A quick bit of economic history.In the 1980’s a shadowy figure, a former Union thug presented as a lovable larrikin; Prime Minister. The head of the union movement at the time, Bill Kelty and he, along with Australia’s “industry associations (business unions) created The Accord. In exchange for “industrial harmony” wage outcomes would be held to CPI, thus, in
theory, holding purchasing power.
CPI is politely a bastardised measure; many things are left out, substituted enhanced and otherwise manipulated. The REAL experienced inflation rate most live is far higher than the “reported CPI.
https://www.businessinsider.com/if-p...my-2016-8?IR=T
In real terms, purchasing power of the individual’s salary/wage/income is held “constant” if one uses the CPI.
Actual lived inflation is higher and so purchasing power has fallen: fallen real wages are a common theme in many western economies.
To maintain standards of living in most western economy required debt, lots of it. From a macro perspective, falling real wages, relative to another country increases competitiveness. For an airline, with wages/salary equating nearly 25% of operating expense, holding wages to this nominal CPI 3% makes sense, provided unions, workers and all actors accept CPI as "inflation" is a big transfer from employees to employer.
Assuming, say a real inflation rate of 7% with CPI (contract improvements at 3%) the difference, transferred to an employer is improved "efficiency" but over time the compounded impact on the individual is substantive.
After all, airlines don’t hold ticket prices to 3%, nor does fuel comply with CPI, but holding wages, provided everyone plays along, provides real benefit to senior management, companies and the economy.