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Aviation Industry Updates: August 18, 2020

By August 18, 2020 August 24th, 2020 Industry News

Full Schedule No-More | Southwest Reduces Plans by 26%

KEY POINTS:

  • “Demand hasn’t returned to anything approaching what was forecast earlier this year.”
  • “Southwest plans to cease flying 128 routes,” “and there are another 294 routes that lose frequency.”

  • “Typically, in September, leisure travel dries up, usually until Thanksgiving. Normally, even at Southwest, business travelers fill planes from September through November. But no airline is counting on that this year, as many corporations are still asking employees to work from home.”
  • “Those green shoots Southwest and other airlines saw in late May and June have withered away,” said Madhu Unnikrishnan, editor of Airline Weekly. “This schedule cut starkly illustrates Southwest adapting to a new, smaller reality.”
  • “Southwest’s changes are similar to American’s domestic plans (down 43 percent), though less than reductions from Delta Air Lines and United Airlines. Technically, Delta is down about 42 percent, Keay said, but that does not account for seats the airline blocks for social distancing. United has cut 59 percent, Keay said.”

Brian Sumers | Skift

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Will Regional Airlines Survive the COVID-19 Market? | Chief Industry Strategist Weighs In

KEY POINTS:

  • “When the North American airline industry sneezes, its regional airlines — those that serve primarily smaller communities — catch a cold.”
  • “There is simply not enough revenue from leisure passengers alone to sustain regional networks.”
  • “After the financial crisis of 2008-09 led to massive losses and industry shrinkage, it took the airlines nearly a decade to start growing by more than the level of GDP increases.”
  • “Whether it is a recession, a demand shock or a shortage of pilots, the regional airline industry is impacted first and is often the last to recover.”
  • “In recent years, regional flights have been profitable, thanks to business travel, a rise in population in mid-sized cities and the low cost of jet fuel.”
  • “A major question for the network carriers is: When will business traffic and associated revenue return since business revenue is the lifeline for the network carriers?”
  • “As of July 2020, only 40% of 2019’s small community traffic flows can be accommodated based on the network carrier’s schedule offerings that have been decimated because of COVID-19.”

William Swelbar | BrinkNews.com

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Spirit Airlines Agrees to Extended Leave Options | Will it be Enough?

In a series of memos over the weekend, ALPA leadership at Spirit Airlines shared the news of a new furlough reduction plan that came without any concessions.

“It is unknown how many furloughs will be offset until the award is complete. ALPA is optimistic that if all the Extended Incentive Lines are taken it will offset the vast majority of furloughs.”

Pilots at Spirit will have the opportunity to bid for “Extended Incentive Lines” [EIL] of three (3), six (6), and eight (8) months duration. The bid opened on August 15th and closed earlier today, August 18th at noon, a short time-frame to make what will likely be a difficult decision for many pilots. While minimum guarantee is 75 hours at most carriers a reduction to 50 hours is often a pay cut of 50% or more for senior pilots.

“I ask that anyone in a financial position to take an EIL or VIL please strongly consider doing so during this Bid Period, as every EIL and VIL taken has a direct impact on the number of furloughed pilots. As Spirit pilots we have always helped our own, and there is no greater need for assistance than at this moment.”
– Scott Vallach

Participating pilots will be paid 50 hours each month, 25 hours per paycheck.

  • “The 8- and 6-month EILs will commence only in the October 2020 bid period and this will be the only opportunity to bid.”
  • “The 3-month EILs will commence in October 2020 and January 2021 (both to be bid on now) with additional 3-month EIL offered, as needed and at the discretion of the company, commencing in any month through February 2021.” Back-to-back 3-month EILs can be awarded as long as they do not overlap.
  • ALPA suggests that “EILs should be bid in order of preferred length. For example, pilots desiring an EIL of a shorter-term should bid for them higher in their bid sheet over longer term EILs.”

The EILs, which the company determines the amount, will be awarded in seniority order and are non-revocable: “The Company and ALPA would have to negotiate early termination of EILs.”

ALPA is encouraging any pilot entering an EIL to bid for as many different options as possible, as it is impossible to know which length will be most popular and therefore becomes unavailable as it moves down the seniority list.

“Future VILs are not guaranteed. They are offered at the discretion of the Company. If in this bid all the EILs are taken the Company is likely to offer fewer, if any, VILs after October. Also, EILs and VILs taken after this bid may not offset furloughs.”

The EIL bid will be run immediately so the company and ALPA can determine the cost-savings generated by the EIL award. Once the EIL bid is complete and the cost-savings are calculated, the company will run a Reduction Bid to determine the resulting number of furloughs, downgrades, and displacements needed. ALPA will have an opportunity to review the company’s financial analysis and resulting mitigation calculations.

“The more senior pilots who take advantage, the more jobs will be saved.”

Pilots awarded an EIL maintain their status as an active pilot, all “benefits, privileges, rights, and accruals to which the Pilot is entitled based on his Position, Status, Longevity and Seniority” will be maintained. Pilots will maintain their jumpseat privileges and KCM access while on leave.

When pilots return to service at the completion of their EIL they will have the opportunity to bid for a line. Pilots will be pay-protected for any trips that are dropped for requirements of training, or if they have lost currency, the time waiting for training.

EIL pilots are able to participate in Vacancy Bids as they become available. The Memorandum of Understanding (MOU) and associated FAQs considers a few situations:

  • “If a First Officer is awarded a Captain Position, they will be able to exit the EIL attend training and return to the line as a Captain at that respective pay rate.”
  • “If a Captain is downgraded to a First Officer Position while on an EIL they will have the opportunity to exit the EIL and return to the line as a First Officer commensurate with the effective date of that position or stay on the EIL and have their pay adjusted accordingly.”
  • “If you are displaced, you would resume work in your new position in the month following the EIL.”
  • “Active pilots on an EIL that are furloughed during the EIL period will immediately move from EIL to furloughed status on the effective date of the furlough.”

In the union-provided FAQ documents there were multiple considerations taken for compensation, sick time, vacation time and training:

Vacation and Sick Time:

  • Sick and Vacation time continue to accrue, as does scheduled vacation bidding.
  • “Previously awarded vacation during an EIL month will remain in the pilot’s vacation bank for use during the remainder of the year.”
  • “EIL pilots may cash out any previously awarded, unused vacation above the 28-hour carry over cap.”

Training:

  • “Any pilot on an EIL who is due for recurrent training will accomplish their recurrent training in the first month after return from the EIL.”
  • “Distance Learning, if required, will be accomplished in the prior month and will be paid above the 50-hour EIL guarantee.”
  • “Pilots whose qualifications lapse due to not attending recurrent during an EIL will attend requalification training in the first month after return from the EIL.”
  • “If landings expire, you will be made current in the first month after return from the EIL.”

Compensation:

  • “While on an EIL you are an active pilot. Your pay rate will change in your anniversary month and then again on March 1, 2021 whether you’re on an EIL or not.”
  • “401K elective and Company contributions will be made for pilots on an EIL.”
  • “If you are downgraded while on an EIL, you may choose to terminate your EIL and downgrade to First Officer. Alternatively, you may choose to remain on your EIL, and your pay rate will change to First Officer pay on the effective date of the downgrade.”

Thank you to those who shared this information with us.

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