![]() ![]() They've "staked their claim" with Southwest Airlines for their careers and entrusted us with their future. We have always held true to our promise of taking care of our People. We believe that Southwest Employees have the best contracts in the industry and that they are very well compensated. How do Southwest Employees wages, benefits, and work rules compare to other airlines in the U.S.? Southwest Airlines is approximately 83 percent unionized. What percentage of Southwest's workforce is unionized? We are proud to continue offering our Employees the best contracts in the industry. Across the board, our proposals include fixed pay increases as well as performance pay that will allow Employees to share more directly in the success they help generate. To the contrary, we want to improve our Employees' compensation plans. No. We are not seeking to cut benefits or hold wages flat. Is Southwest Airlines seeking concessionary contracts? In contract negotiations, our philosophy is to reach agreements that are rewarding for Employees, have scheduling flexibility that allow the Company to operate efficiently in a highly competitive marketplace, and provide long-term job security. ![]() What is the Company's overall philosophy on labor contracts? Each unionized workgroup is covered under a contract, and in some cases, multiple workgroups are represented under one contract. Southwest is actively negotiating four contracts. How many contracts is Southwest Airlines currently negotiating with its Unions? The table entitled Southwest Airlines Employees and Collective Bargaining contains information about each represented Employee group. Today, Southwest is in formal negotiations with several workgroups. Our goal is to reach agreements that benefit Employees, the Company, and Shareholders and support the airline's vision to be the world's most loved, most flown, and most profitable airline. Southwest Airlines actively participates in union negotiations. On the contrary the long distance flights which have less hubs and schedules are likely to be dominated by too many airlines and which consequently would charge exorbitant price from customers. Routes which remain heavily flooded by different flights more likely to charge competitive prices because of the existence of substitute airlines. The extent of price discrimination employed by airlines would also depend largely on routes and type of the customers. Bargaining Power of Buyers The individual powers of buyers remain low because of the inability of the airline customers to coordinate and organize among themselves. Moreover, airplane manufacturers such as Airbus and Boeing, enjoy high powers of bargaining since they huge switching costs are associated with changing the airplanes (Desai, Patel & Quach, 2002, p.4). The bargaining powers of pilots have remained low since there are numerous pilots available in the market. Wage rates have accounted for major operating expense of airlines leading to many union strikes during the post liberalization era. Bargaining Power of Suppliers Employee bargaining powers are expected to vary according to unionization of employees or the characteristics of employees. Business travel could generate more flying demand while vocational travel could demand more driving.ĭue to the fact that leisure travellers are considered to be more price sensitive as compared to business travellers, they are more likely to use substitute services considering the opportunity costs incurred (Desai, Patel & Quach, 2002, p.4). ![]() For example, travelling through seas across US for long journeys would reduce ground transportation to a certain extent. The Switching costs associated between air travel and its substitute services remain quite low however, experts suggests that the importance of the substitutes are likely to change as per the customer type, route and reason for travel. However, the importance of trains and buses as substitute products has declined over the years. The high threat of new entry in the airlines industry in US also gets reflected through the fact that 8 major airlines existing in the market have become bankrupt merged with other companies or has simply vanished from the radar screen (Desai, Patel & Quach, 2002, p.4).SubstitutesTrains, buses and cars account for major substitutes for air travel. However, since 1993 and during the recent years many of these start-ups have been consolidated, established and incorporated as large and major airlines. Experts suggested that the industry had inefficient scale economies which supported the entry of numerous new entrants in the industry. 22 new airlines had been formed and another 43 of them has entered till 1982. Threat of EntrySince the phase of deregulation, many new entrants have entered into the airlines industry in USA. ![]()
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