Delta Air Lines is not the only airline that offers its employees unsolicited raises. American Airlines did the same thing in 2017. But oh what a difference between those two raises.
In a widely-praised move, Delta is giving employees a 4% raise starting next month. Meanwhile, American Airlines offered pilots an 8% raise and flight attendants a 5% raise in 2017. Wall Street reacted with a decisive thumbs down and we’ve seen over the last two years that the ROI has been elusive. Why?
Delta Raise: Vision-Based
Delta workers, with the exception of pilots, are non-unionized. Even so, labor relations at the Atlanta-based airlines are far better than its unionized counterparts at American and United.
Here’s the letter, in full, from Delta CEO Ed Bastian on the raise:
We’re heading into Labor Day weekend, the final days of a very busy summer. I want to thank every member of the Delta family for your incredible dedication and professionalism during the busiest travel season in Delta’s history. I want to share some good news about our investments in you and how we plan to support you even more in the time ahead.
Despite the record passenger volumes, airport construction in key hubs and difficult weather, you delivered operational reliability this summer at a level our customers have come to expect and love about Delta. Because of the success you continue to create, I’m happy to announce a 2019 pay increase, effective October 1. In addition, we expect this year’s Profit Sharing Day will be even better than last year’s.
As to the much-deserved pay increases, effective October 1, 2019:
- Ground and flight attendant scale employees worldwide will receive a 4 percent base pay increase at all steps of the pay scale, other than some international employees covered by an industry, government or collective bargaining agreement
- Eligible merit employees worldwide will participate in a 4 percent merit pool
While I’m proud of our success, I know that it’s been an intense year and a particularly long, hard summer. Maintaining our performance levels with record loads has put a strain on everyone and stressed our people and resources. Our dedication and stamina can only carry us so far.
We know we pushed the operation and our teams harder than expected this summer. Just as important as your pay raise, we need to make additional investments to improve the tools and resources needed to deliver an even better product and service for our customers. We will be making needed investments to improve a range of areas, including staffing, catering, equipment — everything from wheelchairs to GSE — and front-line leadership development among others.
Your divisional leaders will provide more details in the weeks ahead, but we want to continue hearing your feedback and ideas on what we can fix and investments that can be made. Please keep identifying those stress points that need to be addressed. And always remember that when it comes to safety, you are empowered to slow or stop the operation in order to protect yourself, your colleagues and our customers.
Leading the Delta family as your CEO is a great honor, and I will always work to support you as we continue our journey together. Thank you for all you do and congratulations on all you have achieved.
I love this letter because there are no “enhancements” (bad news disguised as good news). There are no “but” caveats. Instead, Bastian’s note expresses not just affirming words, but it is backed by an appropriate recognition in the form of a pay raise. And it does far more than say thanks. He outlines a vision going forward that will continue to inspire employees to work harder.
American Raise: Pity-Based
When American Airlines offered pay raises to its employees in 2017, fuel prices were rising rapidly. American had just reported a 67% drop in profits and at the same time failed to to raise airfare due to competitive pressure. Revenue was up 2% but costs were up 11%. Contract negotiations with pilots and flight attendants were two years away and neither party had demanded these wage/salary increases.
So why didn’t it work? As Gary Leff noted, American gave employees raises but not a vision of where the airline would go. CEO Doug Parker told skeptic investors that service would improve and therefore revenue would improve, but that never happened. Why?
What is missing from Parker’s 2017 statement below?
Today’s news is about doing the right thing and doing so not because we are contractually required to or because we are locked in a contentious contractual battle. We must continue moving past the days of discontent as we build a new American where team members trust each other and work together with our customers’ care in mind.
Ok, we can all stipulate the mid-contract pay raise was intended to build trust. But to what end? What vision was offered for where this increased trust would take American Airlines? Very little, if any. What a difference between Bastian’s note above, which includes info on how Delta is also increasing in the onboard product to create a better experience for customers and a more profitable airline.
CONCLUSION
Part of the problem is one of entitlement mentality. Delta employees, as a whole, feel well treated because their company takes care of them proactively and they feel the sky is the limit; that through hard work there is no limit to growth. Meanwhile, American employees feel entitled to pay raises. In 2017, unofficial complaints over the disparity between Delta and American led to the official pay raise. But employees still felt short-changed. Thus, even a preemptive effort to give them at least part of what they wanted failed to produce fruit. Instead, it merely confirmed in their minds that they got part of what they were entitled to, but would need more. And without it, service would suffer. And it has.
