A large group of employees at a Delta Air Lines subsidiary are resisting changes to their benefits that will result from the airline’s plans to sell the business.
Delta in late November announced plans to sell a controlling stake in Delta Global Services, a wholly owned subsidiary whose employees act as the face of Delta at airports across the nation. DGS, as it’s commonly called, will become a stand-alone company run by Argenbright Holdings I LLC, a privately held company from Atlanta with businesses including contract security and aviation support services.
With Delta a minority partner, DGS workers will no longer be classified as airline employees — a crucial status change that strips workers of certain flying privileges and will require them to start paying taxes on their travel.
News of the ownership change and the impact it would have incited swift backlash from DGS workers. Within weeks of the announcement, Delta and Argenbright agreed to restore some of the benefits that the sale initially would have removed, such as retirement flight privileges, according to a company memo.
Delta spokesman Michael Thomas said the airline feels it has given the workers back their most valued benefit — their boarding priority level when flying standby — and the company hopes this shows the employees that it cares about their concerns.
But several DGS employees, who spoke on condition of anonymity for fear of being fired, expressed a sense of powerlessness and betrayal in the sale process.
“We all feel we are being taken advantage of. It feels like a slap in the face,” said one employee. “They’re changing the rules. This isn’t what I signed up for.”
DGS provides staffing and security-related services — like gate agents, baggage handling and airplane cabin cleaning — for Delta and other airlines at more than 170 airports. It’s like an outsourcing company, or temp agency, with 19,000 workers who fall under Delta’s ownership and management umbrella.
Passengers who fly Delta in and out of Minneapolis-St. Paul International Airport have likely interacted with DGS employees without knowing it. They often perform similar job duties as the airline’s mainline employees, like boarding passengers and loading planes.
They often work part-time and at a lower payscale than mainline Delta workers, but are attracted to the job because of the flight benefits that allow them to fly standby and visit friends and family around the globe.
The airline says DGS employs more customer-facing workers at Minneapolis-St. Paul International Airport than at any other station. Its 1,100 MSP workers account for about 10 percent of Delta’s total employee base in the Twin Cities.
Initially, Delta and Argenbright told DGS workers that, under the new company, their boarding priority would be lowered, making it harder to snag an open seat on a flight. And, because they’ll no longer be airline employees, the workers may lose the ability to fly standby on any other airlines, something Delta employees have access to through interline agreements between airlines.
Airline employees are exempt under federal regulations from paying taxes on their standby travel, but DGS workers will now have to start paying taxes on their flight privileges as that travel will be considered a gift. With gate agent wages ranging between $11 and $13 an hour, having to pay taxes on the imputed income on travel could make taking those trips financially difficult for some, one DGS worker said.
Shortly after the deal was announced, workers began banding together to write letters and organize meetings to discuss the idea of unionizing. “I’m not a pro-union person per se, but what they are doing to us is hard to describe. I feel like I have no rights,” one employee said.
Delta responded by hosting a town hall meeting at MSP, sending Bill Lentsch, executive vice president of flying and air operations, to listen to their concerns. The airline took these issues to Frank Argenbright, chairman of the holding company buying DGS, who agreed to allow current employees to retain their boarding priority, while all new hires made after the deal closes will be given a lower boarding priority.
In a memo e-mailed to workers on Dec. 14, DGS’ senior vice president of human resources Jannie Richardson said the company would try to negotiate with the most commonly used other airlines on a possible extension of their flight privileges.
Having the option of flying standby on other airlines, DGS employees say, can be a useful tool in cobbling together a route home.
“Over the years it’s gotten really hard to get flights. You have to build in an extra travel day, maybe spend a night in a hotel or take a really circuitous route,” an employee said. Without those privileges on non-Delta airlines, that task gets even harder.
A Delta spokesman said the company understands that loss, but said DGS workers book a relatively low number of flights on other airlines, according to their records, without providing an exact percentage.
The airline said it’s going to make a good-faith effort to get something arranged with other airlines on behalf of DGS.
The U.S. airline industry has gone through cycles of in-sourcing and outsourcing airport services jobs, said Bob Mann, an aviation consultant and former airline executive. In the early 1980s, most of these jobs were airline employees, but that started to change in the mid-80s as carriers experimented with farming out certain jobs at smaller airports.
Many of these third-party companies were even started by former managers from the contracting airline, Mann said.
By being a separate entity, he said, the outside vendors could structure their wages on a “market basis, as airlines love to call it,” said Mann, “So the wages would be significantly lower and the scope of guaranteed work is gone.” That’s because the contract between the airline and third-party company is regularly renegotiated.
“It turned out to be far more efficient for the third party vendor because they could work for several airlines,” Mann said. “It worked for everyone, basically, but the workers.”
A decade later, inconsistencies in Delta’s baggage handling and customer-service experiences prompted the airline to set up DGS to initially monitor the service level provided by its outside vendors. But what started as essentially a management-level entity eventually became a “job shop” as DGS gradually hired workers at airports where outside vendors couldn’t meet Delta’s service standards, growing it to what it is today.
“We’ve gone full circle,” Mann said. “Airlines started out doing their own thing, they then outsourced the work, then they didn’t like what they saw, so they bought them, now they are selling them off again.”
Delta hopes to finalize the deal on or before Dec. 31. After that, Argenbright will own 51 percent of the new company while Delta retains 49 percent, according to security filings.
Argenbright wasn’t available for comment before this article’s deadline. The company chairman, Argenbright, has been in the security business for decades, most recently heading SecurAmerica, an Atlanta-based firm that provides security to individuals, corporations and institutions.
He founded Argenbright Security, which was investigated by the 9/11 Commission as the security screeners that allowed the hijackers through checkpoints, prompting the creation of the TSA, making airport security a function of the federal government.
Mann said it behooves Delta and Argenbright to take care of its DGS workers.
“You take folks who are customer-facing employees and then you demotivate them, you can imagine that they wouldn’t necessarily be as motivated as they once were, and if they are unmotivated that can make them not particularly attentive,” Mann said. “The folks who are most marketable just leave. To a certain degree, you get what you pay for.”