📊 Core Calculations
Total Compensation Formula:
Total Compensation = Base Salary × (1 + Benefits Rate)
Example: $85,000 × (1 + 10%) = $93,500 per employee
Year-over-Year Projections:
Step 1: Calculate Salary Growth
Year N Salary = Base Salary × (1 + Annual Increase)^N
Step 2: Calculate Headcount Growth
Year N Employees = Base Employees × (1 + Headcount Growth)^N
Step 3: Calculate Total Compensation
Year N Total Compensation = Year N Salary × (1 + Benefits Rate)
Step 4: Calculate Final Cost
Year N Total Cost = Year N Employees × Year N Total Compensation
Example for Year 3:
• Salary: $85,000 × (1.05)³ = $98,398
• Employees: 15,000 × (1.00)³ = 15,000
• Total Comp: $98,398 × 1.10 = $108,238
• Total Cost: 15,000 × $108,238 = $1.62B
💰 Attrition Cost Modeling
When Attrition Rate > 0%, we calculate:
Employees Lost = Employee Count × Attrition Rate
Replacement Cost = Employees Lost × (25% of Salary)
Training Cost = Employees Lost × $15,000
Productivity Loss = Employees Lost × (15% of Salary)
Total Attrition Cost = Replacement + Training + Productivity Loss
Why these numbers? Industry research shows replacing an employee typically costs 25% of their salary (recruiting, interviewing, onboarding). Training costs average $15K per hire in airlines. New employees take 3-6 months to reach full productivity (15% loss).
📈 Strategic Analysis
Real Wage Growth:
Real Growth = Salary Increase Rate - Inflation Rate
Example: 5% increase - 2.8% inflation = +2.2% real growth
Contract Strategy Impact:
Conservative Strategy: Final Cost × 0.92 (8% reduction)
Standard Strategy: Final Cost × 1.0 (no change)
Aggressive Strategy: Final Cost × 1.15 (15% increase)
Contract Strategy Logic: Conservative negotiations focus on controlling costs through tighter work rules. Aggressive strategies include premium benefits and flexible work arrangements that add hidden costs beyond base salary.
🏆 Competitive Benchmarking
Data Sources: Competitive salary data is based on publicly available information including:
- Union contract announcements and press releases
- Industry salary surveys and reports
- SEC filings and annual reports
- Aviation industry publications
Employee Categories:
- Wide Body Pilots: Fly international routes (B777, B787)
- Narrow Body Pilots: Domestic/short-haul routes (B737, A320 family)
- Flight Attendants: All aircraft types
- Ground Crew: Ramp operations, baggage handling
- Maintenance: Aircraft technicians and mechanics
- Customer Service: Gate agents, reservations, customer care
- Corporate: Administrative, management, support functions
⚠️ Key Assumptions & Limitations
Simplified Model: This tool provides directional analysis for strategic planning. Real-world labor economics include additional factors like overtime, shift differentials, pension contributions, and regional pay variations.
Benefits Rate: Default 10% represents basic benefits. Actual airline benefits typically range from 25-45% including health insurance, retirement contributions, flight benefits, and other perquisites.
Competitive Data: Peer salary data represents estimates based on available public information. Actual compensation may vary based on seniority, location, aircraft type, and contract specifics.
Time Value: All projections are in nominal dollars (not adjusted for inflation). For net present value analysis, discount future costs using appropriate cost of capital.