DLASflyer

I've been wondering how Delta decides which stations have mainline employees ground handling flights vs. contractors. It seems quite random. Obviously the hubs are mostly mainline. SLC is going back to 100% mainline gate and ramp agents this month after a long stint splitting flights with SkyWest. My home station, JAC, currently has all mainline flights but all contract employees (Unifi). I was recently in Canada and noticed both YUL and YYZ are mainline stations despite having mostly regional jet flights. The rest of Delta's Canada stations are contracted out to various different providers.

Does anyone know more on Delta's process for selecting who works which stations? I can't help but notice the service and performance of Delta's own employees is generally better than the alternative. United is in the process of bringing a bunch of stations back in house. Where does Delta stand with this? Are they going more mainline, more outsourced or leaving things the same? When Delta decides to contract out a station, how long is the contract generally for? Thanks to any insiders who can shed light.

WyomingBound

That is a great question....thanks for bringing it up......my home station of BHM has mainline check-in/gate agent/baggage office staffing but UNIFI handles all ground operations. Would love to hear if someone has any insight.

dcstudent

Also, keep in mind Unifi was DAL Global Services until 2018(?). It's now jointly owned with Delta maintaining a minority stake. I imagine Unifi employees don't get as good pay or benefits as DAL employees.

HDQDD

I used to work on these decisions in a previous lifetime (at another airline). It really comes down to cost. Below the wing is easier to outsource, because servicing airplanes is pretty similar regardless of carrier. Above the wing requires training on the company's computer systems, policies and procedures. There's also the customer service aspect of it. Your own employees are almost always going to treat your customers better than a third party. That's why you see below the wing outsourced much more often than above.

Obviously for a station that only has 4-5 flights a day, outsourcing makes a lot of sense. For stations that have >15-20 flights a day (and most are mainline), they most likely will have mainline above the wing. However below the wing it usually takes ~50+ flights a day to make it worthwhile. There are, of course, exceptions to these rules. Other carriers also used to have agreements (and probably still do) with the unions to staff stations when they have >x amount of mainline flights.

I find that DL seems to have mainline agents (above wing) at more airports than the other US3, but most of my flying is in the Eastern US and Midwest, where DL is quite strong.

DLASflyer

From what I can tell Unifi has gotten much larger and worse since Delta sold 51%. They got a lot more business with other airlines because they pay very little and bid the lowest. They are literally running Spirit flights alongside Delta flights in some places. Maybe the agents forget which customers they are dealing with at times 😆

flyerCO

It's like Walmart and McLanes. They wanted McLanes to do lots of business. However with it being owned by WalMart, it made awkward for c-stores to buy from McLanes, same with Unifi for OAL.

JAXPax

Delta ground personnel at YUL, YYZ, and I think a total of 5 or 6 Canadian airports are union, represented by the United Steelworkers Local 1976. These were former Northwest stations originally represented by the Brotherhood of Railway Clerks since the early 80s.

I have worked in airline contract services, putting out RFP and selecting vendors for stations. In the case of union representation, it's very easy who is insourced and who is not: it's whatever the CBA stipulates. That can vary from airline to airline... there are some airlines where there are seemingly really small stations completely insourced while much larger are outsourced and it quite frankly comes down to the union rep on the negotiating committee added their home station to those protected from future outsourcing. There are airline stations in the US with 3-4 flights a day that are fully insourced with full time union employees while the same airline has 15 flight a day stations run by a vendor. It often comes down to different work groups in same location represented by different unions, so you will see some employees as direct payroll and others outsourced. American and Southwest are examples of this split.

Fun fact: You know why Southwest always has two people at the gate for every departure? One at the gate boarding and one at the customer service desk? They are in different unions. In some stations (customer service has more grandfather rights), one may be a vendor while one is a WN employee. They cannot perform each others jobs, or even access each others computer systems.

