11.2.2010 « Swelblog: On Election Morn »
This has been a busy month for the US airline industry with earnings and all. As a result there has been lots of news and most of it good. Of course, two quarters do not make a trend -- something I'm frequently reminding people when I'm out on the road speaking on all things airline industry.
So as we sit awaiting results on what promises to be a most interesting mid-term election, I want to look back on what has been a very political two years
First up: labor. Unions are all politics all of the time and that has played a big role in the airline industry since President Obama took office. A cynic would say -- and I might agree -- that unions are simplistic organizations that too often focus on only on the next contract or the next election. The result is too often a strategy in which they do everything they can to “choke the golden goose” for all of the pay and benefits possible at the time, which only puts their successors in the difficult position of presiding over concessions when the "gains" are no longer economically viable. There are some who say that this blog is too quick to bash unions. But as I've said before, I'm equal opportunity in calling out bad behavior when I see it. And when it comes to airline labor leadership, I've seen a lot of it.
I've spent a lot of time challenging the leadership at the two largest pilot unions: Captain Lloyd Hill of the Allied Pilots Association and John Prater of the Air Line Pilots Association, both who ended their terms as president this year. My fundamental criticism was each man’s decision to run on the opportunistic platform that all concessions would be returned and more. Unrealistic. Unfortunate. Unfulfilled.
Lo and behold, the two important pilot unions have replaced “over promise and under deliver” with two new but seasoned presidents: Captain David Bates at the APA and Captain Lee Moak at ALPA. [Moak has been the subject of much commentary on this blog and I encourage you to learn more about him]. I had the opportunity to spend time with both men last week at the Boyd Group International’s 15th Annual Aviation Forecast Summit in New Orleans.
I don’t want warm and fuzzy from union leaders and I don't expect it from management. What I want is a sense that each side understands and negotiates with a clear understanding of the economic environment in which the industry operates. From both pilot leaders I am confident that principled negotiations and decisions will be the rule of the day. From both pilot leaders I sense a potential to depart from gridlock and enter disciplined negotiations. From management I want to see a renewed effort on communicating clearly the rigors of the business from a global perspective. That would be true leadership.
Unions and management must break through the gridlock that leads to protracted contract talks and ultimately keeps money from pilots' pockets. And both sides need to be honest with pilots about the extent to which the world has changed and the industry continues to change with it. For example, today’s union negotiations should be less about who should fly 76-seat small jets and more about how to position an airline to challenge new and vigorous competition in Latin America, the Middle East and the Asia-Pacific regions. For the mainline carriers, competition is now more about Dubai than Duluth, and more about Auckland than Austin.
It is fast becoming clear that flight attendant union leaders are also increasingly out of touch. And no one is more out of touch than the President of the Association of Professional Flight Attendants President Laura Glading. Glading, more than any union leader in the past or present, is too quick to threaten chaos and strikes without a clear understanding of the competitive realities that affect contract negotiations.
In her latest unconscionable act, Glading is calling on American Airlines flight attendants to write letters demanding a release to a "cooling off period" and possible strike from the National Mediation Board. Maybe Glading doesn't really understand the Board and its mission which, last I checked, is to try to prevent work actions that would threaten the nation's air transport system. Further, it would be unconscionable if the NMB were to cave into a letter writing campaign by a union that has done more to cause dissension in its ranks than promote the high level of customer service and professionalism the airline needs to compete.
It has been interesting to watch the flight attendant negotiations at Continental and United. The Continental flight attendants actually voted down a tentative agreement that would have put money in their pockets immediately at a time the industry remains vulnerable economically. "Immediately" should have been an important factor considering that there will need be a representation election between the AFA-CWA and the IAM before any real negotiations can begin at the merged carrier. My guess is that it could now take a couple of years before either the Continental or United flight attendants realize any economic gains over what they earn today.
As for negotiations with under-the-wing employees other than mechanics, the TWU negotiations at American provide a lens for one of the most difficult issues facing airlines: how to appropriately compensate ground workers. In almost every case, this work could be outsourced for a fraction of the costs of keeping the work "in house" -- particularly when you consider the comparatively rich benefits package most airline employees receive. The baggage handlers are the most vulnerable yet the union group still holds out with demands for more.
