Nature Abhors A Vacuum - Proving True At The Allied Pilots Association

Having been critical of some union leadership in the past, I now must acknowledge when some get it right.  And that someone is Captain David Bates, the president of the Allied Pilots Association at American Airlines.

I may not be doing Captain Bates any favors here. In the sometimes irrational world of union politics, leaders too often are applauded for destructive rather than constructive behavior, which is one reason labor relations are such a mess in the airline industry.  But here goes:

There have been few topics covered as extensively at www.swelblog.com as negotiations between American Airlines and its pilots represented by the APA.  My take is that for too long the APA’s behavior and actions were not becoming of a professional pilots union.  I wrote many times about Captain Lloyd Hill (Bate’s predecessor) and his term of empty promises:  All Eyes on Texas; Just Put It On Ice: American’s Ability to Pay ? APA’s Expectations; Maybe the Allied Pilots Association Is Really Onto Something; American Airlines and the Allied Pilots Association: A $3 Billion Question and AA’s Labor Negotiation Scenarios Get Even More Interesting to name a few.  His delusional approach to union leadership often landed Hill a starring role in the ongoing saga of Captain Lloyd and the Lost Planet Airmen.

My last post on the flight attendants union at American, A Flight Attendant Representation Inflection Point? received a lot of attention.  And it is most relevant to what transpired this week when Bates delivered his speech to the APA Board of Directors.  I have wondered many times how APA’s new leader would begin the process of ending the tough and reckless  leadership style of his predecessor and transition to a style he has shown to be tough yet pragmatic.  His words to his Board very clearly follow his actions in his first seven months in office.

As I’ve said before, there is a financial concept lost on union leaders today:  Net Present Value (NPV.)   It means simply that cash flows realized in the short term have more value to the firm (or individual) than cash flows generated years down the road. 

Bates recognizes this in his speech when he states early on: “We're now coming up on the five-year anniversary of when management opened up contract negotiations. Your National Officers know what the pilots want in this contract. We know that our earning power is diminishing each and every day.”  [the concept of NPV loud and clear].

The next five paragraphs of Bates’ speech speak plainly and loudly with a message that should be heeded by labor leaders throughout the industry.  And that is this:  The historic pattern of bargaining, in which a union gives in one round with full expectations that they’ll get it back plus more the next time, is history.  In the past, airline labor agreements addressed only the competitive realities confined within the 48 contiguous U.S. states to the extent they addressed competitive realities at all.  Today, union leaders need to accept that this is no longer the case. Airlines cannot cave to the urge to repeat the patterned sins of the past and give away pay without demanding changes necessary to compete with new and different competition.  At the same time management must listen carefully and think creatively about addressing labor’s concerns about jobs in a different but an increasingly global competitive industry.

Bates’ Five Paragraphs of Truth

I'm going to tell it straight. For the past several years, APA has played the blame game. We've blamed management, we've blamed the National Mediation Board and we've blamed the recession. We've portrayed ourselves as victims of an unfair world.

It's time we look in the mirror and get honest with ourselves. In APA's extensive contract proposal crafted several years ago, we opened on a large number of items in nearly every section of our contract. Instead of concentrating on the most immediate and important items, we created a wish list for a "dream contract," asking for dramatic increases throughout the contract. We loaded up the openers with "throwaways" and put hundreds of items on the table--of which approximately 320 still remain.

We told the whole world that we didn't know or care how much our demands cost. We said we didn't care what was going on with the economy or with the corporation's economics. We didn't consult with professional negotiators. We abandoned working within established industry protocols and severed ties with management.

These are some of the reasons the NMB and the United States government put APA in recess. The NMB told us to clean up our act. They told us that it does matter how much our "demands" cost, to quit bickering over internal governance and that we needed a leader who was empowered to make decisions. They were clear that APA's radical rhetoric had isolated us and that APA did not have many friends in Washington. They were concerned that the APA Negotiating Committee had no authority to bargain and that much of what they brought back was rejected. Lastly, when I was first elected APA President, the NMB was very direct in stating that there appeared to be no one in charge at the union. The NMB considered APA a basket case and no longer wished to waste resources. Fortunately for us, much of this has now been reversed.

Since our openers, we have refused to remove any items from the table and come off any of our more "interesting" demands. To do so--according to some--would be "negotiating against ourselves," or so the mantra goes. But what we've really done is to paint ourselves into a corner, thereby playing right into management's hands. We've given them the tools to slow negotiations down as much as they want. After five years, we still haven't had any serious negotiations on some of the most important items such as scope, pay, retro, stagnation and others. At the rate we are going, we could literally spend the next decade in negotiations.

Bates concludes, “It's time we get serious about clearing out the underbrush. Our pilots want an industry-leading contract now--not years from now.”

The full text of Captain Bates’ speech can be found on Terry Maxon’s Airline Biz Blog at the Dallas Morning News. 

The hard work of fixing labor relations and contracts in the airline industry must begin with clearing the underbrush  -- a  task that must be done before an efficient use of the National Mediation Board (NMB) can commence.  Using the services of the NMB to “work through” issues with the uniform section is grossly inefficient.  Nonetheless, that is how it seems many negotiating teams are using the Board. Reaching impasse on the uniform section [cynical emphasis added] does not constitute having reached the conditions for a release.

As the Dunlop II Commission recommended, both parties had best be working hard toward a resolution of the issues before a release is considered/granted.  Bates understands this clearly.

