September 30, 2002
Welcome to Hurricane season.
|"Hey Baby, I'm your Telephone Man(sfield)"
- Meri Wilson
The National Mediation Board has adopted telephone voting for future
representation elections. Unfortunately, this means we will no
longer have anything to shred.
NMB Press Release
September 26, 2002
FOR IMMEDIATE RELEASE
NATIONAL MEDIATION BOARD
Contact: NMB Public Information Line -- (202) 692-5050
Re: NMB to use Telephone Electronic Voting
The NMB issued its decision on September 25, 2002, to generally conduct
representation elections using Telephone Electronic Voting (TEV) effective
September 30, 2002. The Board believes TEV will further its mission and
enable the Board to conduct representation elections more efficiently. TEV
uses the same highly secure technology many Carriers use for shareholder
voting and Organizations use for membership voting and polling.
See NMB determination, 29
NMB No. 90, for details.
In any new election, we would receive voting instructions that would
look like this.
STATES OF AMERICA
Case No. R-(Number)
An election is
being conducted under the Railway Labor Act (RLA) for the craft or class
of: (CRAFT OR CLASS), employees of (CARRIER NAME).
Sought to be represented by: (ORGANIZATION NAME) and
presently not represented.
No employee is
required to vote. If less than a majority of employees cast valid votes,
no representative will be certified. Should a majority vote to be
represented, the representative that receives a majority of the votes cast
will be the representative. Under the RLA, a majority of the craft or
class of employees has the right to determine their representative. The
RLA also states that elections shall be free from interference, influence
or coercion. It is unlawful for a carrier to interfere with the
organization of its employees. Alleged violations may be reported in
writing to the NATIONAL MEDIATION BOARD (NMB), Office of Legal Affairs,
1301 K St., NW., Suite 250 East, Washington, DC 20005. If you choose to
vote, follow the instructions below.
- You will need
your secret Voter Identification Number (VIN), which is printed
below, and your Personal Identification Number (PIN), which
is the last four digits of your Social Security Number.
- Call (toll-free)
1-877-NMB-VOTE (1-877-662-8683). Text Telephone users
(TTY) call 1-866-756-2829.
- Enter your
secret VIN and your PIN when prompted to do so.
- When your
identity is confirmed, you will be prompted with voting instructions
for this election. Follow the instructions carefully!
- Follow the
prompts to cast your vote for (Name of Organization)
or Any Other Organization or Individual.
- After you vote,
write your confirmation number here: _________________.
Your vote must be
cast by 2 p.m. ET, on (Date of Count)
the day of the count.
telephone voting system operates 24 hours a day, 7 days a week, starting
at 12:01 a.m. ET, on (Date). If you do not receive your VIN by (Date), you
may contact the NMB to request a duplicate VIN. Your request must be in
writing and signed by you. The request must be in an individual envelope.
No group requests are accepted. Requests by telephone or facsimile are not
accepted. Mail the request to: National Mediation Board, Office of Legal
Affairs, 1301 K St., NW., Suite 250 East, Washington, DC 20005. No
requests will be accepted after (Date). Voting ends at 2 p.m. ET, (Date),
the day of the count. If you experience any problem with the telephone
voting system, please call the NMB at 1-800-488-0019 ext. 5040 (Monday to
Friday, 8:30 a.m. to 5 p.m. ET).
VOTER IDENTIFICATION NUMBER IS:
prohibits knowingly and willfully making materially false, fictitious, or
fraudulent statements or representations in any matter within the
jurisdiction of the United States Government. 18 U.S.C. § 1001. This
includes use of another voter's identification number. Your VIN is a
confidential number, known only to you and the NMB. To maintain the
confidentiality and integrity of the voting process, do not share your VIN
Notice of Election
The NMB will
provide copies of the Notice of Election/Telephone Voting Instructions
(Notice) to the participants at least five calendar days before the
Telephone Voting Instructions (Instructions) are mailed to the eligible
voters. The Carrier must post the Notice on Carrier bulletin boards and
all locations where other notices to employees usually are posted. At
least one Notice per station must be posted.
consist of the telephone voting instructions and a Voter Identification
Number (VIN). The Instructions are mailed not less than 28 days before the
count. Only NMB agents administer Instructions and VINs.