Sadly, it is a vicious cycle.
American must do a better job of expressing its grand vision for the future, going well beyond new route announcements. Until it can do that in a way that inspires its employees, all the pay raises in the world will not solve the underlying employee problem at American Airlines.
Also check out Kyle’s piece on this topic yesterday, American Airlines Gives Apologies, Delta Gives Raises which takes a look at this issue from a different angle, though with a similar conclusion.
image: American Airlines
Is that photo reversed, or are American flight attendants now wearing their wings over their right breast? (Air France crewmembers do – along with several other French-speaking airlines. But at virtually all other carriers, uniform wings are worn over the left breast.)
Bastian is a weasel but he’s not stupid. He just wants to effectively bring back the old days of airline regulation, but with Delta on top, and he’s willing to do this by hook or by crook. It makes sense to ensure labor peace while moving toward his goal.
Parker on the other hand, is just completely out of his depth. He was fine running America West as a regional airline but he’s impressively inept at running the largest airline in the world. The board of American should have begged Rupert Hogg on their hands and knees to become the CEO of American.
I totally disagree. I’ve been with Delta for 28 years and have seen CEO’s come and go. Ed actually listens to us in the trenches. Not just listen but hears out ideas and concerns. He knows that it takes every single employee to make the chain strong. He is a great business man and a very nice person.
A fair counterpoint. As to the weasel part, he is the driving force behind Airlines For America, which wants the USA to abrogate laws that we initiated in order to stifle competition, thereby raising prices. Delta under Bastion also screams hypocrisy about subsidies, and actively crushes anything that could possibly threaten their hallowed position, such as new airports and fifth freedom flights. Delta has also changed their views of the most engaged frequent fliers by drastically and repeatedly worsening Skymiles. Remember about a half dozen years ago when Skymiles was literally asking customers what their loyalty program had done for them lately? Contrast that with the view at the Freddy’s a couple of years back where Delta people stated that if they won an award then they were doing something wrong. Engaging loyal customers and working to retain loyalty is wrong? I say this as a formerly fervent Delta loyalist. I’m genuinely glad that Ed Bastian listens to employees. I just wish that he didn’t want to break every rule in the book to make Delta succeed.
As to the labor peace, peace is often cheaper than war, and Delta badly wants to keep out unions. Since other airlines have unions, Delta has to prove to employees that non union is better. If this were actually the case, Delta pilots would leave their union, but that’s another argument.
Being maybe a customer for more than 65years it has only been within the last 10 years that I have seen a decline in service where company first, customer second,from curbside check in to inflight. We will not mention the baggage handlers. On my last three trips my checked luggage was damaged beyond repair.
Ms. Toni Van Pelt,
President,
National Organization is Women (NOW)
Washington, DC
Dear Ms Van Pelt,
At Delta Airlines approximately 80 to 90 percent of the 25,000 flight attendant group is female and about 90% of the 15,000 pilot group is male so kindly look at the following chart below and let us know if your esteemed organization can help us out with a letter writing campaign to the management of Delta airlines and/or spreading the word of injustice and inequality, that is going on at the largest and most profitable airline in the USA, to other organizations.
DELTA management CLAIMS that all employees are part of a ”DELTA FAMILY” that it is the BEST COMPANY to work for as far as gender equality and treatment of females are concerned so please let us know if that is true by reading the facts below such as 56 hours of sick time for flight attendants, mostly females VERSUS 280 hours for the pilots, mostly males, and for the first 100 hours of sick time the pilots do not have to get a doctor’s excuse whereas flight attendants are required any day the duty falls over holidays or after making 3 sick calls in a year and again all employees are considered as part of a DELTA FAMILY!!!
We would like to remain anonymous as Delta Management can go after the employees that are complaining and terminate them if their identities are revealed. The company does not want the employees to even say the word “UNION” while at work.
Kindly keep this email address confidential and respond by email with your direct phone number at NOW for us to get in touch with you.
Thanks!!!