two quick questions....

[pipers]

I am fairly new to the concept of Airline Unions and labor and I have a couple of questions about it. I am a firm believer in unions and there importance in the airline industry. I am currently studying labor/transportation economics and was wondering about the relevence of two questions of which I might write a research paper on.

1) How much falt (if any) is labor pay issues to blame for United chapter 11 and current problems? Arguments?

2) Do you think it would be reasonable to negosiate a base labor (different for flight attendents, pilots, etc.) pay salery and then have quarterly bonuses based on quarterly profits. That way during times of economic stability and growth, ie. during the late 90', the company as a whole benefits, but during times of a looming war, recession, etc...the company doesn't bleed to death in labor costs when travel is zilch and fuel costs are high. Or are labor costs even an issue in Uniteds/AA/etc. finicial problems?

It seems that aviation has more "high-highs and low-lows" than most other industries. I don't know if versitle labor costs would help....just thinking.

Thanks

 

[mar]

Feb 3, 2003 Aviation Week/ Space Tech

I don't have a response for your second question but I'm not sure "versatile labor cost" will really be that effective (for the reasons listed in the editorial of the Feb 3, 2003 issue of Aviation Week and Space Technology.

And this is my response to Question 1: Read the editorial titled "Bring binding arbitration to airline disputes" by Stephen J. Cabot.

Here's an excerpt: "Labor costs are some of the highest expenses that airlines face. When it comes to airlines, unions are so much a part of the operating system that they exert life and death control. Unions can keep airlines grounded by the extraordinary weight of their demands. For some airlines, bankruptcy is preferable to meeting unrealistic union demands.

"The unions representing pilots, mechanics, machinists and flight attendants at times seem more interested in grounding airlines than in ensuring job stability. One need only look at the post-Sept. 11. 2001, situation: The terrorist attacks caused a rupture of red ink to spill over the balance sheets of numerous US carriers. The volume of passengers dropped precipitously as did the number of regularly scheduled flights.

"In such dire circumstances, one would have thought unions, being both patriotic and concerned about preserving jobs, would have made the necessary concessions to keep airlines profitable. Instead, United Airlines experienced a signficant jump in labor costs. Northwest Airlines lost hundreds of millions of dollars as a result of higher fuel and labor costs. And a strike at Delta's subsidiary, Comair, cost $4 million a day. The operating deficits at airlines are, unfortunately, prefaces to their obituaries.

"Historically none of this is surprising, for unions and corporations have always believed increased labor costs could be passed onto the consumers. Such a scenario, of course, could no longer work in the airline industry after deregulation. Previously, airlines passed along increased const to consumsers in order to avoid strikes. After deregulation, airlines could no longer do this because of the cost-sensitive competition from low-priced carriers. Airlines could neither afford strikes nor pass along costs to consumers, so they simply absorbed the increases....."

...and then it ends with this final paragraph...

"Soldiers, police officers, firefighters and air traffic controllers are forbidden to strike. Similarly, airline personnel, as part of an essential industry, should be in the same category. The government must act to treat the airline industry as an essential part of the nation's economy and security. No union should be permitted to clear the skies, keeping airlines grounded."

[Good luck on your paper. It sounds like a good topic to me.]

 

[pipers]

thanks mar...i'll PM you some day and let you know how it went