Project: Elasticity & Bargaining btwn Delta & the Pilots
Your Mission, should you decide to accept it:
Answer the questions found below as a group. 
Hand in one answer with everyone's name
- First & last & in alphabetical order by last name
- Include only members who are present
Indicate the date:  _____________________		 Indicate the name of the class: 
Indicate the name of the Project: 
Be thorough; write good answers
Use your time wisely. 
Be finished by the end of the allowed time
Project: Elasticity & Bargaining btwn Delta & the Pilots

Background: 

  Delta & the Delta Airlines Pilots Assoc (DAPA) are engaged in contract negotiations.   

  The Pilots have given back wages & benefits over the last 10 yrs.  Their wages & benefits are 12 % below the industry standard.   

  Delta had a long history of profitability, paying out large dividends & stock splits.  Beginning in the 90s they borrowed to finance modernization.  High interest
  payments, the increase in fuel prices, & a decline in ridership since 9/11 have driven Delta into bankruptcy.   

  The positions:   

  Delta is asking for a 9% pay cut, having pilots pay for half of their health care benefits, a reduction in pension benefits, & a cut of 15% of pilots. 

  The Pilots are asking for no pay cut, paying for 10% of health care, no reduction in pensions, & no job reductions. 

  Other issues:  Schedule flexibity, safety in the air, training, future job security 

  Briefly, answer the following questions: 

1.  What is the level of elasticity for the airlines?

2.  What is the level of elasticity for the demand for labor, i.e. the pilots, in relation to the price of labor, i.e. wages?

3.  In bargaining a contract, what effect does the elasticity of demand have on the Delta in these negotiations?

4.  In bargaining a contract, what effect does the elasticity of demand have on the DAPA in these negotiations?

The End