Airline Fares Increase in January as Labor Costs Rise

[WeAAsles]

Labor Costs Spike
With labor talks/deals largely in vogue in the aviation space, labor costs have been on an upswing. One detailed look at the fourth-quarter 2015 earnings of carriers like Delta Air Lines


DAL


, JetBlue Airways Corp.


JBLU


, Alaska Air Group


ALK


and Southwest Airlines, and one can easily reach the conclusion 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.
With carriers' financial health expected to be sound going forward, courtesy soft oil prices, we expect labor talks and new pay-related deals to be a key determinant in 2016 as well.
 
To Wrap Up
In view of the observations made herein, it can be concluded that labor talks/deals will dominate the airline space as carriers continue to be profitable, thanks to soft oil prices. That carriers will continue generating huge profits can be gauged from the International Air Transport Association's (IATA) 2016 upbeat projection. IATA expects profitability in the space to increase to $36.3 billion which is more than double the figure recorded in 2014, when oil prices were higher.
The forecast further strengthens the view that good times are here to stay in the airline space. Stay tuned for more updates on the labor front as we go move further into 2016.

 

Read more: http://www.nasdaq.com/article/airline-labor-deals-take-center-stage-thanks-to-cheap-oil-cm587088#ixzz41lJ6SOB7

 

[WeAAsles]

It's articles like this and the IATA future forecast that keep me saying that the 3% Doug Parker offer is sub-par.

If you do the math on the 03 concessions for Fleet (You guys in Maintenance should do your own) and add 2% from where we would have been had there never been concessions, we would fall almost exactly where we would be today almost equally. Basically in wages it would be nothing more than a snap back. 

And it still wouldn't account for any lost jobs, increases in productivity, lost stations or our Frozen pensions and retiree medical. The Pension was a 6.25% multiplier and our replacement was a 5.5% 401k match that only maximizes if you match it from your own wages. 3% only, if you contribute nothing at all. 

Personally I find the original 7% above Delta current to be a reasonable offer and it shouldn't have been dialed back on. A little bit more also to the 401k contributions and at least for me I would have no issue with anyone who is still receiving profit sharing checks in the industry. And Station Staffing language needs to be improved on the AA side of the fence.