Each voter will be
assigned a VIN to be used in conjunction with the last four digits of the
voter's Social Security number. The VIN is a confidential number known
only to the voter and NMB agents. The VIN is also noted on the Official
Eligibility List next to the voter's name.
Identification Number (PIN) is the last four digits of the voter's Social
Voting with the PIN and VIN
To vote, the voter
must call a toll-free telephone number as explained in the Instructions.
The voter follows the prompts. When the voter's identity is confirmed, the
voter will be prompted with voting instructions for the election.
The PIN and VIN
ensure the confidentiality and the integrity of the election by
eliminating unauthorized votes.
Language Notice and Instruction
When the NMB
determines that eligible voters are unable to or have limited ability to
read, speak or understand English, the NMB will translate the Notice,
Instructions and telephone voting prompts to the appropriate foreign
language as an alternative to English for the eligible voters.
eligibility or ineligibility has been challenged, and no final decision
has been made, will be sent Instructions and a VIN. Their votes, if cast,
will be considered challenged votes. Prior to the count, the eligibility
determinations will be made by the NMB election officials and appropriate
adjustments to the election records will be made.
for Duplicate Telephone Voting Instructions
Voters may request
duplicate Instructions, including a VIN, by contacting the NMB in writing.
The request must be signed by the voter requesting the Instructions and
mailed in an individual envelope; group requests are not accepted.
Requests by telephone, facsimile or electronic mail are not accepted.
Requests received less than seven days before the count will not be
honored. Requests dated or received prior to the mailing of the
Instructions will not be honored.
The name of any
voter requesting duplicate Instructions will be confidential. The voter
will be mailed duplicate Instructions, including a VIN, and the Official
Eligibility List will be marked to reflect that duplicate Instructions
Telephone Voting Instructions
returned to the NMB for incorrect addresses or any other reason, will be
checked for accuracy. If a "corrected" address is obtained at
least seven calendar days prior to the count, the Instructions will be
mailed to the corrected address.
Communications System Users
Voters may use the
NMB's TTY communications system as explained in the Instructions. When the
voter uses the TTY communications system, the voter must identify himself
or herself with the correct PIN and VIN. NMB election officials shall
assist the voter as necessary.
to the Official Eligibility List
will verify the number of eligible voters prior to the count by making the
(1) clearing all
(2) removing names
for those individuals whose Instructions were undeliverable; and
(3) adjusting for
changes in employee status.
Tally of Votes
and Time of the Tally of Votes
The voting will
close at 2 p.m., Eastern time, unless the Investigator establishes an
alternate time. The tally of votes will occur at the NMB's Office, in
and Control of the Tally of Votes
The NMB may allow a
reasonable number of representatives from the Organization(s) and the
Carrier to observe the tally.
Where the voter's
intent to vote for representation is clear, the vote is valid and will be
counted. Valid votes include "write-in" votes which clearly
indicate the voter's desire for representation.
The following votes
are void and will not be counted:
(1) votes cast for
a carrier or carrier official;
(2) votes where the
voter's intent is unclear;
indicating no desire for representation, such as "write-ins"
indicating "No" or "No Union;"
(4) votes where the
voter has "written in" "self," "self
representation" or the equivalent; and
(5) votes which
identify the voter.
adjustments to the list of eligible voters, the NMB agents will enter the
website, tally the votes, print the tally and provide copies to the
Organization(s) and the Carrier.
|"Feed me, Seymour"
of representative elections, the AFA is once again trying to expand its
revenue base. This bit of news is from an AFA press release.
This election is notable because it will be the first use of the NMB's
Sets Union Election for Shuttle America Flight Attendants
The National Mediation Board, the government agency responsible for labor
relations in the aviation industry, has authorized a union representation
election for the flight attendants at Shuttle America.
August 16, the Association of Flight Attendants, AFL-CIO, filed a petition
for election on behalf of the workers.
representation will provide us with a voice in our workplace,” said
Hunter Kidd, a three year Shuttle America flight attendant. “We work
hard for our airline everyday and deserve the job security and better
benefits that a legally binding contract provides.”
election will be conducted by telephone ballot. The NMB will mail out an
informational packet to each flight attendant on Oct. 7 and then send the
voting instructions to each flight attendant on Oct. 16. The voting period
will begin on Oct. 16 and close on Nov. 13 when the NMB will tabulate the
America is a US Airways Express carrier that began operations in 1998. The
carrier employs approximately 60 flight attendants.
is the largest flight attendant union in the world, representing 50,000
flight attendants at 26 airlines. Visit AFA’s website at www.afanet.org.
