Smarter Fleet Strategyĭelta operates an older fleet of aircraft. Southwest also is considered to have good relations but cracks have been shown recently, including when their flight attendants quickly denounced a plan for temporary wage reductions in lieu of furloughs due to demand weakness. By this measure, Delta has managed better than their primary competitors, because while we may not see how the sausage is actually made, the result is a tastier link when it comes to labor relations at Delta. If the company does not willingly offer market based wages, work rules, or benefits, the union bargains on their behalf. If a company does not communicate regularly and openly, and provide good avenues for feedback with follow-though, the union provides that. By comparison, contracts at American and United have often taken years to sign after their amendable dates, and each company has a long history of mistrust between the company and their major unions.Ī common phrase in the airline business is that “weak management creates strong unions.” This has some truth in that unions fill in where the company fails for employees. Delta has a track record of beginning negotiations before their amendable date and signing a new deal on or close to that date. Under the Railway Labor Act, the law that governs collectively-bargained agreements in the airline business, contracts do not expire but instead become “amendable”. Southwest has this benefit for small business travelers given their high frequency service in and among many big cities but has struggled to carry the highest-paying corporate traveler.ĭelta has a strong history of working with their labor groups, and has even kept several big groups non-union. When you know that a large percentage of your most premium revenue has no real competitor, it gives you a lot of flexibility. As a result, United and American must compete for more of their business traffic than Delta must. Houston meets this standard for United, and maybe San Francisco too, but this is smaller amount of their system under their price control. United is in the worst position of the big three, fighting with American and Southwest for Chicago, fighting with two carriers for Denver, and Newark’s increased competition thanks to losing its slot protections and Delta’s build up at LaGuardia and JetBlue at JFK. By comparison, American has this position only in Dallas and Charlotte, though some may argue Miami is a stronghold but that has been withering. They own this position not only in Atlanta, but also in Detroit, Minneapolis, NY’s LaGuardia, and are growing their position in Seattle to create this effect. Delta bests their competition because they are in this sweet spot of the S-Curve in more locations and for a higher percent of their capacity. But once meeting a certain share threshold, almost all of the business traffic chooses the same option. Ben BaldanzaĪs this graph shows, having a small share of seats in a market means attracting almost none of the business travel. Having a dominant seat share in a market tends to win that airline most, if not all, of the buss.
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