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When I assessed the Dallas market and the potential impact on American if the Wright Amendment was immediately repealed, the tenets of a compromise played themselves out in the analytics.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.

The National Mediation Board: From Honest Brokers to K Street Politicians

Something is just not right about the speed with which the National Mediation Board issued a Notice of Proposed Rule Making (NPRM) to amend the Railway Labor Act

I’m guessing that the reasons had more to do with politics than good policy. Something is just not right.       

In its proposed rule, the NMB is seeking to change the election process by which unions organize workers in the railway and airline industries. The new rule, which would change 75 years of practice, would for the first time determine the outcome of union elections based on a majority of those who vote rather than current practice, where a majority of all eligible voters must support joining a union.

What is laughable about this change, at least to this observer, is that the Board describes the NPRM as part of its “ongoing efforts to further the statutory goals of the Railway Labor Act.”  Funny, because the overarching statutory goals of the RLA is to minimize the disruption on interstate commerce stemming from labor-management disputes.  And this rule would likely do just the opposite: increase the likelihood of union activities that could wreak havoc on our nation’s commerce.

Never do I remember the use of the formal NPRM process to make such a significant change to labor law.

But before we go too far, it is important to note the dissenting opinion of the Chairman of the Board.  The NPRM was issued by NMB members Harry Hoglander and Linda Puchala – the two Democratic appointees on the three-member Board. The Chairman, GOP appointee Elizabeth Dougherty, in a formal dissent challenged the action of her fellow Board members

 “Regardless of composition of the Board or the inhabitant of the White House, this independent agency has never been in the business of making controversial, one-sided rule changes at the behest of only labor or management,” Dougherty wrote.  And it is this very mindset of Hoglander and Puchala in the drafting of the NPRM that smacks of politics, disregard for prior practice and arrogance in refusing to address subjects of similar importance 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’s Talk Stability

On September 28, 2009 I blogged in a piece titled:  Airline Industry Eyes on the National Mediation Board,  that looked at this very issue..  The rule change was sought by labor – the Transportation Trades Department of the AFL-CIO as part of its efforts to make it easier to organize airline workers. But the proposed rule is loaded with the potential for unintended consequences, particularly for incumbent unions that might be the target of “raids” by competing unions encouraged by the possibility of picking up new members in an industry already heavily unionized. 

Stability is one issue Chairman Dougherty addresses in her dissent, albeit for different reasons:

 “The Board has repeatedly articulated important policy reasons for our current majority voting rule – including our duty to maintain stability in the air and rail industries,” she writes. “This duty stems directly from our statutory mandate to ’avoid interruption to commerce or the operation of any rail or air carrier.’ The Majority attempts to ignore this important statutory mandate by claiming that only our mediation function is relevant to keeping stability in the air and rail industries. This argument has no merit. The statute does not limit our mandate to only mediation, and it is disingenuous to suggest that our representation function does not play an important role in carrying out our duty to maintain stability in these industries. Moreover, the Board has repeatedly in the past raised this policy issue in conjunction with our representation function.”

But it is just that stability that would suffer in the case of more frequent labor disputes and work actions designed to cripple a carrier’s service.

Some will say that disruption of interstate commerce was one thing in the 1930’s when the RLA was last amended and yet another thing in 2009 to justify making changes to 75 years of practice.  Not so fast.  In the 1930’s, interstate commerce consisted more of construction materials transported by train.  Today’s economy is about “just-in-time” delivery of every commodity imaginable and that includes the crucial role of airlines in getting business travelers to and from their destinations.  Time sensitive materials and travel are critical to today’s economy and fundamental to the service modern airlines provide.  So avoiding disruption is as applicable -- if not more important -- today as it was then.

Why Should You or I Care?

I have been asked by many really smart people why I oppose this change. After all, it would only put in place the very election practice of majority voting that is at the core of our democracy.  From that perspective, I could easily wrap myself in the flag and say the change sought by the unions makes absolute sense. 

But let’s give it a closer look. Our election practices were established by the U.S. Constitution. The 12^th and 17^th Amendments changed the rules for electing Presidents and Senators, but only after careful deliberation.  And just as the Constitution establishes the framework for the establishment of the Federal government and its relationship with states and citizens, the RLA establishes the framework for the resolution of labor-management practices in the railroad and airline industries. 