Most cases of outsourcing vs direct payroll, in my experience, fall into one of two buckets: financial or "intangible." Intangible is easy: airlines want protection from a workforce joining or forming a union. Or want greater flexibility in changing flight activity. It's harder when they are your own employees and you decide to drop a station from 20 to 5 flights a day and then have to deal with furlough/lay-off, displacement, etc. With a vendor, you just tell them and all the HR problems are their problem. An example could be a highly seasonal station like a RSW. Make it someone else's problem to have to hire and then attrit (or maybe the vendor can do so easier because they may have multiple contracts with different airlines that flex at different times). As far as financial.... like anything else in business: run the numbers. Generally above a certain point it's cheaper to do it yourself with direct payroll, especially if a good number of stations are as such. But outsourcing, think about not only all the cost savings that may involve wage difference but also you don't have to have the very labor-intensive recruiting department hiring hourly workers, fewer HDQ payroll/accounting/HR/benefits folks, savings from having all of those high-risk-for-injury physical positions out of the workers comp pool.

Selecting a vendor/business partners/ground handler/whatever you call it: Obviously financial, safety, and service considerations. Cheapest doesn't always win. The folks who evaluate these for airlines know all the players in the industry well, and tend to be fairly intelligent (if I say so myself). They know how the vendors construct their bids and also can tell within a few percent what kind of margin they are planning to get. There's such a thing as too cheap to be a good deal. Also have to look at their safety programs and whether they have things in place that satisfy what the FAA wants for that air carrier. Also, if they mess up badly in one location that may impact business elsewhere or gaining future business. Vendors can get on the naughty list sometimes for a decade. Airlines will frequently bundle stations together as one bid package: let's say two mid-size locations and one small one which wouldn't make financial sense as a standalone. Think about any business going into a new location... start-up costs, capital costs (equipment ain't cheap... bag carts may only be $2000 each but a pushback unit can run you $100k, and you'll see the risk for the vendors on this in a moment...), etc.

Most rate-making in the past was on a unit cost: Charge $xx per flight plus adhocs. That's where a fun story from a friend at Delta comes... with DGS when they were wholly owned, they direct billed Delta and it was automatic payment without much review (internal charge). Lesson to DL managers was always to be cautionary of a DGS manager offering to clean out the breakroom coffeepot. And then bill it as 2 hours out of scope labor. Obviously with a unit cost and fixed income from each flight, the vendor is going to try to do it with as little resources as contractually possible because the less they spend, the higher their margin. In the last decade or so (pioneered mostly by LCCs), contracts have switched to cost-plus/pay-sell/whatever. Hourly wage rate paid to vendor employees is set in the contract. Vendor bids the wage rate plus a mark-up percent (let's say anywhere from 40-70%) to cover fringe, overhead, equipment amortization, etc. That way the airline gets the staffing number they want, while guaranteeing a positive margin for the vendor (if they had their ducks in a row). Also incredibly important in the last few years as it allows adjustments to the wage rate (like the airline agreeing the vendor can bump pay by $5/hr due to market conditions in one specific city) without reopening the whole contract or prompting a re-bid. There's also a third scenario that US Airways used... since they had their own folks almost everywhere until 9/11/01 and later downturns, they had a glut of ground equipment (much amortized to zero) all over the place when they began outsourcing en masse. They put out RFP that included use of their equipment so essentially they were only buying staffing. Made it VERY easy to swap out vendors and gave US a lot of leverage.

Why capital costs and such are important... Most contracts don't have a fixed duration in the US with US airlines. Foreign carriers, and most locations around the world, tend to be a unit cost, fixed duration (usually 3-5 year) contract. In the US, almost any recent handling contract is evergreen. It has no end date, but has an out period (be it anywhere from 30 to 90 days... usually in the 60-90 time frame) where either side can give notice of need to change rate or terminate or re-bid. Some contracts I've worked on have lasted with a vendor for a decade. Some have barely made it 6 months where a vendor with a pretty good nationwide reputation fell on their face in one particular city and it was so bad the airline re-bid it, selected someone else, and told the incumbent to heck with 60 day notice, we'll just pay you out to go away.

