Yeah the old arguement that the contract will go to the lowest bidder is just crap. If price was the sole determinant on demand, then why do so many people drive a BMW? For an aviation example, Skywest was not the lowest bidder for the WA turbo-prop routes but was deemed to be the superior supplier based on additional criteria.
Regarding the aviation industry, it is too simplictic to say that demand for air travel is price elastic so wages must stay low to stimulate demand. This is crap and management know this. It is the low yeild end of the market which is price sensitive. In any event, the elasticity of demand for air travel (in this low end market segment) changes and becomes less elastic as price falls. A saturation point is reached where price can fall to a point where demand is unaffected; the Joe Q Public can only take so many holidays per year!
The high yield end of the market is far less price sensitive. This is the business or 'essential' travel market segement. In WA, FIFO contacts will be offered to companies that can deliver the service AND at a low price. If Skippers pay their pilots more, they will retain staff and thus save training and other costs. At the moment, they will lose contracts because they cant deliver the goods. If other companies were successful against Skippers in a tender process based only on price, they would have to factor in other costs: employing more staff, acquiring airframes, engineering costs, workers comp...etc, etc..This would have to be factored into their tender bid. (Note that if this did occur, datal seniority would mean that there would be no chance for the pilots that are resultantly displaced to either enter the successful company at their current rank or to negotiate a higher salary with a company that now needs their skills- this exemplifies why seniority is a dead duck).
However, bad management means that some companies under-bid so as to appear competitive. They then have to find, in a panic, means to lower their costs so as to remain profitable. This is what drives management to try to cut pilot's conditions. However, many client companies can see through this behaviour and the problems that accompany it. There is a current case in another thread which exemplifies how a company made misleading promises as to what they could deliver and what could actually BE delivered. The whole process is now in the courts, I understand. Do BHP Biliton and WMC what that sort of crap with their FIFO contracts? I think not.
The mining boom in WA can easily support higher wages to crew, and so can the prevaling economic conditions support a general pay increase for all pilots. This can be done with a minimal increase to the price of a ticket: $10,000 a year more for an FO and $20K for a Captain summates to $30,000 for (say A320/B737) crew. With super', etc, this would equate to a cost to the company that must be passed on of ,say, $35K (being generous). The said crew would fly ~ 450 pax/day, say 200 days/year..gives a whole $2:57 per ticket. A$10K pay hike to each regional Pilot that flies for a company that employs 50 Pilots and carries 180,000 pax/year leads to a increase per ticket of $2.77.
I think the market can tollerate that!