I am not a lawyer. But I do know that there is much learned discussion around the issue of original intent as it pertains to the Constitution.  Changes can be made and have been made to that ruling document.  Similarly, changes can be made to the RLA.  But that should happen only after careful deliberation. Moreover, it should not occure on the whim of two NMB members.  I hesitate to even suggest that these changes are being imposed by the Obama Administration on a struggling industry as a way to pay back labor for its support during the campaign, but it is beginning to smell that way.

Should the Industry Really Care?

The fact is, this proposed rule change is aimed at a single airline, Delta, which is less-unionized than any other legacy carrier.  And as the nation’s largest airline following its acquisition of Northwest, Delta is clearly a tempting union target.

So should anyone other than Delta really care? There is probably plenty of water cooler discussion taking place in Dallas, Chicago, Houston and Phoenix to name a few airline headquarters. One can only imagine that, in their view and on one hand, it is high time that Delta has to deal with the same labor challenges that have burdened other airlines for decades.

Delta is unique in the industry in its ability to offer above industry W2 compensation in return for work rule and commercial flexibility.  That’s been possible because Delta isn’t constrained by union contracts that limit productivity, add rigid work rules and protections and add other fixed operating costs.  Under unionization this past practice and fact becomes a question mark.

But I believe that the industry should be concerned about this Board action, both in impact and in precedent. Assuming the rule is implemented as I believe it will be, then all airlines with unrepresented work groups should prepare for union organizing activity unlike anything this industry has seen in two decades.  AirTran, jetBlue, Republic/Frontier and SkyWest should stand ready.

Let me be clear.  I am not saying that unions are all bad.  Good leadership on the union side and a willing management can make deals.  Look at the deals done in 2009.  Look at the most unionized carrier in the US industry – Southwest – which thanks in part to a strong relationship with its unions has managed to pay well and do well in the marketplace by building a great corporate culture and making productivity and customer service a priority

On the other hand, unenlightened and parochial thinking pervade the leadership ranks of many airline unions.  The industry will continue to face change and challenges. Unions that adapt and are able to let go of the past will flourish.  Unions that cannot adapt to the new direction of the global airline industry will struggle to deliver for their members.

Will unions grow stronger and gain members under the new rule? Probably. Does the NMB appear politically-motivated? Absolutely. That’s a real problem.

Today, several airlines are negotiating collective bargaining agreements under the auspice of the NMB. Whereas in the past the parties would have been sent back to the bargaining table to work out their differences, we might in the near future see a reckless use of the release process by a politically motivated Board.

[Note:  I am currently a local AFA appointed board member at Hawaiian Holdings, Inc. where the ALPA represented pilots have requested a release from mediation.  Writing on this topic is purely my own view on happenings at the National Mediation Board and in no way is intended to represent the views of Hawaiian Holdings, Inc., Hawaiian Airlines, Inc., or represent the views of local HAL AFA President, Ms. Sharon Soper.  The opinion stated is solely that of William Swelbar.]

What Does it Mean for Airline Unions?

I always watch with interest what James Hoffa and the Teamsters Union say about the airline and railroad industries.  In a November 3, 2009 Wall Street Journal article by Mike Esterl and Melanie Trottman on this very subject, Hoffa is quoted in support of the proposed change: “This reform lets workers choose a union the same way they choose the President of the United States,” he said. Whichever side gets the most votes, wins.”

But I’m guessing that Hoffa’s real goal is something else entirely. Because Hoffa and his Teamsters Union split from the AFL-CIO, they are free to raid another union by petitioning the NMB to organize workers represented by a different union.  The leaders of AFA, the IAM and ALPA ought to start looking over their shoulders now, because another union might be standing in the shadows. And that union might just be aiming for dissatisfied members that – whether out of anger toward the incumbent union or the struggling economy – might just be open to considering switching allegiances in hopes of getting a better deal. After all, under the RLA it takes only 35 percent of the workers in a “class or craft” to sign a card showing interest in a union.  And then, under the proposed rule, only a simple majority of the minority would be necessary to vote the incumbent union out. 

Imagine how tempting the prospect of signing up new dues-paying members from any number of small railroads around the country, whether for the IBT, the SEIU, or any other aggressive union that shows little interest in abiding by the etiquette of the House of Labor?  In industries in which two-thirds of workers already are represented by unions, a raid targeting disgruntled employees (an unfortunately large group in the airline industry) would present the best opportunity for a union to gain “market share.”

