Memphis Airport Uses Lump Sums in Creative Wage Plans

Nonunion employees at Memphis International Airport will get 2 percent of their salaries in a lump sum non-raise next week, followed by a 2 percent raise July 1 as the airport looks for creative ways to pay competitive wages without significantly increasing payroll.

On Jan. 1, the group will receive an additional 1.25 percent raise, followed by 1 percent lump sum payment next July.

On Jan. 1, 2009, another 2 percent raise will kick in, giving about 120 workers - department managers, engineers and administrative clerical workers - the equivalent of a 5.25 percent raise over 36 months.

In a letter employees received in a recent paycheck, Larry Cox, president and chief executive of the Memphis-Shelby County Airport Authority, said he was "extremely happy" the authority was in a position to provide the increase.

"Since Northwest Airlines Corp. filed for Chapter 11 bankruptcy in 2005, the airline has downsized its fleet, and the authority has lost significant revenues from passenger airline landing fees," the letter said. "We cannot predict with certainty how these airlines will restructure and if mergers will occur. The next several years are uncertain and will depend upon a number of factors beyond our control."

Passenger counts in March, the most recent figures available, were down 53,868, or 5.6 percent. From the start of the year through March 31, the numbers are down 107,697, or 4.2 percent.

The reason, in part, is that carriers increasingly are serving their Memphis routes with 50-seat regional jets.

Airports nationwide are struggling to make ends meet, said Michael Boyd, principal in The Boyd Group, aviation consultants outside Denver.

"Air traffic grew only slightly last year. This year, it might grow 2 percent," he said. "The problem is that airlines are not in a very receptive mode to see rent increases."

Next week, the airport authority is expected to approve a $112.7 million budget for fiscal year 2008 that includes the first increases in terminal rent since 2004.

In the budget proposal, rent rises from $31.20 to $31.56 a square foot for the gate space airlines lease.

Landing fees, on the other hand, are expected to decrease here for the fourth year in a row.

About 120 workers represented by the International Brotherhood of Electrical Workers at the airport received a one-time $1,000 payment in their May 4 paychecks.

Nonunion workers will receive their payment - based on their April 30 earnings - in their May 18 checks.

The airport's police and dispatchers, represented by the Memphis Airport Police Association, received a 5.25 percent raise in a contract impasse that was settled by the board of commissioners April 19.

The police wanted a 5 percent raise this year and the opportunity to reopen the contract next spring.

While the 52 police will receive a 1 percent lump payment next summer, they will not receive the payment this spring.

"Because the police wanted to go to impasse, the 5.25 percent was the airport's final best offer," Cox said.

This is the first time the airport has used the lump sum to bolster employee pay.

Workers employed before Feb. 1 are eligible. People hired after May 1, 2006, will receive a pro-rated amount. Part-time workers do not qualify.

Boyd and other airline analysts praise "very innovative leadership" at the Memphis airport for using alternating lump sums to bolster pay.

"Memphis is a whole lot more innovative. No one else is doing this," Boyd said. "Sure, it will keep people. If the employer you work for - the Memphis airport or a tire factory - makes it clear they want to keep you, you're a lot less likely to revise your resume. Employment is more than just money. It's also about trust and appreciation."

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