Re:On Hold for 45 Minutes? It Might Be Your Secret Customer ...
by leetcrew on Thursday November 01, 2018 @08:38PM
(#18359822)
the fact that they only fly one kind of plane must help at least a little. maybe this gives them a little more leverage with the union, since the pilots are individually interchangeable?
as an aside, when i fly, i usually travel with my dad, who is a big general aviation enthusiast. he often remarks that the southwest pilots make by far the smoothest landings.
As of roughly a decade ago, according to Philip Greenspun, airline profitability was mostly determined by management's negotiating leverage with unions: http://philip.greenspun.com/flying/unions-and-airlines
> Federal aviation regulations, on the other hand, require an airline to operate with pilots who have specific training for and experience at that airline.... An airline whose pilots go out on strike is therefore shut down.
> A competent pilot union negotiator will present the airline with a plan to transfer essentially all expected future profits into the paychecks of pilots. It does not make sense to accept less because the pilots always have the power to strike and shut the airline down. The only real point of discussion would concern the best estimate of what the airline's profits are likely to be during the term of the contract.
> ...Should the economy turn down during the contract period, the pilots, having expected to collect 95 percent of the airline's profits, will in fact be entitled to 115 percent of the airline's profits. As the airlines tend to operate with fairly small reserves, paying out 115 percent of profits results in the airline seeking Chapter 11 bankruptcy protection and a federal judge adjusts the pilot union contract so that the pilots are back to collecting 95 percent of the new estimated profit figure.
...
> How does Southwest survive and prosper? Since they are constantly growing they don't have as high a percentage of senior pilots as their competitors. Also, their union may be taking a longer/smarter/more realistic view about maximizing its compensation. A union does have an incentive to avoid bankrupting an airline: if the airline goes Chapter 7 (liquidation) rather than Chapter 11 (reorganization), the senior pilots may have to start over at another airline at 1/10th of their former hourly compensation.
Southwest has historically done a lot of things very, very well, but airlines are also a weird business where "profitability" and "not going bankrupt" are strange concerns.
I don't know what about this has changed or if we've just been lucky not to have any high-profile airline bankruptcies since then. Perhaps pilots unions have followed the example of the NBA players' union and have negotiated for a specific revenue share rather than (or in addition to) a hard salary floor.