Union mindset

[enigma]

It seems to me that our unions (I am a card carrying ALPA member) want to bargain for wages as if the airline industry was still a regulated business environment. Any thoughts? Comments?

regards

 

[RJFlyer]

I think you're right.

 

[Draginass]

And what's the point?

 

[DaveGriffin]

I think enigma's point is that the unions operate on the assumption that the revenue generated from ticket sales (which pays all employee wages) is somehow static. In reality that flow of cash is the result of millions of individual flyers' purchase decisions. Each individual purchase decision is driven by a multitude of factors. Union wage negotiations are based on the assumption that cash flow is affected very little by the individual flyers' choices and decisions.

I apologize enigma, if I have misinterpreted your post. The following is my own analysis.

I believe your observation is at the center of the unions' wildly errant claim that 9/11 does not qualify as force majeure but is instead an economic event. In reality, when the public observed the very real danger that commercial aircraft could be turned into kamikaze guided cruise missiles, a great many travelers made the rational decision not to travel by air. The unions refuse to acknowlege this.

 

[RJFlyer]

I think you're right.

 

[publisher]

Normal???

One problem here is that many are treating this as the normal downtrend were layoffs are the result of a decline in economic factors....
There was nothing normal about these events at all.

The contract provisions that deal with scope, that deal with flow back, that deal with shrinkage, never contemplated the events of Spetember 12th and the instant decline in business. To then try and apply the contract provisions that deal with these things as if they are normal events is ludicrous.

That mentality is leading to the sale of subsideraries, renogotiation of labor contracts, and changes in the lifes of many/

If you want to talk about this subject, call me on www.Avcareer.tv Monday at 2pm est 954-472-6684 Ext 304 or email me at [email protected]

 

[bobbysamd]

Contracts

Hey, I like "force majeure." Pretty spiffy-sounding.

I believe that Publisher and I finally agree on something. I cannot see how any airline union contract could anticipate the 911 events. However, the public's reaction to 911 gave impetus to events that were already in progress for months, if not for a year, i.e. the recession. Many of the things we've seen were destined to happen, but 911 undoubtedly escalated and magnified their impact and aftereffects.

On the other hand, no matter how good a contract the unions negotiate, somehow management always finds a way to chisel around it. I don't claim to be an expert on this by any means, but some of this outsourcing that some mainlines are using seems to be an example. Mainlines agree to code-share and/or use their regional subsidiaries, but somehow they've found a loophole to use non-owned regionals to feed them, at less cost. In the meantime, crews employed by the owned subsidiaries are furloughed and, as Publisher observed, the subsidiaries are up for sale. All, apparently, for lack of revenue. Now, at this point in time we could say we're in an economic event. Clearly, the unions need to find a way to address this situation from the standpoint of finding flying for their furloughed members.

In a way this is like a lockout. The furloughees want to work but the company is sending the work they normally would have elsewhere.

Just my .02 on what is really a very complex issue.

 

[enigma]

Ya'll are not really going where I thought you would, but I didn't post this with a specific situation in mind. I had not actually related my thinking with the current 9/11 driven events, but I didn't make the post because I had a clear vision of what is happening. I wrote this to stimulate discussion and to enrich my knowledge of how we enteract with management and the economy. I can't quite put to words what I think exactly, when I can I will. In the mean time, keep up the input. This beats the heck out of the RJDC discussion.

regards
8N

 

[bobbysamd]

Management interaction

Thank you. That helps. Lemme take another run at it.

Remember our last discussion about unions? Let's revisit it briefly. I will speak in generalities for ease of discussion. Of course, there may be specific instances which may void these generalities.

By the late '70s, unions had served their members well. They worked for good wages and better working conditions. However, the country was in recession and had double-digit inflation. The country was in a bad way, yet unions were wanting more. Somehow, I'm flashing on the U.A.W. The quality of American cars sucked big time and sales weren't the best, but the unions wanted more.

Then, Ronald Reagan is elected President and the country's mood changes. Now, management is demanding givebacks from the unions, claiming business is down and it needs the givebacks to ensure jobs for the rank-and-file. So, the unions give back. Once you give back, it's hard to get it back.

My point is management will scream "bad economy" when unions demand higher wages. Moreover, once again, I return to the Frank Lorenzo, Carl Icahn and mid-80s United "A" and "B" scale examples. The theme of those years into the late '80s and early '90s was do more with less. Lorenzo and Icahn counted their beans. United started its "B" scale; I heard from someone only lately that the bad feeling about that is still around. Companies did more with less, the economy turned around, and companies prospered. Still, management tries to demand rollbacks of gains obtained in the past, under color of "economy."

What I said above still applies. Low revenues, i.e. bad economy, therefore, modest raises, if any, and maybe givebacks.

Is this what you're after, Enigma? At least that's how I see it.

BTW, I, too, am trying to follow the RJDC discussion, unsuccessfully.

 

[Draginass]

Union wage negotiations are based on the assumption that cash flow is affected very little by the individual flyers' choices and decisions.

Incomprehensible as written. Please provide specific examples of "individual flyers' choices and decisions" that significantly affect cash flow to the point of being fundamental in negotiations.

I believe your observation is at the center of the unions' wildly errant claim that 9/11 does not qualify as force majeure but is instead an economic event. In reality, when the public observed the very real danger that commercial aircraft could be turned into kamikaze guided cruise missiles, a great many travelers made the rational decision not to travel by air. The unions refuse to acknowlege this.