August 29, 2001, AFA petitions NMB for a representative election for
Delta Flight Attendants. On February 1, 2002, the AFA loses election. On
September 30, 2002, we are still waiting for the NMB to complete its
Clearly, this process has taken to long. This begs the
question - Is the NMB unionized?
the AFA's weaknesses is how it represents the needs of its members.
Instead of working with companies or government agencies, the AFA, through
its International President Pat Friend, takes an adversarial
approach. This method strikes us as shrill, emotional, and
members will not get respect until their leadership acts like they deserve
it. For an example of the quality of the AFA's communication skills,
look at the following press release.
Admiral Loy Uninformed on Flight Attendant Training Needs
Admiral Loy has not been properly briefed on the need for effective,
mandatory flight attendant training. I have requested a meeting so that
AFA can ensure that this loophole in aviation security does not remain
open. At that meeting, I will deliver 10,000 signed statements from flight
attendants around the country that attest they are not adequately trained
to face the current threat to commercial aircraft.”
than 50,000 flight attendants at 26 airlines join together to form AFA,
the world’s largest flight attendant union. Visit us @
our opinion, the best way to influence an admiral is not to issue a press
release calling him "uninformed." (We think the best way is to
threaten him with incriminating photos, but nobody asked us).
AFA is long on rhetoric, and short on social skills. When trying to
educate someone on an issue, it is best to provide information instead of
calling names in a public forum.
On Wednesday, September 26, Sharon Wibben held a conference call. This
story hit the broadcast media that evening. On September 27, the AJC
published this article. Coincidence?
We think that the fact that the article below was published is the best
reason for not sharing a conference call with the media. (The second
reason is they breathe heavily on the telephone and leave crumbs all over
the conference room floor.)
Delta tightens belt another notch
1,500 attendant jobs to be cut
Friday, September 27, 2002
Delta Air Lines plans to cut about 1,500 more flight attendant jobs as the
airline grapples with a grinding financial slump that shows little sign of
Delta's senior vice president of in-flight service, Sharon Wibben, told
flight attendants Thursday in a periodic teleconference call that the
Atlanta airline will try to make the job cuts through voluntary exit
Last fall, about 3,200 flight attendants accepted leaves, early
retirement and other offers as part of a broader wave of 10,000 job cuts.
Delta officials confirmed that it plans to cut more jobs but released
"That's an estimate," said Delta spokeswoman Catherine
Stengel said of the 1,500-job target.
"We have made it known that we will have to make the hard
decisions," she added, noting that Delta previously announced it will
reduce capacity by about 8 percent this fall, about twice the usual
"We are looking to match our work force with our capacity
reductions," Stengel said. She declined to say what incentives
attendants will be offered, when they will be offered or when jobs will be
"We're still working all that out right now," she said.
Other big airlines also are making cuts this fall, including American,
which recently said it will ax 7,000 jobs.
Delta has more than 16,000 flight attendants. About one-third are based
at its giant Atlanta hub.
Stengel also declined to say whether Delta plans to make similar cuts
in other departments. However, she cited a comment last week by Delta
President Fred Reid, who said further trimming through voluntary offers is
Delta Chairman and Chief Executive Leo Mullin, in an interview earlier
Thursday, also said more internal cutbacks could be necessary.
"We have taken a horrendous number of actions," he said,
"and we may have to take more."
Besides last year's job cuts and nearly 1,000 pilot furloughs, Mullin
said Delta has cut capital spending, ended flights to six countries and 10
cities and reduced service on 80 other routes.
After a better-than-expected rebound in travel demand in the spring,
traffic has remained flat in recent months, and average fares have
continued to fall, adding to the industry's losses.
Airlines are expected to lose about $7 billion this year on top of
similar losses last year because of a stalled recovery of passenger
traffic and falling ticket prices.
This week, Mullin and executives from American, Northwest and AirTran
Airways asked lawmakers in Washington for relief from heavy
security-related costs and lost revenue.
"We're the only industry that is being taxed for our own
security," Mullin said. "What it has turned out to be is a
He said costs and lost revenue due to security measures will total
about $660 million this year. Analysts estimate Delta will report pretax
losses of $1.2 billion this year.
