Last week, Delta Air Lines approved a new contract to raise pilots' pay by 34% over four years - a new standard for the industry which is likely to be looked at closely by other major airlines. But with costs increasing and supply failing, will other airlines be able to match this standout agreement? Well, it looks like they may have to.
The impact of COVID-19 had resulted in a two-year delay for contract negotiations across the airline industry. Additionally, pilot shortages have led to many airlines, especially smaller ones, struggling to fill vacancies. As a result, pilots across the country have been demanding higher pay.
Following months of negotiations to make sure that both parties were content with the deal, Delta announced last week that the company would be offering an industry leading pay rise of 34% to its pilots.
The Air Line Pilots Association (ALPA) – which represents Delta pilots - said that the deal was a resounding success, with nearly 80% of Delta's 15,000 pilots voting in support of the collective $7 billion pay increase. Before the agreement, Delta pilots could expect to earn between $66,853.80 and $257,657.40 per year . Now they can look forward to salaries between $89,584.10 and $345,260.92. The contract, which took effect last week, will run until 2026.
John Laughter, the Atlanta-based airline's chief of operations, said the contract "recognizes our pilots' contributions to Delta." He further outlined that the deal showcases Delta as a top destination for aviation employees.
Meanwhile, Darren Hartmann, a pilot and union official who chairs the Delta Master Executive Council, said in a release, "This industry-leading contract is the direct result of the Delta pilots' unity and resolve." He added, "Despite a two-year delay in negotiations due to COVID, we never lost sight of our goal to obtain significant across-the-board enhancements to our pilot working agreement."
Delta also announced last month that it would increase its wages for certain ground crew and flight attendants, with these employees receiving a 5% pay increase effective next month. The company explained that they are rewarding its employees following rising profits, with plans to pay more than $550 million to its staff.
In an interview with Reuters, a spokesperson for American Airlines said the deal "profoundly" impacts the airline industry and that Delta had “raised the bar”. Other airlines will now have to follow in Delta's steps in order to retain current employees and stop potential hires from going elsewhere.
Last week, Air Canada pilots announced that they would press for higher pay following the deal reached by Delta. Captains at the airline currently receive 45% lower pay than their Delta counterparts, according to the Air Canada Pilots Association (ACPA). Charlene Hudy, a top ACPA union leader, said in a statement, “Pilots in the U.S. have recently secured significant wage increases and other contractual improvements, creating an embarrassing gap with Canada.”
Additionally, American Airlines CEO, Robert Isom, announced this week that the company will match Delta’s pay increase, suggesting that other members of the ‘big four’ have already begun to follow Delta’s lead. AA’s offer to pilots includes matching Delta’s 40% cumulative increase in a new potential four-year deal.
Isom stated, “Let me be clear, American is prepared to match Delta’s pay rates and provide American’s pilots with the same profit-sharing formula as Delta’s pilots.” He outlined that a new agreement could include a 21% pay increase in the first year increasing pay for senior captains of wide-body planes to $590,000 per year, as opposed to their current rate of $170,000.
Delta’s new pay rise is already having a knock-on effect as other companies race to offer a similar deal in order to retain and encourage new and existing pilots. With American Airlines already following in Delta’s footsteps and flag-carriers such as Air Canada acknowledging a need to change current contracts, the next few months may see other airlines attempting to reach the high bar set by Delta.
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