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Update 2002-9

September 30, 2002


Welcome to Hurricane season.

Item 1

"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



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.




NMB 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.



  1. 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.
  2. Call (toll-free) 1-877-NMB-VOTE (1-877-662-8683). Text Telephone users (TTY) call 1-866-756-2829.
  3. Enter your secret VIN and your PIN when prompted to do so.
  4. When your identity is confirmed, you will be prompted with voting instructions for this election. Follow the instructions carefully!
  5. Follow the prompts to cast your vote for (Name of Organization) or Any Other Organization or Individual.
  6. 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.

The 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).


VIN (Number)

(Name of Eligible Voter)


Federal law 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 with anyone.


20.1 The 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.

20.2 Telephone Voting

20.201 Telephone Voting Instructions

The Instructions 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.

20.202 Voter Identification Numbers

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.

20.203 Personal Identification Numbers

The Personal Identification Number (PIN) is the last four digits of the voter's Social Security Number.

20.204 Telephone 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.

20.205 Foreign 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.

20.206 Challenged Individuals

Individuals whose 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.

20.207 Requests 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 were mailed.

20.208 Returned Telephone Voting Instructions

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.

20.209 TTY 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.

20.210 Adjustments to the Official Eligibility List

The Investigator will verify the number of eligible voters prior to the count by making the following adjustments:

(1) clearing all challenges;

(2) removing names for those individuals whose Instructions were undeliverable; and

(3) adjusting for changes in employee status.

20.3 The Tally of Votes

20.301 Location 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 Washington, DC.

20.302 Admission 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.

20.303 Vote Determinations

20.303-1 Valid Votes

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.

20.303-2 Void Votes

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;

(3) votes 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.

20.304 Tally of Votes

Following any 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.


Item 2

"Feed me, Seymour"

Speaking 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 telephone balloting.

NMB Sets Union Election for Shuttle America Flight Attendants 

WASHINGTON, DC – 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.  

On August 16, the Association of Flight Attendants, AFL-CIO, filed a petition for election on behalf of the workers. 

“Union 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.” 

The 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 ballots.  

Shuttle America is a US Airways Express carrier that began operations in 1998. The carrier employs approximately 60 flight attendants. 

AFA 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.


Item 3

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 investigation.

Clearly, this process has taken to long.   This begs the question -  Is the NMB unionized?

Item 4

One of 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 unprofessional.  

AFA 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.

TSA’s Admiral Loy Uninformed on Flight Attendant Training Needs

WASHINGTON— The following is a statement by Patricia Friend, International President of the Association of Flight Attendants, AFL-CIO, regarding Acting Undersecretary of Transportation for Security James Loy’s remarks to Senate Commerce Committee on Tuesday.


“Admiral Loy’s claim that the Transportation Security Administration has ‘what we need’ when it comes to flight attendant security and self-defense training is patently false. The current training provided by the airlines and sanctioned by the TSA is woefully inadequate.


“Flight attendants are the last line of defense on an aircraft and we are no better prepared to deal with a terrorist attack today than we were on the morning of September 11. The Federal Aviation Administration has created flight attendant training guidelines for the airlines to follow, but the TSA has not been enforcing those guidelines effectively. Since we lack a law that includes specific training requirements, the airlines have offered only the bare minimum--in many cases just two or three hours of updated training--and have made vital components, like self-defense, voluntary. The result has been a patchwork of deficient training programs that are virtually useless in protecting the people in the aircraft cabin.


“Apparently, 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.”


More than 50,000 flight attendants at 26 airlines join together to form AFA, the world’s largest flight attendant union. Visit us @ www.afanet.org.



In 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).  


The 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.


Item 5

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
Russell Grantham - Staff
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 easing.

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 offers.

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 few details.

"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 seasonal reduction.

"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 phased out.

"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 likely.

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 catastrophic burden."

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



Item 6

We added a new forum entitled "Flight Attendant Survival - How to get by in the Lean times."  Click here to post your thoughts

Item 7

Mr. Mullin went to Congress. In our tradition of continuing plagiarization, we lifted his testimony from the DeltaNet.  

Statement Regarding 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


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Mr. 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 national security.

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 key messages:

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 Act.

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 downturn.

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.

Referencing 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.



On 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 increases.

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 consequences:

These 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 lower costs.

· 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.

This 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 obligation.

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.

This 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 revenue losses.

$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:

o The applying airline must have no access to private capital markets.

o The carrier must provide a viable business plan that ensures repayment.

o The carrier must provide a major contribution to the nation’s air transportation system.

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 million.

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.


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 specific techniques.

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 don’t.

§ They shop on the Internet for the lowest possible price, for example, so airlines by necessity end up absorbing the new tax.

§ 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.

§ The cargo carriers have been a major beneficiary of these rulings.

· Unreimbursed costs for cockpit door fortification - $20 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.

· Loss in potential seat revenue as part of the Federal Marshal program - $35 million

§ 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 costs.


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 unfunded mandates.

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 billion.

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 analysts’ estimates.

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 requirements.

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 legislative agenda:

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 mandates.

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.


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.

· As a result, these costs should be funded through the national security funding mechanisms, not as taxes or costs imposed specifically on airlines.

Secondly, as the final point for today, we ask for that help because aviation is key to our nation’s economic health.

The statistics are well known:

· 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 jobs

· 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.

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 airline industry.

Thank you.

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 "uninformed."

Item 9

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.

Item 10

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)


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 bargaining.

“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.






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Last modified: December 13, 2008