Get breaking news throughout the day on Delta Air Lines at
We added a new forum entitled "Flight Attendant Survival - How to
get by in the Lean times." Click
here to post your thoughts
Mr. Mullin went to Congress. In our tradition of continuing plagiarization,
we lifted his testimony from the DeltaNet.
Financial Condition Of The Airline Industry
Testimony of Leo F.
Mullin, Chairman and CEO - Delta Air Lines
Before the House Aviation Subcommittee
September 24, 2002
*******AS PREPARED, NOT NECESSARILY AS
Chairman and Members of the Committee:
Thank you for providing this opportunity to testify
before you today.
Also here with me are fellow ATA members Don
Carty, Chairman and CEO of American Airlines; and Richard
Anderson, CEO of Northwest Airlines.
You may recall that I testified before the
full committee in a similar capacity a little more than 12 months
ago, shortly after our nation was rocked by the brutal terrorist
assault of September 11.
One year later, the terrible tragedy of so
many lives lost – including the passengers and crew members
aboard the four ill-fated aircraft – remains fresh in the
memories of Americans everywhere.
Even today, it is difficult to contemplate
the implications of September 11 in any terms other than the
immense human suffering and loss.
But the enormity of the event has resulted
in profound changes in almost every aspect of our personal and
business lives, extending far beyond any we contemplated in those
first few days and weeks.
I came here on September 19, 2001, to testify before you because
the immediate financial impact of the September 11 attacks had severely
destabilized our industry.
U.S. commercial aircraft were used as weapons of war, which
thrust our industry into the center of the ensuing national crisis.
We estimated at that time that the industry’s losses
associated with the tragedy for the shutdown period -- plus the huge
expected revenue losses for several weeks thereafter -- would likely
exceed $5 billion.
Although any forecast about the length of time required for
industry economics to return to normal following the unprecedented events
of 9/11 was highly speculative, our best guess was that revenue would
reach previously expected levels by mid-year 2002.
Now, while the airlines expected the financial damage to
continue throughout 2001 and through at least the first half of 2002, we
limited our request to Congress to only the most immediate and direct
damage from the terrorist attack.
Our plan was to bridge the gap until the time of revenue
recovery through difficult but necessary self-help initiatives, such as
cuts in fleet capacity, staffing, and capital expenditures – and we have
followed through in these areas and more.
Also, in order to ensure that airlines would have access to
necessary capital funds up until mid-year 2002 when we forecast revenue to
have returned to expected levels, we requested from Congress a $12.5
billion loan guarantee program.
This program was intended to assure private capital sources that
the government would play a financial role if needed, and provide actual
funding if appropriate.
Mr. Chairman and Committee members, we remain enormously
grateful for your support of our request, which resulted in the Air
Transportation Safety and System Stabilization Act of 2001 and provided $5
billion in cash aid and $10 billion in loan guarantees.
Also at those hearings, it became clear that September 11 marked
a sea change in how we as a nation must think about security.
Terrorists had used commercial aircraft to attack highly visible
symbols of our country’s democratic government and our free market
system – the Pentagon and the World Trade Center towers.
With those acts of war, aviation security suddenly became part
of the larger national effort to combat terrorism.
Consequently, Congress moved quickly again to create a new
federal aviation security system as part of the larger restructuring of
As with the financial package, members of the industry are
grateful to this committee and to Congress for the passage in November
2001 of the Aviation and Transportation Security Act, which has played an
instrumental role in restoring the public’s confidence in air travel.
Mr. Chairman, as I look back on the tumultuous events of the
past year, I had hoped to be able to provide a positive report on our
progress in dealing with the enormous security issues and in restoring the
industry’s financial health.
Unfortunately, I cannot.
While much has been done that is positive, our industry today is
at a point where its viability is seriously in question – much more so
than last year – and where the industry’s capacity to perform its
expected role in serving the public interest is in jeopardy.
This hearing affords the opportunity to discuss the dimensions
of this very large challenge and to continue the urgent dialogue on what
to do about it.
To that end, I would propose to arrange my testimony around four
1. Because the repercussions of 9/11 have extended beyond anyone’s
expectations, our industry is experiencing an unprecedented financial
crisis, even with assistance from the Air Transportation Stabilization
2. While it is airline management’s responsibility to deal with
economic or competitive factors, the industry’s ability to address the
current crisis is seriously limited by the staggeringly high costs of
well-intended post-9/11 actions by the government related to security.
