Ernest K Gann made the same observation in his seminal memoir "Fate is the Hunter" written in 1961

Fursty Ferret

Perhaps this is the ideal time to bring aviation into line with the rest of the world then?. LIFO in other industries died out in the 70's when the power of the unions was broken, now it is not Government diktat that is enforcing fundamental change but economic reality.

Would the industry actually be any worse if it was not based on seniority?

Good luck getting BALPA to agree to that. Imagine what it would do to the promotion prospects of first officers if retrenched Captains from other airlines could be hired straight into the left seat to keep training and insurance costs down.

The low cost airlines get away with it because they have expansion, and turnover of pilots. Whilst command opportunities come faster, they may very well have a shortage of copilots who are ready for upgrade when needed and have no option but to employ DECs.

A legacy airline typically has very low pilot turnover and very little expansion. 10-15 years to get the fourth stripe is normal, join at the wrong time and it can go up to 20 in some airlines.

No, but I don't think it would be particularly better either. It's rare in any industry to have 4000+ individuals with identical skills (within reason).

How would you handle redundancies? Sure, you could use training records, but how in a way that's fair to both the youngest and oldest, and simultaneously the most junior and senior person in the company? Most people have squeaky clean records (i would assume). Picking names at random? Hardly seems better than LIFO and probably legally dubious. Total flying hours? Should ten thousand hours trundling around in a Seneca give you an advantage against someone who's got 5000 hours PIC of an Airbus? What about university qualifications?

Would you, as someone that's been in the company for a long time, accept a pay-cut to provide a flat pay structure? Right now that would benefit me but in ten years...

That's all fine and dandy but in other industries you stand a decent chance of getting the same job paying somewhere near the same salary. If you lose your job with an airline that operates a seniority system, to join another with its own seniority system, you face almost certain financial ruin and your career is set back 10-15 years at a minimum. Is that fair?

LIFO Is a thing of the past protected y some powerful inion indivuduals who do not want to give up their own job prospects.

An accountant or HR manager can be employed by a multitude of companies in many different industries. In the UK, how many equivalent jobs are available for a BA B777 Captain ?

Fursty Ferret

Well I would point out that companies across the globe handle redundancies without using LIFO every single day without a problem, even BA has done that in the past.

I have not got a dog in this fight having retired from the industry 5 years ago, but reading the threads on different airlines and the way that they are all responding it just seems to that LIFO causes as many problems as it solves. With regards to pay cuts personally I think they are inevitable but I do have my doubts how useful they actually are. Take EZY, a couple of months ago their crews were lauding the fact that they had all come together and accepted pay cuts to ensure that redundancies were not needed - now I am reading that the company is not saving enough cash flow and could be out of business by the end of the year. To me if the market reduces in size by 75% then your only option to save the company is to reduce the size of your company by 75% to meet the new reality.

and then your economies of scale go out the window and you’re stuffed anyway.

There is no point in having economies of scale if nobody is getting on your jets.

You’re missing the point. You’re not going to be able to make a profit by shrinking the business by 75% either so that line of thinking is flawed. It’s what makes this whole situation such an excrement show.

Jet II

Your argument is predicated on the EZY false news item. The statement "hanging by a thread" was clearly an off the cuff comment made to try to get BALPA members to accept the pay cut deal. And they are not talking about this year......they may be in trouble at the end of next year if 2021 summer is poor.
The market maybe 25% today........but it won't be in a few short months. Staff are not the main cost to an airline as you well know so to cut your business by 75% would mean a reduction of 75% in the number of hulls. No way back then, so you may as well chuck the towel in now.

Why seniority lists exist
 

Hec7or’s reference to Ernie Gann’s great work “Fate is the Hunter” made me think that maybe there should maybe be just a word here about why seniority has historically had such a unique position in pilot employment, especially compared to other professions. Unless things have changed radically in the last 20 years, as far as I am aware there is no other profession (e.g. law, medicine, architecture) where every single practitioner is required regularly to demonstrate his or her skills to an independent authority. Similarly, the pilot-in-command is the only type of employeEE who has legal responsibilities in international law which are on the same level as those of his or her employER.

