COLA Update
As reported several months ago and pursuant to Article 15.N of the s-CAL Collective Bargaining Agreement (CBA), the Union and the Company met in Washington, D.C. at the office of Kathryn Kobe, Director of Price, Wage, and Productivity Analysis for Economic Consulting Services. The purpose of the meeting was to continue discussions pertaining to cost of living data in cities where technicians and related are based.
Ms. Kobe submitted a bid/proposal to Continental Airlines to perform the research that would estimate the cost-of -living for mechanics that live in the Houston, Newark, Cleveland, Orlando, and Los Angeles areas relative to the cost of living for individuals of similar income levels in the United States overall. Continental balked at the overall cost of Ms. Kobe’s bid and countered with an offer to buy “off the shelf” surveys themselves and review the data with the Union. The Union refused this offer pushing instead for a neutral, independent, outside consulting firm to compile and analyze the data.
During negotiations for the s-UAL Collective Bargaining Agreement (CBA), the Union strengthened Article 15 N of both agreements by introducing the following language:
“The Company agrees that it will fund a study of the cost-of-living and cost-of-living differences for airline technicians based in San Francisco, Seattle, Chicago, Denver and Washington compared with the cost-of-living for airline technicians in the 48 states contiguous United States. The study must be conducted by an independent, outside economic consultant firm mutually agreeable to the Company and the Union. The extension of the Proposed Study by Economic Consulting Inc. recently submitted to the Continental Airlines and the Union under Article 15 N of the current Continental Technicians and Related Agreement to include the five bases above will satisfy the requirements of this Article 15 N.”
Shortly after the ratification of the s-UAL CBA, Ms. Kobe proposed a new statement of work and cost estimate for analyzing the place-to-place cost-of-living issues with respect to the Teamsters-represented mechanics at United Airlines/Continental Airlines. Such work would estimate the relative cost-of-living for mechanics that live in the Houston, Newark, Cleveland, Orlando, Los Angeles, San Francisco, Seattle, Denver, Washington DC and Chicago areas relative to the cost of living for individuals of similar income levels in the United States overall.
To the extent that is possible, the data will show differentials for major groups of expenditures including but not necessarily limited to housing (using both a rental concept and a purchase concept), transportation, food and clothing. It will also examine differences in taxes and transportation issues, such as length of commute. The overall weights used for the comparative indexes would be the U.S. average expenditure totals for households with incomes in the $70,000-$79,999 income range (before taxes).
The bid/proposal has been submitted to the carrier and the Union is waiting on their response. Once the data is made available it will be shared with the membership and date(s) will be scheduled for the parties to begin discussions about the cost-of-living in the various cities. We know this is an issue that is near and dear to the hearts of many members and we appreciate your patience. The Union is doing all we can to move the Company along and will continue to update you frequently.
Airline Division attends MRO Conference
Last week Representatives Chris Moore and Bob Fisher attended the 17th annual MRO Americas conference in Dallas Texas presented by Aviation Week. In addition to speakers promoting the MRO industry, several very informative breakout sessions occurred regarding outsourcing and future trends. Airlines for America (A4A), formerly known as the Air Transport Association (ATA) opened the conference on Tuesday with remarks from Jon Oberdick, A4A Chairman of the Engineering Materials Maintenance Council (EMMC) and Managing Director of USAirways Technical Operations. A4A member airlines and their affiliates transport more than 90 percent of U.S. airline passenger and cargo traffic and is America's oldest and largest airline trade association. Oberdick informed the attendees that at this year’s conference there were more than 8000 participants and about 700 vendors selling products and services.
President and CEO of A4A Nick Calio next addressed the conference and laid out his legislative plan for the airline industry. Mr. Calio pointed to the rail side of the RLA as a model for a new national airline policy. On a side note, moving towards a rail type policy has two significant benefits for the membership. If done correctly, these benefits would include a national pension plan supported through passenger revenue and a bankruptcy policy that requires negotiation of collective bargaining agreements without the ability to immediately move to abrogate. This would improve the status of all represented airline employees.
Mr. Calio also suggested that the airlines needed to work in a unified manner because sending different messages to Congress negatively affected the industry. Unfortunately, several tornadoes moved through the area and there was an hour long break in the basement of the convention center. In the afternoon, there was a discussion on MRO industry trends. The cost of fuel is a major issue for airlines and they continue to search for ways where they can reduce costs to offset the rise in energy costs. Interestingly, it was noted that with current margins, a spike in the price of fuel to $135 per barrel will flip the projections for 2012 from an expected profit to an overall loss. Older planes are being retired at a faster pace than in previous years which will give a short-term bump to the used parts market helping to drive costs for operating older aircraft slightly lower over the next five to seven years. New financing in the industry is pushing buyers towards new fuel efficient aircraft as no one wants to finance the older planes due to decreased yield on those models. Newer aircraft provide short-term maintenance savings to the carriers as well.
Annual spending on MRO's was $49.5 billion dollars last year and is expected to climb to $68.4 billion annually by 2022. Heavy Airframe, Engine and Composite MRO spending will increase but not dramatically. Line maintenance however is expected to be a substantial part of the MRO market increasing from today's 17% to an estimated 42% by 2012. On Wednesday, Aviation Week President Greg Hamilton introduced Gary Kelly, CEO of Southwest Airlines. Mr. Kelly relayed that the AirTran merger is expected to be complete by 2015 and the company should realize a $400 million dollar savings in synergies when the merger is finalized. Mr. Kelly expressed a desire to achieve maintenance cost controls through productivity gains because the old paradigm of 4% to 5% increases each year in the maintenance budget was unsustainable. Like every other carrier, SWA is seriously concerned about the rise in fuel costs and a spike could put the carrier in a position where it would have to report its first loss in 29 years.