3. Airlines are not asking Congress to assist with economic or
competitive challenges, but we do request that the government relieve
the industry of government-imposed security costs stemming from the
nation’s war on terrorism.
4. Because aviation is key to our nation’s economic health, swift
Congressional action is crucial to allow any meaningful possibility of
appropriate industry recovery.
I’ll begin with the first point, which is that because the
repercussions of 9/11 have extended beyond anyone’s expectations, our
industry is experiencing an unprecedented financial crisis, even after
assistance from the Air Transportation Stabilization Act.
Prior to September 11, the airline industry was moving
through a period of serious economic challenge.
The year 2001 was proving difficult, yet on September 10, the
prevailing sense was that almost all airlines were dealing with the
challenge adequately and would manage their way through the business
Then came September 11.
In addition to the horrific human impact, the event also
directly affected our industry, depressing revenues and triggering an
extremely severe financial crisis.
Exhibit 1 in the charts attached to my statement today,
you can see that in 2001, industry losses for the nine major airlines
totaled $7.4 billion.
As the footnote indicates, these losses would have reached
nearly $10 billion without the aid provided by this Congress.
You can see also that airline stock analysts’ estimates for
2002 currently reach as high as $7 billion.
This is one of the most discouraging numbers in this
presentation, since the expectation had been that losses would be
substantially reduced for 2002 as the industry fought its way to recovery.
the next page, Exhibit 2 shows that by June 2002, airline
debt had grown by $18 billion, a 21% jump since January 1, 2001.
The industry, in effect, has funded its losses with huge debt
As debt has grown, the crucial balance between debt and equity
has deteriorated, so that the average carrier now has a debt to
capitalization ratio in excess of 90% -- far higher than the average ratio
for all publicly held corporations.
Except for Southwest, the bonds of all other carriers are now
rated as "junk bonds" by Standard and Poor’s.
In the face of such challenges, airlines have acted quickly to
cut losses by adjusting operations to meet the new demand environment.
Since September 11, the major U.S. carriers alone have trimmed
costs by $14 billion in a series of difficult steps with far-reaching
self-help measures are illustrated on the chart marked Exhibit 3:
The six major hub-and-spoke carriers have cut operating
expenses by $8.7 billion or 13%, and many airlines are also working
through the painful process of renegotiating labor contracts to further
· We’ve removed 86.8 billion available seat miles, or ASMs,
from the system, a 15% reduction, and 267 aircraft from the fleet.
These cuts have resulted in unfortunate service
reductions for many cities and towns and, for the international
carriers, even the elimination of service to some countries.
· Commensurate with this reduced capacity and fleet, in a
step that has been most difficult for all of us, 70,700 airline employees
have lost their jobs – representing fully 16% of the people working for
the hub-and-spoke carriers.
· And we’ve also cut capital expenditures by $5 billion,
affecting the economic health of the industries that supply goods and
services to airlines and putting important technology-based customer
service improvements on hold.
Even as the industry has struggled with its unique challenges,
another source of financial stress has occurred as a result of the fall in
the value of financial investments – namely the increasing need to deal
with underfunded pension plans.
is shown on Exhibit 4.
At the end of year 2000, assets in airline pension plans
amounted to $34.9 billion, slightly below the projected benefit
This year 2000 gap reflected normal fluctuations that occur in
pension assets and liabilities.
But by 2001, reflecting heavily the drop in the stock market and
changes in interest rates used for asset and liability estimates, the gap
had grown to $12 billion.
Now, and in the upcoming year at least, substantial expense and
cash contributions to pension plans will be required by many airlines
during a time when the industry can least afford such contributions.
We can all hope that the financial markets improve soon, since
that recovery would clearly help in relieving this problem.
But in the near term, it will cost the industry a lot to deal
with the pension funding issues.
Now, including all the issues I’ve noted, the impact of this
aggregate crisis is already evident -- US Airways is in Chapter 11 and
United Airlines has indicated the possibility of a similar outcome.
Other airlines grow increasingly vulnerable each day.
