Delta pilots lock down a new contract and 34% pay raise as a major labor shortage makes airlines shell out big money to keep workers

This post was originally published on this site

The COVID-19 pandemic decimated travel worldwide when cities and businesses shut down, and people stayed home. In the absence of flight demand, pilots were grounded and offered early retirement packages, and airlines slowed down hiring new workers. But interest in travel has bounced back over the last year—and now a pilot shortage is plaguing the airline industry.  

On Wednesday, pilots were able to capitalize on how in demand they are by striking a new deal with an eye-popping salary raise. Delta and the Air Line Pilots Association (ALPA), a union, have agreed to increase pilots’ pay by 34% over four years. Delta is the first U.S. carrier to have a breakthrough with their union contract, while others like United and American are still negotiating. 

Delta and the pilots union came to a preliminary agreement last year, where pilots would receive an 18% salary hike when the contract is signed and further increases until 2026. The last time Delta and its pilots union agreed on a contract was in 2016.

“This industry-leading contract is the direct result of the Delta pilots’ unity and resolve,” Capt. Darren Hartmann, chair of Delta’s Master Executive Council, said in a statement on Wednesday. “This contract recognizes the Delta pilots’ substantial contribution to our company’s success. We will now focus our efforts on ensuring all provisions are implemented and enforced.” 

Last November, nearly 15,000 pilots for Delta Air Lines authorized a strike amid postponed negotiations for a new contract with their employer. Along with pay increases, pilots demanded that 25% of the contract value must come from benefits that improve quality of life as well. 

When asked for a comment by Fortune, Delta referred to its press release praising the contract. 

“I want to thank both negotiating teams and the National Mediation Board for their efforts in reaching this agreement that recognizes our pilots’ contributions to Delta,” said Delta Chief of Operations John Laughter. “From the beginning of the negotiations process, we set out to deliver the industry’s best pilot contract to the industry’s best pilots, one that keeps us as a top destination for U.S. aviation careers, and this contract is a reflection of that unwavering commitment.”

Atlanta-based Delta Air Lines is just the latest to shell out more money to retain and recruit pilots. Earlier this year, Spirit Airlines approved a 34% pay increase in a new contract. Alaska Airlines said last October that it would increase pilots’ pay by up to 23% based on the number of years of service. And American Airlines increased pilots’ pay by 50% last June.

Attrition among pilots has not only cost more for carriers, it has also threatened the smooth operations of airlines and led to more expensive tickets. In an earnings call earlier this year, United Airlines CEO Scott Kirby pointed to the pilot shortage being a critical constraint in 2023. He also added that the current system “simply can’t handle the volume” of travel that is expected in the coming months. Through 2023, United said it would hire 8,000 pilots so that the company can keep up to speed with demand.

The labor shortage for the airline industry extends beyond just pilots. Support staff are also scarce, and airports and aircraft carriers have been scrambling to lure more people in by offering free cars, iPhones and access to in-house child care facilities. In February, Delta Air Lines also increased pay for its flight attendants and other non-union employees by 5% along with expanding its issue of merit raises.