But if the unions may have a false sense of power because the worst-kept secret in the airline industry is the fact that baggage handlers have long ridden the coattails of the more skilled mechanic group, demanding wages that far exceed what these workers could command outside the airline industry. Said another way, because the skilled mechanic group has "carried" these less-skilled workers for so long, they have received less in negotiations over the years because the political structures of the TWU and the IAM includes baggage handlers in the same "class and craft" as a way to boost their ranks.
This week we will know the outcome of vote of the Delta and Northwest flight attendants, who are deciding whether to organize under the AFA-CWA banner (which would be a first for Delta flight attendants) or be a non-union group. This election is the biggest yet under a new NMB rule that made the most significant change to the union election process under the Railway Labor Act in 75 years. That new rule likely will be the deciding factor in the outcome. The change in the rule was all about politics, with a clear disregard for prior practice and arrogance in its refusal to address key subjects in the labor arena, including the ability of employees to decertify a union.
But that is reality in Washington today as it pertains to the airline industry. We have had a number of issues become political in the name of consumer protection. There are a number of matters being regulated or legislated in the name of safety. A FAA Reauthorization bill cannot get passed because of all the non-FAA issues lawmakers stuck in the Senate and House versions as goodies for their own political constituencies. But no matter the outcome of the national elections tomorrow, gridlock promises to rule the day in Washington for the next two years as well.
As British author Ernest Benn wrote: “Politics is the art of looking for trouble, finding whether it exists or not, diagnosing it incorrectly, and applying the wrong remedy.” That sums up how Washington deals with an industry that delivers value and jobs to the economy each and every day.
Reader Comments (3)
Dear Swelbar,
I have posted here before and still have a fundamental difference with how you label labor unions. You quote labor unions as trying to “Choke the Golden Goose,” and you know what, some might because after all, that is the goal of the Union, to get everything they can for their employees. Just like management is tasked with getting everything they can for the shareholder, board of directors, etc. I am in full agreement with you that contract negotiations need to be cut in half, as dragging them out for almost four years does nobody any good and just leads to more resentment between the two parties. My point here is this, if you ask a pilot what he or she deserves, I think most would tell you fairness. Of course there will always be a few that well tell you we need pay equal to what we got back in the 70’s and 80’s, but for the most part if the pay is reasonable, the quality of life is GOOD, and there is the ability to pick-up more flights if the worker wants to make more money, then I feel your labor unions would be satisfied. But how can a labor unions roll over when executives continue to take large ($millions) bonuses while reducing flights and furloughing employees. The reason most given, “It was in the executives CONTRACT to receive that bonus!” No matter the state of the company. So in turn, the next CONTRACT is all the employees have to guarantee their quality of life, pay, benefits, etc. And I am sorry, but I believe that the whole 76-seater thing stems from first officers getting paid less than $25,000 first year to fly it, upsetting the majors. I am of the mind that no pilot should start at under $30 grand for the amount of time and experience it takes just too even break into the industry. I am sure you will reply to that by saying, “that is the market wage.” Well as far as I know, most executives did not create the airline they work for, they are employees as well, and yes they have obviously made some right decisions and contacts to get where they are, but taking while reducing breeds angst. Personally, I wish there wasn’t a need for unions, but the simple fact is that at most airlines, not all, is that there needs to be a union to protect the employees.
I believe this article is an important matter to discuss and resolve over the upcoming years if we ever want a semi-stable industry.
Mr. Swelbar,
I would like you to do a post sometime about your opinions and reasons on who should fly the so called RJ's.
It seems to me that RJ's can only pay a certain amount for pilots regardless who flies them unless their operations are subsidized. If the aircraft were flown by pilots at the major airlines wouldn't the RJ pilot pay be subsidized by reduced pay for the pilots of the larger aircraft?
If the RJ's are flown by a separate company, won't the RJ company's costs be subsidized by the major airline, thus reducing profits and pay potential for the major carrier and its pilots?
The whole issue looks like a dog chasing its tail to me. The only major difference that I can see is that if the RJ's were flown by the major carrier, the RJ pilots would have better benefits and more years in the retirement program and perhaps a higher risk of being laid-off.
I would appreciate your insight on this since it seems to be a major obstacle in union contract negotiations. When I read about the amount of time that passes while contracts are under negotiations, I am flabbergasted! How could it take so long? It makes me wonder if the Railway Labor Act is broken. It seems to be even worse in the railroad industry by the way.
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