Given the cost-cutting efforts the industry has undertaken,
the obvious question is, why have airlines not returned to profitability,
especially in light of the financial assistance Congress provided through
the Air Transportation Safety and System Stabilization Act?
The most obvious reason for the industry’s continued losses is
that while costs have been cut, revenue remains severely depressed.
As indicated earlier, airlines had expected a significant
revenue drop in the wake of September 11, but we also anticipated
continued improvement over time, with a return to previously forecast
levels by midyear 2002.
Instead, August 2002 revenue for the major U.S. airlines,
excluding Southwest, was down hugely -- 24% compared to August 2000.
To give perspective to this drop, consider that 2002 revenues
are now running at levels comparable to 1996.
reflects the development of a deeply troubling trend, which is indicated
on the chart marked Exhibit 5.
For 20 or more years prior to 9/11, airline fares correlated
closely with the GDP – fluctuating near .95% of GDP.
But following September 11, this connection appears to have
become unhinged, with revenue amounting to only .7% of GDP.
This is a huge change, and at the moment there is no indication
that the correlation will improve in the near-term.
While economic factors may play some role, this clear and
dramatic de-linking also suggests strongly that the airlines’ revenue
shortfall is closely associated with the events of 9/11 and its aftermath.
The Air Transportation Safety and System Stabilization Act was
essential in meeting the industry’s immediate cash needs following 9/11,
including the costs of the shutdown and the extreme subsequent short-term
$5 billion was provided for this purpose.
As you know, the Air Transportation Safety and System
Stabilization Act also established a loan guarantee program, providing
assurances to private capital markets of backstop governmental funding and
also serving as a final safety net.
The task of distributing the loan guarantees was assigned to the
Air Transportation Stabilization Board (ATSB), which subsequently set
three criteria to govern loan grants:
The closing date for loan applications to the ATSB was set at
June 28, 2002, so the application period has now ended.
While 16 carriers applied for federal loans, only America
West’s request for $380 million has received final approval.
In addition, US Airways was given conditional approval for a
$900 million loan.
In both these cases, the loan board has or will require that it
receive stock purchase warrants as part of the transactions.
The primary applications still pending are United’s request
for $1.8 billion million and American Trans Air’s request for $149
At this point, it appears that at most, the ATSB will fund
around $3.2 billion from the $10 billion Congress designated, with full
expectation of repayment consistent with the board’s three criteria.
As a result, the Air Transportation Safety and System
Stabilization Act has accomplished its intended mission, helping airlines
through the immediate aftermath of September 11 and providing lending
support through mid-year 2002.
However, because no one could have foreseen that industry
revenue would continue to suffer from the aftershocks of 9/11 more than a
year past the actual event, the industry crisis is not yet past.
o The applying airline must have no access to private capital
o The carrier must provide a viable business plan that ensures
o The carrier must provide a major contribution to the
nation’s air transportation system.
Now, as I noted in my second point, it is airline management’s
responsibility to deal with the marketplace factors in the current crisis.
The major reductions in fleet capacity, capital expenditure,
expenses, and -- most regrettably -- personnel, give evidence of the hard
steps already taken.
However, the industry’s ability to address the current
crisis has been seriously limited by the high and unanticipated costs of
well-intended post-9/11 actions by the government related to security.
Mr. Chairman, as I proceed to discuss this point, let me say
once more that our industry supported the Aviation and Transportation
Security Act and the decision to recognize federal responsibility for the
aviation portion of our nation’s broadened security concerns.
Since its passage, important improvements have been made
that make aviation vastly more secure.
We in the industry are deeply supportive of the federal
thrust for improved security, even as we may have issues with some
However, when the cost and revenue impact of each
well-intentioned federal security decision is viewed as a whole, the
startling degree of financial burden imposed on the airlines following
9/11 becomes clear.
In an effort to estimate this impact, we at Delta analyzed
the amount of cost or lost revenue for our airline in 2002 for each of the
several categories which are shown in Exhibit 6.
The magnitude of the post 9/11 financial impact of government
policies on Delta this year was extraordinarily surprising to us.
Let me review those with you:
· New security tax of $2.50 per segment – $265 million
§ This security tax was imposed on airline tickets to
help offset the federal cost of security and was intended to be passed
on to passengers.
§ But airlines have no
current pricing power, simply because our supply of seats so far
exceeds passenger demand.