Under the ICAO umbrella obligations are assigned separately to the State, the Operator, and the Pilot in Command. That’s why although ICAO is a United Nations organisation (where only States have total power), in ICAO meetings the Operators and Pilots are both represented (via IATA and IFALPA) and participate fully in decision-making. Individual Operators and Pilots have their own obligations assigned to them by their State authority via their licences. To ensure safety these must be maintained at a constant minimum level.

All this is a long way round to get the point that there is no other type of employee who has to PROVE, once or twice a year, that they can do their job properly to someone who is NOT their employer. In other professions, once someone has their initial qualification, their competence is only questioned AFTER SOMETHING HAS GONE WRONG.

How does that link to seniority systems? Most people would probably agree that in an ideal world where there is competition for a job, it should go to the person best able to do it. But in practice this usually means that even if there are objective criteria such as basic qualifications, it must lead to subjective judgements being made by individual managers about individual candidates, especially regarding continuing competence after initial qualification. Some do well, others flounder: ideally the less competent may get overtaken by the more competent – but the less competent may do better by various ways including nepotism, politics and all the other biases we are increasingly conscious of.

In the pilot group however, everyone has had to continually achieve the same minimum competence level as verified by an outside assessment. (And yes I do know that’s not always the case in reality.) So on that basis if you want to ensure fairness in the system, you have to include something else. Generally, of two equally well qualified candidates, the one most likely to do the job best is probably the one with the most experience. And within a single organisation the best (but by no means perfect) measure of experience within that organisation is length of service. Hence the seniority lists. So most pilots associations historically have said that it is better for the COLLECTIVE good that between equally SUITABLE candidates, preference should be given to the most senior.

That does not help a lot when dealing with such traumatic problems as the pilot profession is facing now. But it does mean that when trying to resolve things and spread the pain, the basics should be forgotten.

This is the second time I have seen this stated and I still dont understand this argument. If you are delivering a service you deliver at the level the customer demands. So if there is only a demand for 25% of current flights then airlines will reconfigure to match that demand. The idea that suddenly this becomes uneconomic and no airline will operate at that level simply does not make sense.

It may be that the industry changes to meet the new economic reality but that is what the rest of the economy is doing already.

Then I suggest you read up on some basic economics. Your unit cost will increase quite steeply particularly if an airline like BA shrank to that degree. Couple that increase in costs with trying to service the unaltered debt and things get ugly pretty fast. It’s nowhere near as simple as “shrinking to meet the demand” in afraid.

what you’re saying isn’t inherently wrong. If aviation was a declining industry (let’s say like Kodak film dealing with the rise of digital / phone cameras), as work dried up over time airlines would get rid of aircraft as leases came up, lay off staff etc in the same way that Kodak have closed factories, reduced output etc. While tough for all involved, it’s a part of how capitalism works. Companies, industries rise & fall along with the market.

The situation airlines have is more akin to the closure of the car plants in the 80s / 90s - the government deciding they were non viable and pulling the rug from under them (in this instance via quarantine, or state aid). Airlines are still geared for 2019 levels of output, and have no support to gracefully shrink to a more appropriate level for the market.

Plastic787

so what is the alternative if the demand for your service is no longer there? - state bailouts?

thetimesreader84

But the rest of the economy doesn't get this support to 'gracefully shrink' - you either arrange your business to meet the economic reality or you go bust - as much of the economy is doing already.

Jet II

Either that or bankruptcy, yes.

(I’m not saying that BA cannot shrink, that’s what they are doing of course but it’s a law of diminishing returns. There comes a point where it’s not viable to shrink anymore, shrinking by 75% is way beyond that. Especially as they also have the slots in Heathrow to keep hold of.)

