline was no longer viable. Going into BK behind UA and US gave DL the opportunity to think about what it needed to be and do to transform itself – which is precisely why DL’s transformation from 2005 until the merger with NW in 2008 will stand as one of the most dramatic turnarounds in corporate history.
DL was determined with the NW merger and in its actions since to address its historic strategic shortfalls and to pursue revenue opportunities that would make the company successful for the long-term, in the same way that WN and CO did by adapting to changing market conditions and finding new revenue streams when it was apparent the old ones would no longer deliver what the company needed.
This pay raise is about DL’s ability to transform itself, to integrate the rich assets and people of NW – who like CO built a strong franchise even it was limited in size, and to adapt together to the changing market. All of the new DTW-Asia flying has initiated and has succeeded because DL recognized it had the domestic strength to support an inland US-Asia hub, yet NW didn’t have the right aircraft – and perhaps not enough corporate contracts – to make such a venture possible. The NYC buildup and the slot swap is about pursuing the corporate revenue necessary to support DL’s global network and to have a revenue advantage even against carriers that have lower costs.
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There were many who said DL would never succeed at merging NW – yet DL has once again set the bar very high for how well airline mergers can happen… although it is certainty true that there has been enormous changes for a lot of people, esp. the PMNW people.
And yes, Kev, those pay and benefits can indeed be taken away… nothing is guaranteed in life. But when you consider how much BK has taken away from the entire legacy segment of the airline industry, the focus should be on how to prevent such a serious restructuring from ever happening again.
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Finding stable long term sources of revenue, having the foresight to recognize changes and adapt to them, and building a cooperative relationship between labor and management are clear keys to success in the airline industry – WN and CO succeeded post deregulation because of their ability to recognize those principles. UA and DL, while very different companies, have both become what they are today because they have proven that building on your strengths while continually looking for new revenue generating opportunities is the best formula for success not only for the company but ultimately its employees. With the merger completed, DL appears to be returning to its historic strength of having above average profitability and flexibility to adapt to the changing marketplace – and isn’t afraid to compensate its employees for helping it maintain that competitive edge.
