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Richard Branson's open letter to all Virgin pilots

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Re: Richard Branson's open letter to all Virgin pilots

#61

Post by estel »

rvkennedy wrote: post #57
jterce wrote: post #33

Earlier quoted context omitted.

- "Its utterly ridiculous" "They well deserve it." Why? You seem to be forgetting the basics of economics. It really doesn't matter what you think they "deserve" or how hard you or they think it is to deal with the general public. What matters is how many people could/would be willing to do their jobs. And the answer is quite a few, whereas there are many fewer people who could manage a McDonalds. Thus demand is low…

If demand is low, no-one will miss them much when they strike. If they are missed, basic market economics dictates that they should get paid more. Further, there are two sides to the demand curve. There is supply - how many people are prepared to do the job, and there is demand - how much those who pay them, directly or indirectly, appreciate what they do. Now, clearly there is some variation in the demand - you perh…

Noone will miss them much when they strike? Regardless of how "large" the supply of cabin-crew is; a strike that cancels flights will still affect my hypothetical holiday, and I will miss them an awful lot. That's more because there's a latency in the training duration and short-term availability of staff, than because there's a labor shortage for aircrew. (My understanding is that cabin crew is an exceptionally competitive job with many more applicants than successful employees).

Re: Richard Branson's open letter to all Virgin pilots

#62

Post by spiantino »

yid wrote: post #53
temphn wrote: post #47

Earlier quoted context omitted.

> Its utterly ridiculous that some of the nicest, caring people in the airline industry have to deal with such people as the general public (myself included, of course) and yet make less money than a manager at a McDonalds franchise. Day in, day out. If you want to give them more of your money, or start a company that pays them better, or take up a collection for them, nothing is stopping you. The airline is paying t…

What a vapid comment. GP is perfectly within his rights to gripe about people performing a stressful job admirably while receiving less money than they deserve. Saying "start your own airline" hardly advances the conversation. As a counterpoint, you could have linked to median wages for all flight attendants and pointed out a systemic issue.

While I don't think it was presented as such, the "start your own airline" comment is, to me, the correct response to "people aren't being paid what they deserve". It turns out we are unlikely to agree as to what people deserve to be paid for their jobs, so we have decided the most fair thing to do is rely on labor markets and competition.

Re: Richard Branson's open letter to all Virgin pilots

#63

Post by whyleyc »

Klinky wrote: post #58
whyleyc wrote: post #34

Earlier quoted context omitted.

I'm sure this is true if you have a blanket mindset of "all corporations are evil" but you're doing a Branson a disservice - he's one of the few progressive modern CEO's around. Check out the "Employees First" section here - http://www.hrh.ch/whoiswho/bransonr/br_page4.html

My usage of of "evil company" was in relation to the post I was replying to. Also your article is 13 years old. It sounds like things have changed & Branson has a more hands off approach with the airline now.

Actually it doesn't sound like things have changed.

Here's a recent article detailing how Branson gave 8,500 Virgin Atlantic employees 2 week's holiday + 2 free tickets to fly anywhere on the airline's network as a 'birthday bonus' for loyal service:

http://www.dailymail.co.uk/news/article-1194942/Virgin-staff...

Re: Richard Branson's open letter to all Virgin pilots

#64

Post by spiantino »

asmithmd1 wrote: post #44
jterce wrote: post #33

Earlier quoted context omitted.

- "Its utterly ridiculous" "They well deserve it." Why? You seem to be forgetting the basics of economics. It really doesn't matter what you think they "deserve" or how hard you or they think it is to deal with the general public. What matters is how many people could/would be willing to do their jobs. And the answer is quite a few, whereas there are many fewer people who could manage a McDonalds. Thus demand is low…

You seem to think the market for jobs operates with something approaching market economics. If this were true then we should be running PSAs to encourage people to become investment bankers because the incredibly high salaries paid are indicating a severe shortage. Instead I see commercials encouraging people to become teachers - if there were really a shortage wouldn't salaries rise by market forces? The truth is ec…

The labor market is different than a commodity market, but that doesn't mean economics don't apply. There are switching costs, people are not fungible, and labor skills represent a huge time/money investment.

But this misses the point. We want our economic system to be as fair as possible, and in most cases (and certainly in the case of flight attendants), the "fairest" solution and the one that pays what flight attendants "deserve" to make is the fair market wage.

Re: Richard Branson's open letter to all Virgin pilots

#65

Post by spiantino »

nodata wrote: post #11
geuis wrote: post #7

I haven't heard anything about the pilot strike mentioned in the article. That aside, I have the following to say which is oriented more towards flight attendants than the pilots whom you don't normally interact with. Of any airline I have ever traveled on, the Virgin lines (Atlantic and America), have been my favorite. This ranges from the very basic things like more leg room than their competitors to wifi in the sk…

In "Capitalism, A Love Story", Moore claims that new pilots average the same as a McDonalds low-level manager. If this is true, it would make Virgin pilots comparatively well paid.

Data!

http://www.pea.com/imd/airline-pilot-salary.html http://www.glassdoor.com/Salary/McDonald-s-Store-Manager-Sal...

Maybe they start around the same, but they certainly diverge pretty quick.

Re: Richard Branson's open letter to all Virgin pilots

#66

Post by estel »

o1iver wrote: post #60
tomlin wrote: post #49

Earlier quoted context omitted.