Jet II

just because everyone’s in the same situation, doesn’t make it ok.

However the banks, the train operating companies, even pubs / restaurants have all had help to “meet the new economic reality” over the last 6 months. Airlines, Arts & Ents etc, not so much.

The government are picking winners. Sorry, “Viable” business (presumably as decided by “blinky” Cummings)

Plastic787

really interesting direction this thread has taken. i hadn't considered the fact that fixed costs don't scale directly with the business size (eg finance on owned airframes where the airframes themselves have significantly devalued) which will make the business fail at a certain revenue level that would be generating good profits for a smaller business. however the slots at LHR arent part of that, if BA can't utilise them and they have to use it or lose it, then it's time to sell the slots.

(or Buy a fleet of Senecas and start up regular services to Fairoaks and White Waltham. )

I just don’t believe aviation is a shrinking industry the same way as Kodak or Car plants. Even with climate thoughts, the world is shrinking and global travel is key on everyone’s expenditure plans each year. Being a wet island nation I don’t believe the return of the U.K. holiday will be making a long term comeback.

the only thing stopping aviation being viable is government restrictions. Just like the wedding events industry. Granted maybe they will be a cut back in business travel for a period, but even that will return. The struggle for BA et al will be their business offering. If they can make it more appealing to the holiday market maybe they can make it work still.

They'd have to find someone willing to buy them at anything like a value that would actually make it worthwhile to sell them. I wouldn't have thought that to be an easy task in the current climate.

Nobody has mentioned the "elephant in the room".

It's all well and good making 12,000 staff redundant to save money, even though I vehemently disagree with it , but then there also is the gigantic pension deficit that has been accrued. That should be more of a concern. If staff over 55 are forced into CR it will be chaos unless IAG has a moneytree growing at Waterworld.

Ex Cargo is spot on.

BA always was a little airline with a huge pension deficit.
It is now even smaller, and has a bigger deficit.

I wonder who is managing the Pension Black hole at BA??
How on Earth will they afford to make the agreed special contributions? Not to mention the new special contributions which will be required.

Johnny tax payer to the rescue? https://www.ppf.co.uk

Whilst the pension payments are not insignificant, they are a pretty small part of the company’s cash burn at the moment.

Ex Cargo Clown

I don't know the conditions of the BA pension scheme, but, on the basis of other large public companies, find it very unlikely that pensions could be drawn before retirement age ( usually 65 ), and if so, see no difference if CR happens. No doubt someone will inform me if I am wrong.

Pensions can be drawn up to ten years prior to the individual’s state retirement age. Someone drawing their pension early makes no difference to the fund’s liabilities though, so I am unsure why redundancies would alter those liabilities. I suspect we will actually see the fund’s liabilities reduce in size at the next triannual valuation because the life expectancy figures will have come down considerably.

The pension fund needs money but can survive until the Aviation business is back up and running.

Although NAPS has a large deficit it is being managed, early retirements will have to be funded in the sense that a VR, who will only be going with a pension, will need the scheme to crystallise this money internally This means BA will have to fund any outstanding deficit pertaining to that person now.
This may have been a factor during the past negotiation
The CR people were junior and would not have been a cost as they would have been in money purchased schemes.
Of course any future retrenchments may drag in more senior CR/VR NAPS members, and could be a major cost

Tartiflette Fan

A company/private pension can be drawn without penalty at age 55. NAPS and APS are now deferred pension schemes. yes, they are in deficit but they are no longer linked to final salary. They are essentially a finite cost . That's why they have been closed.
What is interesting is the size of the CETV currently being offered. Well in excess of the actual individual fund 'values'. This suggests to me that the fund owners are trying to rid themselves of liabilities. IE Current staff.
What is a real fear (to me at least) is that if BA cannot access their biggest market very soon, they will not survive and my pension will be reduced to 80% of its current value when it's picked up by the PPF.
Even those who are currently employed and not in immediate danger of redundancy are looking at drawing their pension just to protect it if BA actually go to the wall.
Waiting time for pension packs and CETV estimates is currently 3 months!!

