Overview

Overview:   For years APFA has negotiated with the Company to realize a duty free commission for Flight Attendants.  Our philosophy is simple; duty free sales would increase if the company offered an incentive for Flight Attendants through a commission program.  Through recent discussions between APFA, the company and DFASS an agreement has been reached to test duty free commissions for Flight Attendants.  We hope this is just a beginning on finding ways for Flight Attendants to share in the revenue that American plans to pursue.

Beginning November 1, 2004 and continuing through March 31, 2005 the company will pay Flight Attendants a 6 % commission for duty free sales.  The test will be considered a success if DFASS, AA’s duty free vendor, realizes an increase in gross sales and revenue relative to current volume and AA’s commission revenue increases sufficiently to fund the Flight Attendant commission with no loss of revenue to AA.  Historical data from other airlines suggests that the increase in revenue will cover the cost of providing the commission.  During the months of November and December 2004 a threshold of $200.00 in duty free sales must be met in order for commission to be paid.  Once the threshold is met commission will be paid on the total amount of sales including the $200.00 threshold.  APFA and the company will meet to determine the necessity of a threshold in early 2005.

The joint task force has also agreed to create an additional revenue sharing opportunity by testing the sale of coach amenity kits in main cabin on flights to and from Tokyo.

Details of Duty Free Commission: The 6% commission will be divided among the Flight Attendants that have an administrative and/or selling responsibility related to duty free.  The ability to sell and therefore earn Duty Free commissions will be determined based on bid position and paid based on the Revenue Sharing Form.  In order to provide flexibility, you will have the ability to trade your duty free selling responsibilities to another Flight Attendant without trading your actual position.

The Purser and #3 will each receive a .5% commission of the total duty free sales for their administrative and paperwork duties. The four selling Flight Attendants will each receive 1.25% of the total duty free sales.  The designated duty free selling positions by aircraft will be:

777  –  F/A #3, F/A #6, F/A #7, F/A #9

767  –  F/A #3, F/A #6, F/A #7, F/A #8

These positions were determined to make sure there is flight attendant coverage in all cabins during duty free sales.

You may trade out of duty free sales responsibilities by simply indicating the name, employee number and position of the person to whom the selling duties were traded on the Revenue Sharing Form. The Revenue Sharing Form must be included in the duty free deposit envelope.  A Revenue Sharing Receipt will be available if you wish to keep a record of your revenue sharing.

Commission checks will be issued twice during the test period.  The tentative schedule for check issuance is mid January 2005 for sales in November and December.  Another check will be issued following the sales for the period January through March. The commission check will actually be paid by DFASS, AA’s duty free vendor.  Checks will be mailed directly to each eligible flight attendant’s home address located on Jetnet.

DFASS has a website for a Flight Attendant to track their commissions and make inquiries if they have questions or concerns.  They are generally able to respond to inquiries within 48 hours.  As soon as it is determined how Flight Attendants can gain access to this website we will provide that information.

Details of Amenity Kit Revenue Sharing: This test will also begin on November 1, 2004 and is scheduled to end on December 31, 2004.  The kits will be added to the duty free cart and sold on all flights to and from Tokyo.  Flight Attendants will receive a $1.00 commission for each kit sold that will be split among those with administrative and selling responsibilities.  The Purser and #3 will each receive .10¢ per kit sold.  The designated selling Flight Attendants will each receive .20¢ per kit sold.

The caterer will board the kits, as DFASS is not the supplier.  The initial price of the kit will be $5.00, however it may be adjusted to drive-up demand.  After reviewing the tests outcome and profitability, American will meet with APFA to determine if selling coach amenity kits on other international flights should be pursued.