In the recently completed round of labor negotiations during its restructuring, the airline industry focused significant attention on total compensation – the total cost to an airline for salary and wages, pension, benefits, payroll taxes and other items affected by terms included in a collective bargaining agreement. These labor costs, which are interdependent, are key to calculating an airline’s fixed cost of its respective work forces.
Given the industry’s efforts to minimize fixed costs, in this section the ADP presents labor cost data in terms of total compensation as the true determinant of a company’s labor costs.
Total labor costs are calculated based on company filings with the U.S. Department of Transportation and the Securities and Exchange Commission. U.S. DOT Form 41 data is then used to disaggregate those costs.
In the Form 41, pilot costs are reported in conjunction with the relevant aircraft productivity measurements and other data necessary to calculate overall pilot costs and productivity.
Similarly, data filings also are available to measure overall labor costs for flight attendants, maintenance workers and ground employees. It is not possible to determine an accurate calculation for maintenance, engineering and ground costs for those airlines that outsource a significant portion of work, but the data does show a trend-line toward the outsourcing of maintenance work.
Because of differing reporting methods by various airlines, it is also not possible to accurately calculate average salary and benefits for the various classes and crafts of ground and related employees.
As for pension and benefits, the average cost per pilot employee is easily calculated; the results follow an expected trend-line based on respective carrier contract negotiations or bankruptcy filings that have driven significant changes to retirement and benefits plans.
While it is more difficult to determine pension and benefit costs in other airline workgroups, the data provides calculations for each carrier that follows the expected trend following restructuring negotiations. While there are nuances to each calculation, the overall direction and trajectory of each carrier's trend-lines reflect the impacts of recent restructuring actions.