“Capital Is Global, Labor Is Local”

The title is not my words but rather those of the International Federation of Air Line Pilots’ Associations (IFALPA). On Tuesday of this week, I sat on a panel with Captain Paul Rice of IFALPA to discuss consolidation at the ACI World Conference in Boston. Captain Rice is a most articulate and passionate speaker when it comes to issues important to labor.

As our panel progressed in its discussion, I challenged Captain Rice on his use of his phrase describing events occurring in the industry on consolidation. My basic assertion was: that labor is capital and its flow is being hindered by seniority and other fundamental union rules that probably will not serve tomorrow's work force as currently designed. Restrictions on the flow of capital, or anything, are good for no one. The Boston Beacon reported on our panel.

Yesterday’s Northwest – Delta Shareholder Vote

There is no event currently taking place that highlights the “Labor is Local” mantra more than the pending Northwest - Delta merger. Susan Carey of the Wall Street Journal writes: Northwest's Unions Face Tough Reception at Delta. This comes on the heels of the Association of Flight Attendants – CWA testifying before Congress earlier this week that the rules for union elections at airlines need to be altered. Ah, we are again back to that contemporary law that governs airline labor relations: the Railway Labor Act of 1926 as amended in 1936.

What is interesting to me is that unions negotiate hard to have Sections 3 and 13 of the Allegheny-Mohawk Labor Protective Provisions in their contracts. In February of this year, I wrote a piece entitled: F + E = LPP^DL: Fairness and Equity; Seniority Integration; Union Representation; and Lee Moak Again. Delta had offered these protections to its employees ahead of the announcement of a deal, and they did not have to bargain for it.

There will almost certainly be elections among the IAM and AFA-CWA work forces but now union leaders are concerned that, under NMB rules, a ballot sent to an employee that is not returned is counted as a no vote therefore making a representation election most difficult to win. Just as it has been for years and years.

But like any election, isn’t it up to the union to convince potential new members that being represented by a collective bargaining representative is better than not being represented at all? So, if labor is going to ask that we review only Sections of the Railway Labor Act that serves their local interests only, I say no. If labor is going to ask that an Act of Congress that is more than 70 years old be amended to address issues and concerns that prevent the US airline industry from fully participating in global capital flows because current labor capital says no, then I say yes.

If nothing else, the two mature airline industries in the US and Europe should be able to find common ground that separate continental seniority lists could provide.

Yet Another Prism from Swelbar to Think About US Carrier Competitiveness in the Global Airline Industry

The one thing I have definitely discovered since introducing swelblog.com is that once you write, there is no where to run and hide. Following my November talk to an ACI-NA audience in Washington DC, I penned an article that appears in the March 2008 edition of Airline Business where I discuss the competitiveness of the US airline industry in the face of increasing global competition.

The many themes that run throughout piece have been discussed over the past five months here. So on a day where there are reports that the Delta – Northwest talks have been restarted, I continue to believe that a resolution can, and will, be found. Assuming that is true, then it will be off to Washington to discuss, and defend, the combined carrier. This article was written with the mind that the regulators must also consider any consolidation attempts in the context of US carrier competitiveness in the global airline industry.

Anything short of this consideration ignores the economic realities of globalization and the direction this industry is taking. And I sure hope that we do not spend inordinate amounts of time discussing how air service in the middle part of the US is made less competitive. Rather, I hope it is recognized that the regulators need to focus commensurate time considering how the middle part of the country will benefit from increased access to markets around the globe. Just as deregulation of the US domestic market has taught us, more than sufficient competition will remain.

One can hope.

U.S. Airline Management and Labor: The World is Smirking at US

On Thursday of this week, I have the honor of addressing the ACI-NA (Airports Council International - North America) International Aviation Issues Seminar ACI-NA :: Meetings And Conferences :: Calendar of Events in Washington, DC.

What great timing. Because the fact is, as carriers across the world are changing their business models to respond to the new global aviation market, U.S. carriers are far behind the ball in making the changes necessary to compete.

I won’t use this space to preview my speech, but there are a couple of points I’ll use that lectern to address.

For one, and as I referenced in an earlier post about the Dubai Air Show on November 13, 2007, click here I find it troubling that the vast majority of the orders for new aircraft are coming not from U.S. carriers, but from carriers operating in previously obscure regions of the world. They are the ones that will be on the leading edge as our markets are exposed to increasing competition from foreign carriers. Is the US being relegated to a supporting role in tomorrow’s global aviation market?

Julie Johnnson of the Chicago Tribune weighed in on just this subject in her “must read” that ran on November 25,2007 click here. It offers an insider’s view from a global carrier on the U.S. airline industry, from the labor battles to many carrier’s struggle to maintain identity in a changing marketplace. I read between the lines that we may be winning some battles but are sure to lose the war if we do not address the competitive deficiencies of the U.S. legacy carriers that compete for the international passenger.

And so to labor. So much energy and time is devoted to management-labor skirmishes that’s it is no wonder that foreign carriers are moving forward while we look back. Whereas Qantas has taken advantage of weaknesses and structural change in its home market to succeed, we appear in no shape to do the same -- despite a known outcome for some.

Perhaps it is time for the U.S. carriers – management and labor alike and together – to stop focusing on the small battles and begin to plan for the big one: maintaining, and even expanding, market share in an increasingly competitive global industry.