§ In this high-capacity, low-demand environment,
airline customers do not have to accept price increases – and they
§ They shop on the Internet for the lowest possible
price, for example, so airlines by necessity end up absorbing the new
§ This converts what was intended to be a price add-on
to an expense, making it a direct hit to our bottom line.
· Increased terrorism insurance costs -- $150 million
§ Terrorism insurance was
essentially a throw-in item for our airline insurance program prior
to September 11, costing Delta only $2 million in 2001.
§ Following September 11,
premiums rose an incredible 900%, increasing costs by $150 million.
· Revenue losses due to new
restrictions imposed on air carriage of U.S. mail as well as on freight
shippers - $90 million
§ This loss is due to
the elimination of airlines’ right to carry mail over 16 ounces in the
cargo holds of our planes, as well as restrictions on the number of
shippers we can serve.
· Unreimbursed costs for cockpit door
fortification - $20 million
§ The cargo carriers have been a major beneficiary of these
· Loss in potential seat revenue
as part of the Federal Marshal program - $35 million
§ The government has paid a
portion of the initial cockpit door modifications, but $20 million
remains unfunded – and additional fortification costs are still ahead.
§ Federal Marshals occupy space
in the cabin closest to the cockpit, generally high-premium first class
seats which the airlines can no longer sell.
· Other mandated but unreimbursed
security costs - $60 million
§ This category includes the
costs to meet new post 9/11 federal requirements to increase ramp
security, maintain checkpoints for document verification, screen
catering suppliers and materials, provide airport space occupied by the
TSA, add security equipment, and provide security-related training.
· DOT-imposed fee for passenger
screening costs - $40 million
§ The Department of
Transportation has chosen to exercise discretionary authority granted to
the DOT in the Aviation and Transportation Security Act to impose
monthly fees on the airlines as reimbursement for passenger screening
Adding the financial impact of all these categories together –
the new security tax, increased insurance costs, new restrictions on U.S.
mail and freight, mandated cockpit door fortification, other unreimbursed
security costs, and the monthly fee to the DOT – the 2002 estimated
impact on Delta is $660 million.
In addition to these items, pending legislation to arm pilots
and provide self-defense training to flight crews could create large new
Also, the current TSA plan to implement new screening
requirements for checked baggage by the end of 2002 has enormous potential
to impact the industry with new costs, including increased staffing
demands and reduced efficiencies.
Now, the numbers just presented are Delta numbers – airlines
have not yet made a full survey to judge the industry wide impact.
However, given that Delta represents just over one-sixth of the
industry, we can roughly extrapolate to the rest of the industry by
multiplying Delta’s numbers by slightly more than six.
The resulting rough estimate for the total post 9/11
security-related impact on the U.S. airline industry would be about $4
That’s a staggering number – but it’s even more staggering
given that this amount alone could account for on the order of 30% to 40%
of the industry’s pretax operating losses for the year, based on
What’s more, $4 billion does not take into account the
significant revenue losses resulting from passengers deterred from air
travel by the increased "hassle-factor" of new airport security
Based on Delta’s market research on the subject, lost revenue
as a result of the hassle-factor, though difficult to estimate, could well
be almost as large as the security related cost.
Turning now to my third point, Mr. Chairman, we are not here today
to ask Congress to assist with economic or competitive challenges, but to
request that the government relieve the industry of the security costs
stemming from the nation’s war on terrorism.
The problems we face in the economic arena are appropriately the
responsibility of each airlines’ management team.
But we can meet our economic and competitive challenges
successfully only if Congress removes the national security burden now
placed on airlines – security burdens which, to our knowledge, no
other industry has been asked to shoulder.
We are here today to ask you to consider a seven step
We ask you for your support in the rapid
implementation of these initiatives for two important reasons.
First, we believe -- and we believe the
government generally has expressed through legislative intent -- that
increased aviation security should be viewed as an appropriate national
security response to the September 11 national attacks which used airlines
as the instruments of destruction.
1. Eliminate the security segment tax imposed following September 11.
2. Provide terrorism/war risk reinsurance for at least one year.
3. Immediately authorize airlines to carry U.S. priority mail.
4. Obtain reimbursements to the airlines for unfunded security
5. Give TSA the flexibility to implement new baggage screening
processes -- including EDS and ETD -- in a manner that is
security-effective, but also customer-focused and cost-efficient.
