AFAP Narrow Body EA Update #12 - Understanding the REM Package
Understanding the REM Package
Following on from our previous Update on reaching in principle agreement we provide the following further guidance on the remuneration package (“REM”).
We recognise the desire from pilots for all payments to be reflected in base salary as the AFAP claimed. However, the structure of the payments is how Virgin has approved meeting our REM package as it is able to:
- include an additional guaranteed amount as a retention payment (i.e. paid to all pilots employed at a fixed date each year); and
- link additional payments to performance of duty.
Our responsibility is to recommend and endorse a package that meets the high-level objectives we set as we went into these negotiations. It would have been reckless for the AFAP to ignore the significant value of the REM package as a whole simply because it is not all in the base salary.
Further, the AFAP in saying “no” does not guarantee that any future package will have an improved base salary or less payment types. Instead, we have said “yes” to the proposal on the basis pilots are capable of assessing the package and recognising its value. This update provides factual information to allow pilots to assess the package as a whole in the lead up to the vote.
For those pilots seeking additional payments for higher productivity, the EA delivers a 23.81% higher productivity rate and increase in draft payments when compared to the EA21 hourly rate. Further all work also attracts either a DTA or higher ODTA, along with a higher retention payment for more credit hours performed each year.
Pilots comparing their hours and days off worked under the current EA21 structure to the new package will see a considerable increase in remuneration for the same work. We have provided examples below and a pay calculator is available to do a comparison on an hour by hour basis.
We also recommend pilots consider the package based on the guaranteed payments compared to the current EA21. We note that the recent rosters have seen a drop in average credit hours and a significant drop off in Open Time and availability of drafts, when compared to the same RP 12 months ago.
Primarily, we have negotiated this package to address the downside risk that additional flying is not available and for pilots to have improved lifestyle by not relying on working on DDOs to supplement income. In a straight comparison of guaranteed income, this EA represents more than a 31% increase.
Below we outline the payments in more detail to allow pilots to further review the proposed EA agreement.
Guaranteed Income
The table below represents a comparison of the guaranteed amounts for pilots under EA21 and the proposed EA (“EA24”), regardless of work performed.
- For EA21 this is a base salary of 747.5 (MCG x 13) x hourly rate
- For EA24 it is:
- Base Salary (inclusive of 6 DDO payments = 30 hours at Productivity Rate); and
- Retention Minimum Annual Guarantee = 747.5 minimum ((11.5 x 65) x Base Hourly Rate x Retention Rate (3%))
When the proposed offer is compared to the current EA (assuming no productivity i.e. performing 65 hours in off-peaks and 70 hours in peaks) it is as follows:
Guaranteed Payments for all Duties – DTA/ ODTA
In addition, pilots need to place a value on a new guaranteed payment that was not in EA18 or EA21. This is called a Daily Travel Allowance, or DTA.
Pilots should calculate their DTA hours (sign-on to sign-off) for all day trips, simulator, and ground duties to determine the amount this represents. It is a common allowance in other aviation EA’s that are often used to provide another income source that pilots will earn on day trips. It is taxable and superannuation is payable.
Based on the actual data extracted from pilots’ rosters over the past 12 months, the median duty hours DTA is payable on is 82 hours for CPTs and 84 hours for FOs per Roster Period. Annualised this represents the following amount (assumes 6 weeks leave):
But I perform mostly overnight duties so how will a DTA benefit me?
While the value placed on DTA for an individual pilot may be reduced depending on the amount of multi-day trips a pilot performs, to help offset this, there is a 9.27% increase in Overnight Daily Travel Allowance, or ODTA. Pilots need to value the difference between moving from ATO Table 2 to Table 3 (for both ranks) for overnight trips.
ODTA will apply from sign on in home base, to sign off in home base and is still tax free, which is a shift away from the meal window approach of the current overnight allowance structure.
We have also negotiated the inclusion of a top up from ODTA rate to the ATO rates for international ports. The hourly rate uplift from the ATO TD 2023/3 Table 8 (salary $247,021 or more) using the Cost Groups in Table 9 will apply from sign on in the Australian port prior to international layover sectors until sign off back in the Australian port after international layover. To trigger this allowance top-up, an international layover will be required not just return sectors.
Productivity Based Payments
The AFAP has negotiated the return of a productivity rate, which applies to credit hours above the productivity threshold (65 or 70) and draft payments (representing an increase of 23.81% on EA21).
The median credits performed by pilots over the last 13 RPs (based on actual rosters) is:
- For CPTs – 74.6 hours in peak RPs and 73.3 hours in off-peak RPs; and
- For FOs – 71.6 hours in peak RPs and 69.3 hours in off-peak RPs.
The below table illustrates the value of median productivity and DTA compared to the current EA:
The below table illustrates the value of the proposed package compared to the current EA when factoring in median credits, drafts (average of 2 per pilot per RP, based on actual rosters less an allowance of 6 days in base salary and 6 weeks annual leave) and DTA:
The above are provided as examples to illustrate the value of the package as a whole. Pilots should utilise the AFAP calculator to compare based on their personal circumstances.
Tracking Pay
We understand pilots are concerned regarding tracking their pay and do not trust the Company to deliver on systems that support new payment types. The new payments outlined above are industry standard payments and the payments themselves are also not complex as they are based on verifiable information trackable by pilots:
- DTA – duty hours sign-on to sign-off for all duties other than as part of a layover;
- ODTA – sign-on in Home Base to sign-off Home Base;
- IDTA – top up paid from sign-on in Australian port for international overseas pairing to sign-off in Australia port; and
- Retention – minimum of 747.5 or total credit hours (excluding leave) for 13 RPs (e.g. RP8 to RP7) if higher x base hourly rate x 3%.
As always members should contact the elected representatives directly, or alternatively post on the AFAP Forum or email virginNBEBA@afap.org.au should you have any questions or feedback regarding EA negotiations.
Alternatively, email general industrial queries to virginAIC@afap.org.au, Safety and Technical matters to technical@afap.org.au, and HOTAC issues/ reports to HOTAC@afap.org.au.
Regards,
AFAP 2024 EA Negotiating Team
First Officer Steve Hungerford – Chair
First Officer Shaun Rudduck – Vice-Chair
Captain Ben Raby
Captain Brad Wilson
Captain Mark Bannister
Pat Larkins – AFAP Senior Industrial/ Legal Officer
Deanna Cain – AFAP Senior Industrial/ Legal Office