One can only assume that the strategists at the TTD and the AFA-CWA have thought all of this through. They must be counting on passage; otherwise, why would the AFA-CWA and the IAMAW have moved to withdraw their applications for single carrier determination at the merged Delta that is necessary to initiate a representation election?  And the fact that they’ve come this far leads me to believe that they have some pretty powerful friends in Washington, D.C.

Something is just not right

.     

Airline Industry Eyes on the National Mediation Board

The Railway Labor Act (RLA), which governs labor relations in the rail and airline industries, has been around longer than the airlines flying today.  First passed in 1926 and amended in 1934, it is designed in part to ensure that labor disputes in these key industries can be managed in a way so that they don’t interfere with the nation’s critical commerce.

Decades later, we can all point to the RLA and find certain aspects of the law that should be changed.  And that’s a worthwhile discussion. As long as it’s based in the understanding that the purpose of the RLA was to promote stability and not to disrupt interstate commerce with labor strife.  In its own quirky way, it accomplished these two inherent objectives. 

Now some in organized labor want to inject instability on top of an already unstable industry architecture.  Labor leaders insist they want a more predictable, efficient system. The question is whether the reform being sought will bring unintended consequences?

Organized Labor, President Obama and the National Mediation Board

Recently, the AFL-CIO’s Transportation Trades Department (TTD) asked the National Mediation Board to change 75 years of practice regarding representation elections. The practice in place today requires that a union win with a majority of employees within a “class” or “craft” in order to be certified as those workers’ collective bargaining representative.  The TTD, running interference for the Association of Flight Attendants (AFA-CWA) and the International Association of Machinists and Aerospace Workers (IAMAW), is seeking to make a major alteration to the practice that would put the union in place if it gets “yes” votes from a majority of those voting, not a majority of all employees in the class or craft.

This issue promises to provide some insight into the power of organized airline labor in the Obama Administration. Clearly, labor played a key role in electing the President.  But to date, labor has not reaped the successes many expected in the early months of the new administration.  Will the administration pressure the National Mediation Board to make this change?

After 75 Years, Why Now?

It is pretty simple and transparent.  Neither the AFA-CWA nor the IAMAW believes that they have the votes necessary to win an election in their efforts to organize the combined work forces from the merger of Delta and Northwest.  So labor hopes that a friendly administration will change the process to help them pick up these coveted new members – particularly on the Delta side where the flight attendants and maintenance workers have never been union.

Or, as the union leaders have clearly calculated, if you fail to win hearts and minds at the ballot box (as they have not once but twice) then change the rules. 

The AFA-CWA failed twice in its efforts to organize Delta flight attendants. In their last campaign, only 40 percent of eligible flight attendants even voted. And under NMB procedures, those who don’t vote are counted as a “no” vote regarding union representation. 

After months of delay in seeking to have Delta and Northwest declared a single carrier – an administrative procedure necessary to hold an election for union representation – the AFA-CWA petitioned the NMB for the single carrier determination in July.  The IAMAW followed in August, but is not seeking to organize the entire group of eligible employees in various class and crafts of Delta and Northwest employees.  Unfortunately, an election cannot proceed until the TTD’s request of the NMB has been decided upon.  Therefore, more hurry up and wait for affected employee groups. 

The TTD asked the NMB to change election procedures on September 2, 2009.  Since that time, various groups opposed the change in formal comments to the Board. Opponents include the Air Transport Association, the Regional Airline Association, and the Airline Industrial Relations Conference.

The TTD’s position is that the NMB’s policy is “clearly inconsistent with the longstanding, widely accepted understanding of a democratic election process in the public arena.”

I could wrap myself in that flag -- I guess. And as I read through the various filings, I understand the legal arguments being made. But I am not a lawyer.  So I am going to think about this in another way.

Majority Rule

The “majority rule” issue that is at the center of the TTD’s request seems to have a philosophical bent toward stability:  If a majority of workers in a class or craft want a union to be its collective bargaining representative, the union then has a mandate to bargain with the employer.  With less than a majority support, how effective can a union be in representing the work group?  If the ultimate weapon of the union is the ability to engage in “self help” (the RLA term for strikes, work stoppages, hiring replacement workers and other actions either side can take if the negotiating parties are “released” from mediation), then how effective can the union be in forcing the employer to improve pay and working conditions if more than half of the workers choose to work during a declared job action?

