UAL Discussions Continue, Agreements Reached in Some Areas
Union Negotiators for UAL Mechanics and management in San Francisco this week and progressed further towards concluding discussions with the company for a new collective bargaining agreement. This weeks discussions led to tentative agreements on articles regarding Reduction In Force, Seniority, and Overtime. Discussions on Compensation, Benefits and Scope continued with progress reported, however more discussions are required.
Meetings have concluded for the week and the full committee will convene again next week in Chicago to continue discussions.
Week In Review News Items
Labor Developments
British Airways cabin crew have invited the airline’s new chief executive for talks after beginning their fourth strike ballot in two years. Unite, the union which represents the BA workers involved in the dispute, has asked Keith Williams to meet to discuss the three-year-old dispute over changes to contracts and pay levels. Last weekend, Williams wrote to cabin crew telling them to forget “the angry words of the past” and praising the role that the cabin crew play.
Business lobby group London First has called on the government to limit the power of trade unions by introducing tighter rules on strike action. In the week that British Airways' cabin crew were asked once again to vote on industrial action, London First said the government should introduce legislation that outlawed strikes unless at least 40% of balloted members support strike action, as well as a majority of those voting.
The Aeronautical Repair Station Association (ARSA) is fighting perception issues. It has begun the second phase of its multi-year Positive Publicity Campaign, designed to educate decision makers in Washington on the importance of contract maintenance. ARSA launched the campaign about a year ago and initially focused on public opinion data. Its second phase is designed to develop economic data on the aviation industry’s impact, in the U.S. and internationally.
Legislative, Safety & Regulatory
After delaying for more than three years a bill to reauthorize FAA, Congress appears ready to adopt legislation that would also make several changes in the way airlines operate. For example: An amendment to the bill could more than double the number of daily round-trip flights between the western U.S. and Ronald Reagan Washington, to 28 from 12. Long-distance flights into Reagan National have been limited because of noise concerns and an effort to shift more flights to Washington Dulles International Airport. Airline officials expect nearly half of the new flights to take off from Los Angeles and San Francisco.
Choosing to carry your luggage onto a plane instead of checking it with an airline might save you a few bucks at the ticket counter but it's costing taxpayers about a quarter-billion dollars a year. Homeland Security Secretary Janet Napolitano told Congress this week that luggage fees have prompted more passengers to hold onto their bags, which means more items for TSA officers to inspect at security checkpoints at a cost of about $260 million annually…the Homeland Security Department paid contractors millions of dollars to develop and study surveillance systems that could covertly track pedestrians and check under people's clothing with airport-style body scanners as they enter train stations, bus depots or major events, newly released documents show.
Airline Industry Finances & Structure
US Airways said Thursday that traffic and a key revenue measurement rose sharply in February, allowing the airline to fully cover rising fuel prices. Company president Scott Kirby said travel demand last month was "exceptionally strong." Traffic on the nation's fifth-largest airline rose 4.1 percent from a year ago…indeed, airfares at major U.S. airlines are climbing again, continuing a dizzying pace of nearly weekly increases on both penny-pinching vacationers and expense-account corporate fliers. The airlines are raising fares to cover higher jet fuel prices, and the strategy seems to be working.
IATA cut its global industry profit outlook due to rising fuel prices. The forecast for the airline industry was cut back from USD9.1 billion to USD8.6 billion. Oil prices are forecast to increase from 26% to 29% of overall costs. North American airlines are forecast to make USD3.2 billion in 2011, down 32% from 2010. Shares in US carriers dropped in trading on Wednesday, with Delta Air Lines falling 4.3%.
Star Alliance airlines are expanding their capacity by 10.6% in Mar-2011, growing the grouping's share of global supply to 26.1%, as other groupings fail to keep up. The world's unaligned full service airlines (FSA) are still the biggest group (and rich pickings for the expanding alliances). The unaligned FSAs command a 27.9% of global capacity, down slightly from 28.2% in Mar-2010, as they grow capacity by 7.3% year-on-year this month – slightly below the global average 8.6% expansion.
Predicting what will happen to the airline industry in 2011 and beyond is, as always, a hazardous task. CAPA's annual Outlooks over the past decade have consistently pointed to airlines facing "challenging" times in the coming year. The nature of the challenge has varied. One thing has not changed: this is not, and never will be, an industry for the faint-hearted. The year 2011, promising a weak and uneven economic recovery, with some still-unresolved potential setbacks, will be no exception.
Miscellaneous
Southwest Airlines is recovering from two unrelated computer outages this week that caused the carrier’s online reservations systems to crash and briefly snarled its flight operations…California-based airline Virgin America is being applauded for building a powerful brand and developing a “fervent fan base” in a short span of three and a half years…if you’ve ever asked yourself, “What will they think of next?” then here’s one possible answer: How about an airline ticket price that rises or falls with the price of fuel? Sound far-fetched? Yes, but that isn’t stopping Allegiant Air from proposing it.