Delta Air Lines has offered its pilots a 34% total salary increase over three years in a new contract, indicating that aviators are bargaining for increased travel demand in a short-staffed industry.
If the deal is approved by Delta pilots, it is expected to serve as a benchmark for contract negotiations at competitors United Airlines and American Airlines.
According to a draft contract reviewed by Reuters, Delta pilots will receive a raise of at least 18% on the date the contract is signed, another 5% after one year, 4% after two years and 4% after three years.
They will also receive a one-time payment equal to a total of 22 percent of their revenue between 2020 and 2022 after the deal is ratified.
Pilots at the Atlanta-based carrier have been without a new contract for nearly three years after their old contract was up for renewal in December 2019, fueling frustration.
In October, they gave a majority vote to authorize a strike if negotiators couldn’t reach an agreement on a new contract.
Installation costs, high tariffs
The big wage hike is expected to worsen cost pressures for carriers, just as concerns about a US recession are fueling worries about consumer spending.
Although ticket sales remain strong, investors fear that demand for travel will weaken, making it difficult to repair the debt-ridden industry’s balance sheet. They fear carriers will have to borrow more to finance operations.
However, staffing conflicts among carriers to take advantage of growing consumer demand have increased the bargaining power of pilots. As the industry returns to profitability, pilots argue that airlines can pay them more to cover their living expenses.
So far, airlines have relied on strong demand and high fares to ease inflationary pressures. Any increase in wages is expected to be passed on to customers through higher ticket prices.
In the draft deal, Delta promises that its pilots’ pay rates will be at least 1 percent higher than those of United and American.
In a memo to its members, Delta’s pilots union said the deal would increase the total value by more than $7.2 billion over the next four years.
Delta said it is “pleased that we have reached an agreement in principle on a new pilot contract that recognizes the contributions our pilots make to Delta’s success.”
Pilots at all major US carriers are demanding higher wages and better work-life balance in a year of protests for the industry.
Hundreds of United pilots picketed outside Chicago’s O’Hare Airport on Thursday, demanding an “industry-leading” contract. Last month, they rejected a proposal that included more than a 14.5% total wage increase and increased pay for overtime and training.
American pilots also rejected a 19 percent pay increase over two years that would cost the Texas-based carrier about $2 billion.
Pilots are also demanding better quality of life. They say staffing and operational problems at the carriers are driving overtime and exhausting them.
The Delta Pilots Union said in a memo that more than 25% of the value of the contract agreement is dedicated to quality-of-life items.
The proposed deal also includes 10 weeks of maternity and paternity leave, two weeks of paid parental leave and reduced health insurance premiums.