With nearly 150,000 airline industry jobs lost since 2002, it is easy to understand why labor is concerned about the decline in its ranks. Delta has long been a tempting target for unions. Only the pilots and two smaller groups of workers are now unionized.  Delta is a non-union airline by industry measures.  So unionizing the world’s largest airline could be a big step for unions trying to replenish their membership roles following the industry’s restructuring period.  Simply, labor wants to change the majority rule because union activists are those that vote. 

In AFA’s last election attempt at Delta, one assumes that 60 percent of eligible flight attendants didn’t vote because they knew that not to vote was a “no” vote. A clear majority said that they were not interested in changing the labor dynamic at the airline.  But the majority of the 40 percent who did vote supported the union. 

Now enter Northwest and its 7,000 flight attendants. Prior to the merger, they already were members of the AFA-CWA.  Add those votes to the mix and AFA-CWA should easily get a majority of the combined work force.

Fragmented Labor Meet a Fragmented Airline Industry

Today’s AFL-CIO is not the same force that it was during its "New Deal" heyday.  Then, the labor movement was consolidated and spoke with one voice.  Today it does not.  Two large and powerful unions, the Teamsters and the Service Employees International Union (SEIU), recently broke from the AFL-CIO to form a rival coalition.  That defection has created a fragmented labor industry in which the old rules no longer apply. Already, unions in rival coalitions have tried to “raid” members from other unions – something the old rules prohibited. Herein lies the rub.

Arguably, one of the fundamental issues that airline labor has struggled to recognize and reconcile in a constructive way is the fragmented airline market.  Yes, fragmentation leads to hyper competition, but it also creates an unstable industry structure.  This unstable structure has forced airlines to seek wage cuts and productivity gains from labor in order to prevent competing airlines from entering markets and stealing the incumbent carrier’s traffic and revenue - and to live to fight another day.

In my view, changing long-established rules that are intended to promote stability has the potential to exacerbate an already unstable situation. Consider the scenario played out by AMFA following restructuring at United.  Because AMFA is not an AFL-CIO union, it could raid - or threaten to raid - at will mechanic groups at those airlines where unions had gone along with deep concessionary agreements under bankruptcy or other financial pressure. In fact, it won a few elections along the way only to lose later when they failed to deliver on their promise of securing “snapbacks” and wage and benefit increases the industry simply couldn’t afford.

I have seen many airlines struggle in negotiations with AMFA-targeted groups.  In many cases, the company and the incumbent union could probably have reached agreement earlier but for the union’s fear that by agreeing to some perceived negative change to the agreement, they would invite a raid from AMFA hoping to steal their dues-paying members.  This created a destructive and mercenary element to contract negotiations that too often delayed deals and hurt airlines and their employees.

Another question worth asking, but unresolved, is if a majority rule provision were replaced whether a minority of the class and craft could then move to force an election to decertify the union?  (The RLA would seem to be silent on this subject) Imagine the destabilizing effect of that situation.  Just about any tentative agreement I can think of would have elements or aspects that may not be palatable to some vocal minority.  So if an agreement ultimately passes by a razor thin margin, the vocal minority begins a campaign to replace the union that made the deal, looking to a new union that will promise that it can accomplish what the incumbent could not.  And so it goes.......

I may be going out on a limb here, but I’d guess this is a scenario that the Teamsters have already thought through in trying to change the RLA.  The minority rule should allow for raids that could bring new members into the Teamster ranks.

Concluding Thoughts

There’s a real risk to the change the union seeks, particularly during a collective bargaining cycle like this one in which the expectations of employees are so far from most airlines’ ability to afford. There is enough instability in this industry without creating a situation that would bring even more.

Labor has asked the NMB to move toward quicker resolutions of cases on the docket.  But the debate over the RLA must also consider the perspective and concerns of incumbent unions who will be hard pressed to make a deal that offers airlines something of what they need – namely, greater productivity – without facing a raid from a hungry competitor.  A hungry competitor that will promise anything without the corresponding responsibilities of working with management and putting together agreements that serve the long-term best interests of the companies and their employees.. 

It is the burden of management to make very difficult decisions based on the competitive environment in which they operate.  In this labor environment, union leaders could very well face the same challenges and be forced to make decisions that are not in the best interests of dues paying members but in the best interest of the institution. And that would be just one unintended consequence of a change in the rules of the game in order to “possibly” achieve a short-term gain.

The alteration sought by the TTD would prove to be a bad NMB policy change I fear -- particularly when one of the most important goals of the new NMB is to resolve cases in a timelier manner. 

“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.