Unifi does not always bid the lowest, but they are able to frequently offer lower bids because of their size and established presence in many markets. If they are handling a Delta station on the ramp with 25 flights a day, they're paying for their equipment and admin staff and such on that easily. They can pick up incremental business like a 2 flight a day Sun Country or something for very little additional cost since they've already got the equipment.

I can tell you from experience that vendor doesn't necessarily equate to worse than direct airline-payroll employees. In many cases, some of an airline's best performing stations on on-time/baggage/customer service metrics is better at a contract station than insourced ones. It all depends, like always, on local management, job market, etc. Also with the cost-plus model, sometimes the pay on the starting end isn't really all that worse than what the airline would pay directly. It's common to see vendors paying $16-20 an hour starting... nowhere near minimum wage. Some contracts even have escalation built in as the vendor agents gain seniority their billing rate goes up. Supervisor qualifications and pay differentials are also usually spelled out in the contract by the airline.

And in your example, as fun as it may be to bash on Spirit, your scenario actually isn't really possible. Spirit mandates that the customer service agents on its contracts only work Spirit in the vast majority of cases. Same is true on the ramp in a lot of places because it's cost-plus and Spirit is paying by the hour by head and the vendor has to provide local Spirit management how many billables hours by employee name every day. Consequences for seeing one of those employees touching a non-Spirit airplane can be contractually severe. Spirit also has provisions where its local managers (and Spirit puts its own station manager and usually some duty managers in every location to oversee the vendor... Delta, United, Southwest sometimes do not) can go to the vendor and say "I want employee X off my contract effective right now" without having to provide a reason (actually providing detail to that probably crosses a line of co-employment).

Sorry for long-winded but questions were asked and I thought I'd try to be thorough. There are a lot of misconceptions on FlyerTalk about direct payroll versus contract agents, both positive and negative.

DLASflyer

Fascinating and just the sort of answer I was hoping for. It explains why YYZ and YUL have very senior and very good gate agents. Quite the contrast from my domestic Unifi airport with a rotating cast of new employees, many of whom speak english as a second language and/or are on temporary duty from somewhere else.

I think the rest of the ex-NW Canada union stations have probably closed. Ottawa and Edmonton died during covid. Pretty certain Vancouver and Calgary are contracted out. Not sure about Winnipeg. A bit sad that Delta only serves 5 airports in the world’s second largest country.

GagaPilot

I’ve wondered the rationale behind this as well. My home station, ANC, has DL staff with as few as 3 flights a day in the middle of winter to as many as 15 during peak summer. My other home, ECP, has Unifi with about 5-7 flights per day depending on the season. I’ve noticed over the years at ECP (Unifi) a decline in friendliness and honestly professionalism - basically just doing the bare minimum to get by. And honestly more rule sticklers. However at ANC with actual DL I’ve started to notice a decrease in training with employees having no clue how to assist with rebooking or use DL Term, etc. Or even through check bags when the system tries to default to short checking. I used to think being at a mainline station would be better in the event of IROPs, but now not as much. To me the only real perk of status anymore is being able to (hopefully) get through on the elite phone lines to someone who can help solve your issue before options dry up.

VFR

I don't have much to add compared to JAXPax 's fascinating answer, but I've heard that DL wrote it into the handling contracts that the 2500 miles that you get for the 20 minute baggage handling guarantee is paid for by the below-the-wing contractor.

GagaPilot

Interesting! Now that I think about it, I seem to have slightly more 2500 mile bag claims from mainline DL stations, and not contracted ones. Could explain the slightly better push to get bags out on time.

jamiel

As we have been splitting time between DTW and Palm Springs, it's quite interesting to view Palm Springs situation (HIGHLY seasonal, 100% outsourced handling for all other airlines except for Alaska) and interact with the ticket counter folks who often are really great, even though they're all contractors.