As I write this, I can hear the hue and cry from his union brethren that, with his speech, Bates is acting like a management lackey.  But that is simply naïve.  Negotiations require a back and forth on issues important to each party.  That’s the way it’s supposed to work. Changing course from the discredited reliance on “pattern bargaining” does not signal defeat.  It merely recognizes that the old way is not working toward reaching a agreement.

Every union has its minority factions that want to “burn the furniture” before they’re ready to sign a deal on the house.  That is a strategy that has proven in this round to not work.  Captain Bates is from a domicile at American, Miami, known to be a home to the union’s Taliban.  That faction will certainly scream.  But the professional airmen at American deserve better than the prior administration and maybe, just maybe, they will accomplish their ultimate goal of getting a leading contract.

This Wednesday, February 16 I will be speaking at the FAA Aviation Forecast Conference in remarks I’m calling: The US Airline Industry and Herbert Stein’s Law.  If you are not familiar with Herbert Stein’s Law, then give it a google.  More to come . . .

Is the Proposed NMB Rule Change Wright or Wrong?

I had made up my mind that I was not going to write anything more on National Mediation Board activities, at least until after the scheduled public hearing on December 7 in Washington. Isn’t it interesting that the date for the hearing is synonymous with Pearl Harbor Day?  I digress.

I have heard from many people regarding the two recent NMB pieces I posted on this blog.  Most of the comments have been private and along the lines of:  “How can you oppose something so fundamentally akin to our democracy? “And “How can you possibly be against anything that is so aligned with the Constitution of the United States? “

Negotiation and Compromise Were Wright

As I think about my feelings, I reflect back on the reasons I helped American Airlines a few years back in its campaign against Southwest’s push to repeal the “Wright Amendment.”  After all, Southwest’s CEO Herb Kelleher had made a deal in 1979 (or maybe 1978, or maybe 1977, or maybe earlier)when he agreed to the Wright Amendment’s limitations on Southwest’s flying from Dallas Love Field.  Then, in 2004, for reasons unstated but not hard to figure out, Kelleher wanted to undo that deal and expand his airline’s ability to fly nonstop on new routes from Love to points beyond the eight state limit that had been legislatively imposed. 

The Wright Amendment was negotiated with a purpose and a commercial issue at its core.  The law was largely designed to promote stability in the Dallas/Ft. Worth airline market as a then-fledgling DFW Airport came online.  In my work on the campaign, I was often asked how I could oppose unfettered competition in the Dallas marketplace. My reasoning was simple: I believed repeal would lead to dangerous instability in the airline marketplace, particularly for American at a time when all legacy carriers were on life support.  Southwest's motives were largely intended to take advantage of commercial weakness.   

When I assessed the Dallas market and the potential impact on American if the Wright Amendment was immediately repealed, the tenets of a compromise played themselves out in the analytics. That analysis supported a phased-in repeal that immediately allowed through ticketing for Southwest at Love Field.  It certainly was not my place to suggest that compromise.  That compromise came only after a lot of hand wringing among politicians and senior airline executives alike.  But it assured more stability in the market and will ultimately lead to what Southwest sought:  Come 2014, it will be "free" to fly to any and all domestic points from its home base in Dallas.

A Cram-Down Would be Wrong

Based on what we know today, the National Mediation Board through its Notice of Proposed Rule Making (NPRM) seems to leave very little room for negotiation or even compromise as to how representation elections should take place.  This, despite concerns raised from not only management interests but from other unions with interests as well.  Interesting, and disturbing, behavior for a quasi-government agency with the mandate to reach agreements with parties rather than provoke, and perpetuate, actions that lead to disruption and delay, don’t you think?  

As I wrote in my last blog, as drafted the NPRM smacks of politics, 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 and a union’s right to demand the personal contact information of employees they hope to organize known as an Excelsior list.

Let me be clear here:  I have no issue with the rule change per se.   But I have major problems with how it is being done.  In a real world application of NMB mediation cases, doesn’t the Board provide one or both parties “political cover” in reaching an agreement that might otherwise be politically unpalatable? That sure as hell is not the case here. 

The Wright Amendment was a politically and commercially-charged issue between two airlines and two cities that also had national implications because airline activities so often do. Changing the union organizing process under the Railway Labor Act has implications beyond airlines and airline unions as well. I believe that by changing the rule, the NMB will be creating more instability on top of an already unstable airline marketplace.  And that has national implications. How many industries have interdependencies on the airline and railroad industries?  A stimulus question indeed.

The truth is that some at the NMB are looking to do nothing more than change a rule that would initially make it easier for unions to organize a largely non-union airline (Delta) and add/retain thousands of dues-paying workers to union ranks. But the ramifications have much longer-term implications that very clearly favor one side (union supporters) over the other (those who oppose unionization).  That’s one upshot of a draft rule that ignores rail and airline employees’ right to decertify a union or provide their personal contact information to union organizers.

It sounds to me like either the NMB and its proposed rulemaking should be put on ice, or a Presidential Emergency Board be convened in order to make sure that all input be considered.  At least in a PEB, history suggests that neither party will be totally happy. Inside baseball tells us that means a good deal has been reached.

In this case, like Wright, compromise would be right but only after all sides have had their say and issues heard and considered. Because otherwise, something tells me that the outcome will be wrong.

More to come, for sure.