6. Eliminate the monthly security fees airlines are currently paying
to the Department of Transportation.
7. For any armed-pilots program or cabin crew self-defense training,
ensure that associated costs are not levied on the airlines.
Secondly, as the final point for today,
we ask for that help because aviation is key to our nation’s economic
The statistics are well known:
· As a result, these costs should be funded through the
national security funding mechanisms, not as taxes or costs imposed
specifically on airlines.
Removing the national security burden from
the airlines is crucial not only to my industry, but to the millions of
people, businesses, and organizations that depend on a secure, healthy,
and efficient air transportation system.
In summary, Mr. Chairman and members of the
Committee, we are not asking the government for special treatment – we
are asking for an end to special treatment, and for relief from the
government-imposed costs of the war on terrorism now uniquely borne by the
· Airlines are a vital infrastructure
for U.S. commerce, carrying 620 million passengers and 22 billion ton
miles of cargo each year.
· Air travel makes a significant contribution to the $700
billion travel and tourism industry, which employs approximately 1 of
every 7 people in the U.S. civilian labor force
· Airlines’ directly provide approximately 1 million
· We pay $17.7 billion in taxes -- $10 billion of those
at the federal and state level.
· And airlines provide an essential social and business
link between America’s cities and its smaller communities.
Notice Mr. Mullin's approach to communication with the
government? Compare and contrast this approach to Ms. Friend's
efforts. We think that all the nifty charts and graphs are
much more persuasive than calling someone in a position of power
Are you motivated now? Want to do
your part? Follow the link to send a message to your representatives
in Washington. Tell
Washington what you think.
Delta ALPA news courtesy of the National Right To
Work Legal Defense Foundation (however, they do not know that they were
extending that courtesy here)
UNION FORCED TO RETURN $672,000 IN DUES ILLEGALLY
SEIZED FROM DELTA AIRLINES PILOTS
National legal foundation helps pilots recover money spent for
objectionable union activities
Washington, DC (September 4, 2002) — In response to legal action
brought by attorneys with the National Right to Work Legal Defense
Foundation, the Airline Pilots Association (ALPA) union is returning
$672,000.00 in dues and interest to 330 non-union airline employees.
The settlement brings to close a long-running case that
reached the United States Supreme Court. In
addition to returning the dues money, the ALPA officials are required
to change the accounting procedures they use to determine how much
non-union employees pay in agency fees. These changes may reduce the
difficulties faced by airline employees in reclaiming forced dues used to
pay for union politics and other activities unrelated to collective
“This victory is a small first step in protecting employees in the
airline industry from union shakedowns,” said Stefan Gleason, Vice
President of the National Right to Work Foundation. “Unfortunately,
federal labor law has given airline unions a virtual stranglehold over the
industry, to the detriment of both employees and consumers.”
Although many of the airline workers represented by Foundation
attorneys live in states with Right to Work laws, they are not protected
from compulsory unionism.
The airline industry is regulated by the Railway Labor Act (RLA), which
imposes compulsory unionism despite state Right to Work laws. The
illegally confiscated dues are being returned pursuant to the settlement
of two related suits brought by Foundation attorneys, Miller v. ALPA and
Shackelford v. ALPA. Foundation attorneys won the Miller case at the U.S.
Supreme Court with a 7-2 ruling that non-union workers cannot be forced
into internal union kangaroo courts before taking their constitutional
claims into federal court.
Among other things, the suit alleged that ALPA officials violated First
Amendment protections as articulated in the Foundation-won Supreme Court
decision in Chicago Teachers Union v. Hudson. Under Hudson,
union officials must provide independently audited disclosure of their
books and justify expenditures before seizing any forced union dues from
employees who choose chosen to refrain from union membership.
National Right to Work Legal Defense Foundation
8001 Braddock Road | Springfield, VA 22160
http://www.nrtw.org | (800) 336-3600
The National Right to Work Legal Defense Foundation is a nonprofit,
charitable organization providing free legal aid to employees whose human
or civil rights have been violated by compulsory unionism abuses. The
Foundation, which can be contacted toll-free at 1-800-336-3600, is
assisting thousands of employees in more than 300 cases nationwide. Its
web address is: http://www.nrtw.org/
.(C) 2002, NRTWLDF
Well, that's the news as we see it. If you have any ideas, write
them up and send in.