JAXPax

Yes, not surprising it is in their contracts to have some sort of financial penalty. Anymore, most airlines have some sort of bonus/malus program with their vendors. Some international carriers have built in that if there is a delay caused by the ground handler, it's a sliding scale all the way up to an hour delay basically means they got that flight for free (which can be thousands of dollars on a widebody). With many contracts within the US between airlines and the ground handling vendors, there can be penalties (or a bonus) assigned to each goal and there can be 8-12 goals monthly. Penalties can be even as high as 5-7% of the monthly bill, and that's a lot considering the margin on these things is usually around 8-10% to be competitive.

I had a Delta station manager explain to me once how their station made their 20 minute to claim goal... they figured out they didn't get in trouble for sitting a plane out waiting for a gate for 15 minutes, especially if it arrived early. So they would let planes sit short of the gate until they had enough people to throw at it for 10 minutes to hurry up and get all the bags offloaded (like 5-6 ramp agents). Back when check-in kiosks were a new thing in the late 00's many airlines had goals for percent check-in via self service. A lot of airline stations had their closing agent, while waiting for the nightly terminating flights, take a manifest and stand at a kiosk checking in everybody for the next morning. Amazing when you set a goal and suddenly compliance goes from 20% to 80% in the course of 60 days.

But on the bags to claim with Delta... that vendor and its employees have more incentive. Insource Delta station is gonna get yelled at. Outsourced station is going to take a financial hit, and probably result in suspending agents to "pay back" the handler.

JAXPax

It isn't surprising that they are rule sticklers. They get audited like crazy. Even a decade ago, I know of one airline that would have auditors at its hub stationed at the transfer point for connecting bags and randomly pull bags to weigh them. If they were 51lbs, they'd take a photo of the bag on a scale and look up the PNR to make sure the field station charged the passenger the overweight charge. It usually got back to the field station same day. Probably makes an agent less inclined to bend rules when they know they could get asked before they go home today why they didn't charge you for something (and the company who is their actual employer - the vendor - may get assessed a penalty).

I had a horrible experience last week with Delta in Atlanta. Basically my flight was late to ATL... pushed back from the origin and then because we were late, we were 27th in line for take-off behind the incumbent hub carrier's mid-morning push. Got to ATL to miss by 5 minutes, and Delta auto-rebooked me for 24 hours later (only 2 flights a day to where I was going). My trip was only for 24 hours. So I wanted trip in vain to turn around and go home. SkyClub agent refused to help saying that "we don't do ticketing or rebooking... you've been rebooked already... you gotta call the 800 number." Long story short, got put on a flight that was about to start boarding back to my origin, went to gate, agent said she didn't have time to check me in (turns out she'd already given up all open seats to nonrevs and my getting put on oversold the flight by 1) and told me to go to the service desk. While dealing with a red coat there (who called the gate, and whatever that agent said to the red coat pissed him off so badly he got up and walked with me back to the gate), he was instructing the other agent at the desk "tell them to call res... you're gonna have to reissue and do a credit and it's just best if res does all that." They aren't teaching how to do more than the basics anymore.

beachmouse

That seems like the Florida Panhandle in general here days- less friendliness and professionalism in so many a customer-facing position (though at least the folks at my local Publix are still good). I think it’s a combination of an extremely tight labor market that still pays wages that assumes housing costs are still what they were in 2013 so the ‘good employees’ can’t afford to take the same jobs they used to- or are having to ork a second job to make rent and are burning out- and a general increase in entitlement and unpleasantness in the tourists we get around here grinding down the employees who used to be good until they’re just as bitter their coworkers.

The ramp worker situation was screwed up enough at VPS this summer that we actually had a station manager come on the pa by the baggage carousel and ask for grace because she only had 3 of the ramp workers she needed that night when 17 was her ‘fully staffed’ level as she reminded everyone to make their Bags On Time claim. Bags eventually came to belt 45 minutes after the door chime. As you don’t normally get someone in charge admitting that kind of labor issue to customers, it was like a plea for help that we were, I dunno, write Delta and ask them to up pay so they could authorize pay somehow to at least hit half staffing levels on a regular basis.

This makes it even weirder because VPS is contract under the wing (and I suspect over the wing as well) she as encouraging people to take an action that was actually costing the contacting company money.