I'm the kind of person that will pay a little extra for quality. I do it with food, personal products, and travel. I don't fly Virgin because its cheaper, though it often is. I fly them when I can because I enjoy the experience and don't want to be stressed out when I get to where I'm going. If it means that I pay an extra $10 $20 to fly Virgin so that their employees directly benefit, that's something I would do gla…

Proof of that is the success of airlines like Ryan Air. The CEO (don't remember his name) said something like: people don't care about drinks and pretty stewardesses, they care about getting cheaply from A to B (even if it means shitty seats, no food, earlier boarding times, etc...).

Michael O'Leary is a brilliant example of a CEO who is almost the complete polar opposite of Branson in every way except one: he uses his own persona and personality in the media to really drive Ryanair's value propositions forward. His widely publicised (and blue-sky) proposals, amongst others, to have only one co-pilot per flight, ask passengers to load their own baggage, and have standing-only sections are great examples of this.

Edit: his proposal to remove all but one lavatory to make room for extra seating and charging for use of the remaining one is textbook.

Re: Richard Branson's open letter to all Virgin pilots

#67

Post by temphn »

yid wrote: post #53
temphn wrote: post #47

Earlier quoted context omitted.

> Its utterly ridiculous that some of the nicest, caring people in the airline industry have to deal with such people as the general public (myself included, of course) and yet make less money than a manager at a McDonalds franchise. Day in, day out. If you want to give them more of your money, or start a company that pays them better, or take up a collection for them, nothing is stopping you. The airline is paying t…

What a vapid comment. GP is perfectly within his rights to gripe about people performing a stressful job admirably while receiving less money than they deserve. Saying "start your own airline" hardly advances the conversation. As a counterpoint, you could have linked to median wages for all flight attendants and pointed out a systemic issue.

1) OP's opinions about flight attendant pay are his. Others think it's a bit more exciting to fly around the world than to manage a McD's, and that pay isn't the only measure of comp.

2) There are many things OP could do besides starting his own airline. Do some Kickstarter like thing for the ostensibly underpaid flight attendants. Do a Hipmunk like thing where there's a wage surcharge on each ticket, given directly to the flight attendants.

In short, do something to put money in their pocket rather than pointing a finger at Branson, the guy who is actually putting money in their pockets today.

Otherwise, it's all too easy to be generous with other people's money.

Re: Richard Branson's open letter to all Virgin pilots

#68

Post by Klinky »

Klinky wrote: post #58
whyleyc wrote: post #34

Earlier quoted context omitted.

I'm sure this is true if you have a blanket mindset of "all corporations are evil" but you're doing a Branson a disservice - he's one of the few progressive modern CEO's around. Check out the "Employees First" section here - http://www.hrh.ch/whoiswho/bransonr/br_page4.html

My usage of of "evil company" was in relation to the post I was replying to. Also your article is 13 years old. It sounds like things have changed & Branson has a more hands off approach with the airline now.

Sir Richard Branson's Virgin Atlantic has itself also been forced into staff cost-cutting to survive the recession.

It has already announced an imposed pay freeze for its staff. Board directors will not take bonuses this year.

And the airline has filed to reduce its headcount by 600 staff - a cut of 7 per cent - though it says it has so far activated about 500 job cuts.

It's a bit like saying "everyone gets cake, oh and 7% of you are getting fired".

Re: Richard Branson's open letter to all Virgin pilots

#69

Post by estel »

Klinky wrote: post #68
Klinky wrote: post #58

Earlier quoted context omitted.

My usage of of "evil company" was in relation to the post I was replying to. Also your article is 13 years old. It sounds like things have changed & Branson has a more hands off approach with the airline now.

Sir Richard Branson's Virgin Atlantic has itself also been forced into staff cost-cutting to survive the recession. It has already announced an imposed pay freeze for its staff. Board directors will not take bonuses this year. And the airline has filed to reduce its headcount by 600 staff - a cut of 7 per cent - though it says it has so far activated about 500 job cuts. It's a bit like saying "everyone gets cake, oh…

Why is making job cuts something only an evil corporation would do?

Re: Richard Branson's open letter to all Virgin pilots

#70

Post by wtvanhest »

This is an analysis of the negotiation and everything needs to be said to understand the situation.

In almost every airline negotiation with pilots, airline management has a far greater position in the negotiation, except in the case of Virgin where the pilots probably still have a worse position, but a much more equal playing field!

Here is why:

There is something that is EXTREMELY important to understand about the economics of being a pilot at an airline. Pilots cannot switch airlines without starting at the very bottom. They cannot leave the airline they are with! If they do, they will go from $100-$150K to $30K.

Pilots are not promoted based on how good they are, they are promoted by seniority which means that if a pilot is a captain with Virgin and they switch to whoever is hiring now, they will never make their previous salary for the rest of their career.

There is a second piece of airline economics that is EXTREMELY important. If the pilots strike, the losses an airline would take while trying to replace them will easily bankrupt any airline. The fixed costs, long training time and lack of trained pilots in the market makes a strike an airline killer.

When you combine these two factors, you would normally say that both management and pilots are both in really bad positions to negotiate and MUST come to an agreement or they will both loose badly. But, the reality is that pilots loose far worse than management… Why? Well, management can take their skills to a different company whereas pilots cannot transfer their skills for the same money. This puts the negotiation power directly in management hands, with one exception… Richard Branson.

He is getting involved and trying to get everyone together because he knows that if the pilots strike, management cannot afford their demands and the airline will be bankrupt. If this occurs, he takes a capital loss which will suck, but the real blow is to his ego and the Virgin brand. No other airline management is in this position.

A lot of airlines will be facing strikes over the next few years, great management will bridge the gaps, talk to both sides and keep the airlines running. Terrible management will allow them to fail and move on to the next company.

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