Representatives Moore and Fisher then broke up to attend several breakout sessions. These sessions were panel discussions led by industry leaders including manufacturers, MRO providers, and airlines. Regulators from the FAA also sat on several panels. These sessions included; "Regulations Aren't Just for the Airlines," "Knowing When and What to Outsource," "Tricks of the Trade: Maintenance Forecasting and Planning," "The Training and Future of the MRO Workforce - Problematic or Not?" and "The Changing Face of Engine MRO." Each of these sessions provided valuable insight for collective bargaining moving forward. A comprehensive report will be submitted to the Division for its use in bargaining with an eye towards protecting members’ careers in the future.
The “Training the Future of the MRO Workforce” breakout session proved once again to be both inspirational and disappointing. The MRO’s as well as the airlines are grappling with the same issue of how to attract and retain A & P mechanics. As our work force continues to age, the prospect of attracting new, qualified technicians to the industry is becoming an immediate problem. The inspirational part of the equation is that across the industry, management is recognizing the value of a long-term, well-trained Aviation Maintenance Professional. The disappointing part is that the industry still has its head firmly buried in the sand on what to do about it. A great example of this comes from AAR which is one of the largest MRO’s in the country. They have positions available for 500 technicians that they have not been able to fill resulting in missed opportunities to generate revenue. They have finally found the bottom as far as wage rates and benefits but still will not admit that it is the driving factor behind their inability to hire qualified people.
The overall problem was summed up brilliantly by a Memphis College AP instructor. In an effort to attract more kids to the industry, they have begun an outreach program to the local high schools. The program was presented to 50 students, of the 50 only 5 showed interest, of the 5 that showed interest, only 2 continued into the program. The 3 that did not were instructed by their parents NOT to get into the Aircraft Maintenance profession. Why? First, from an institutional standpoint it costs more to train an A&P mechanic than it does to train an RN. Maybe this explains the high cost of obtaining the license since the FAA regulates class size to 25 students and the breakeven point is 21 just to cover the instructor’s salary. Second, and more telling, is that after the high tuition cost is paid the reward is an average starting wage of around $12 to $15 per hour in an industry that works nights, weekends, holidays, in the elements, with no job stability, and a very bleak outlook for the future owing to the continued downward pressure on airline worker wages, retirement and benefits. Finally when students do complete the course they are snapped up by other industries that require the same skill sets, are stable and start at more than twice what the industry pays. The industry is approaching the problem on a couple of creative fronts by starting to introduce aviation to students in school at the 4th and 5th grade level and by training laid off workers on task specific work such as sheet metal. Unfortunately, this does not address the real issue--Pay, Benefits and Stability. So, while the industry stands by scratching its collective head in an effort to solve the problem, we get older and the pool of qualified workers shrinks. Day three included a breakout session for Safety Management Systems (SMS). The panel discussed various aspects of the SMS they currently have in place. They encouraged the audience to formalize SMS in their respective companies and shared thoughts on how to proceed. Finally, the conference closed with a keynote speech by Senior VP Tech Ops for United Airlines, Jim Keenan. Jim’s presentation was on airline financing and like the other presenters he explained that the continued rise in fuel costs was putting pressure on all other aspects of the operation. According to Jim, several years ago fuel was only 20% of CASM but that percentage has now increased above 35%. Jim also stated that ancillary fees such as checked baggage would continue and carriers would look to charge for several other items to offset fuel costs. And lastly Jim restated the need to overhaul airline regulations and threw his support behind the A4A plan.
PV/GQ Meet in Houston
In the third of regularly scheduled meeting between representatives of the Union from the Facilities and Ground Equipment departments and the Company, the parties discussed the openings of HNL, PHX and LAS. At HNL, our technicians will take over from the vendor on April 15th. The bids for PHX and LAS will be reviewed on April 2nd. Tentative start dates are; PHX May 31st and LAS July 1st. The parties are close to an agreement on staffing bid area 109, machinist. There is still much work to be done concerning bid area 108, welding. The parties will meet again in Chicago on April 23rd. In attendance for the Union were International Representative Bob Fisher, Business Agents Dave Elmore (LAX) and Kevin Giegolt (ORD). Chief Stewards Ken Meidinger (DEN), Dion Cornelious (LAX), Scott Baroni (ORD), Greg Sullivan (SFO), and Allen Cosides (LGA). In attendance for the Company were Ray Ames (WHQ), Gary Dyer (DEN), Nick Klym (EWR), Jody Cope and Bob Watson IAH) and Bob Heatherington.
Furloughed Members Urged to Update Their Addresses.
Members on furlough are advised to keep their addresses current with the company while on layoff. It is predicted that there will be many movements this year and there have been several members that have been removed from the seniority list because old addresses were on file when notices were sent. If you are in touch with a furloughed member, please forward this information to them. Updates may be emailed to: ESC@united.com . The ESC will provide a fax number and ask members to send the address change accompanied with a signature.