TURIN

I am no finacial adviser and pensions are a minefield so would suggest that everyone takes individual advice.

However, my own experience is as follows:1) CETV will be large - it is typically around 20 times pension value -
2) I don't believe you can draw down a defined benefit pension (ie final salary) - only a defined contribution (ie money goes into stock market)
3) Transferring out of a DB scheme is not straight forward - you need to get a quote (official CETV) - then you need to get advice which will be paid for. Advice will almost certainly tell you that it's not a good idea to transfer your DB pension out. You can appeal on the grounds that it's what you want to do and it's your pension (and YOUR money) but the Ombudsman thinks people are stupid and also likely to decline your appeal. No financial advisor is likely to tell you it is a good idea to transfer and the govt has massively increased fines for bad advice which means financial advisors can't afford the risk (and can no longer get risk insurance) and a lot have stopped advising on pension transfers.

Personally, I think it's scandalous that you can't transfer a defined benefit pension (or at least it's near impossible). After the TATA pension debacle where so many were advised to transfer out of their DB pension and got ripped off and ended up with little or no pension the Govt has basically made it impossible to do otherwise (ie transfer). BUT, it is your money , your pension so for Govt to make it impossible via regulation to transfer is not on and you should complain to your MP.

BTW - Something else I consider scandalous - if you die (prior to taking your pension) current legislation allows you to pass on your pension pot as part of your estate. This can be a lot of money. However, DB funds will typically only return PREMIUMS paid into the scheme and NOT its value. So, if your CETV is 200K then you may only have paid 30K of premiums and that's all you get back. If 200K was in a defined contribution scheme then you could pass on all of that.

As per my opening comment - the above is just my experience, I am not a financial advisor so you should take independent advice. I do have a DB pension (but I am not retired so it is deferred) so have done a lot of investigation into what I can do with it hence the post above.

As a simple legal statement, yes, however companies can alter ( increase ) this this. My company - which has a pension deficit - changed their rule from that to state-pension age and I thouht it likely that BA would have done the same.

I find it interesting in the light of concern over pension affordability that more seniors didn't take VR and early crystallization of pension benefits to mitigate risk. Any idea why not? I get that the company might not have wanted them to go (as might be inferred from its VR offer) but would like to think that more than a few would ask themselves why that should be so.

I very definitely think BA wanted people to go....but those that look after the balance sheet weren't prepared to pay a lot to encourage more than a relative handful of people to take that particular leap...

Surely its APS that have a large funding not NAPS. NAPS is underfunded having attempted to amalgamate the two funds unsuccessfully to reduce the debt level. As a contributor stated it is of little concern as if it were to fail the government will foot the bill. Assuming there is any monies left?

Why would a senior long haul Pilot take VR a with the top scales, including flight pay. expenses moving upwards of £180000 a year?

Possibly so he/she might live a few extra years in retirement enjoying that massive maxed out pension?
Trouble is, it is never that simple, some can't because they are on the 3rd. marriage, some because they don't have anything else to do and some because they just plain like the lifestyle. Having retired at 60, it was a bit scary, but nothing now would get me back on the Atlantic at 3am!

Contemplating the hassle I'm hearing about now now associated with operating to some of the destinations - I'm thinking things like reporting at LHR the day prior to departure for pre-departure Covid tests, lockdowns in some downroute hotels, risk of being detained by friendly local police at a government facility if you test positive on arrival I do wonder if some who were on the cusp of taking VR but declined the option are regretting their choice.

I can understand why those with more than a year or so to go are soldiering on and I wish the the best of luck but I think if you've months to go you'd have to be seriously addicted to aviation and/or seriously hard up to continue putting up with "the dream" as it is currently being lived by some on Long Haul.