Don't understand this either. If travelers decide not to travel by air, for whatever reason, then it's a defacto economic problem. The simple fact is, the airlines have used force majuere provisions to mitigate management and business fall-off from early last year, not just 9/11. While business is rapidly approaching pre-9/11 levels, there are no indications that the airlines will cancel their force majuere declarations. I'll bet they won't until forced to by lawsuits and the courts. If not challenged, it would stand ad infinitum to selectively disregard agreed to contract provisions at will. There might as well not even be a labor contract. I suppose the writer would suggest that labor be on a strict profit-sharing scheme only, with labor taking the risk for management foibles. Also, other fixed costs like aircraft leasors should be legally forced to take lease price cuts when the airline has a biz turndown? Should the airlines be legally allowed to unilaterally reduce the price of fuel from their suppliers during force majuere declaration?

 

[Dieterly]

Draginass,

business is rapidly approaching pre-9/11 levels

Can you specify "rapidly"? What are we talking about, 2 months, 10 months, 2 years until we reach pre 911 levels?

 

[RJFlyer]

Draginass:

Incomprehensible as written. Please provide specific examples of "individual flyers' choices and decisions" that significantly affect cash flow to the point of being fundamental in negotiations.

You are being very hardheaded here. Let's say I am an 'individual flyer,' with cash in my wallet which I am considering spending on traveling from A to B. But instead of flying, I decide to drive, or take Amtrak, or even stay home. That decision has affected the airline I would have used, in that they do not have my money. If enough 'individual flyers' make a similar decision (say, because some maniacs flew airliners into buildings one day), the cash flow of the airline is significantly affected. Changes in a company's revenue are a direct result of the cumulative effect of millions of 'individual flyers' decisions. What Dave Griffin was saying is that unions approach negotiations as though changes in cash flow, resulting from these decisions, don't matter - as if the industry were still regulated and cash flow guaranteed. This is no longer a valid or workable position.

If travelers decide not to travel by air, for whatever reason, then it's a defacto economic problem. The simple fact is, the airlines have used force majuere provisions to mitigate management and business fall-off from early last year, not just 9/11. While business is rapidly approaching pre-9/11 levels, there are no indications that the airlines will cancel their force majuere declarations.

So what if the attacks had happened 2 years earlier, when the economy was still pumping right along? The same people would still be afraid to fly, and the airlines' revenues would still be in the toilet. Would that then qualify as force majeure, since there was no prior economic downturn? If not, why not? And even if it is a 'de facto economic problem,' why do the unions (and you, apparently) think that pilots should be immune from it? Not many other workers in the US are. And I would also like to know exactly what numbers you're talking about when you say 'business is rapidly approaching pre-9/11 levels.' Not from the numbers I've seen. To say that the load factors are almost back to normal is misleading - they are up on reduced capacity. And yields are WAY down, as airlines cut fares to try to get people traveling by air again.

Also, other fixed costs like aircraft leasors should be legally forced to take lease price cuts when the airline has a biz turndown? Should the airlines be legally allowed to unilaterally reduce the price of fuel from their suppliers during force majuere declaration?

This argument actually works against you, for this is exactly what the unions are trying to do with the airlines. They are unilaterally trying to force the company to operate unprofitably - to pay expensive pilots to fly airplanes that aren't needed on routes that can't support them.

What I don't understand is why so many pilots have such a hard time grasping the fact that an airline cannot exist indefinitely without profit, and that profit is directly affected by costs, of which their salaries, work rules, and benefits are a very large part. Airlines are for-profit companies. They exist to (try to) make a profit by moving people from A to B. They do NOT exist solely so pilots can have great-paying, fun jobs flying big airplanes. If an airline can't make a profit, it won't exist very much longer, and its pilots won't have any job at all. That is the reality of the situation.

 

[DaveGriffin]

RJFlyer;

“Hardheaded” is too kind. The ALPA pilots who minimize and/or deny the attacks of 9/11 are simply spinning untruths in an effort to further their mercenary agenda.

Here are some facts for Draginass:
1. Prior to 9/11 ALPA opposed reinforced cockpit doors because pilots feared flimsy doors would slow cockpit crews escape in a crash.
2. Prior to 9/11 ALPA didn’t promote the deputizing, arming and use of deadly force by pilots. Now they do.

Guess what has happened here? ALPA is reacting decisively and rationally to the sneak attacks of 9/11. Passengers have done the same, except all they can do is decide not to fly. This isn’t a reaction to an economic development of reduced passenger miles, it is a reaction to a very dangerous situation.

Here’s a good quote: Capt. Stephen Luckey, longtime chief security official for the pilots group, acknowledged that the union's position is a 180-degree reversal.
"That was on Monday," Luckey said of ALPA's earlier opposition. "We're at war now. We weren't at war on Monday.

No situation in the history of the US qualifies more as force majeure than the attacks of 9/11. It was totally unexpected and absolutely devastating in loss of life. And there is no guarantee we can keep it from happening again. The worst part is that our own planes, full of passengers and crew, were turned into cruise missiles targeted at civilian and military targets. So it was a double whammy: the targets were destroyed and the instrument of the destruction was a plane full of our own people.

Here is the last fact. Prior to 9/11 there were no furloughs.

 

[trainerjet]

Dave

If you are going to present something as FACT...have your facts straight. Your last "fact" is, in fact, NOT a fact.

Prior to 9/11 at least 4 ALPA carriers that qualified under the DOT's definition of at least National carrier status had pilots on furlough, and a 5th had sent out furlough notices to be effective Oct. 31.

And of the Major carriers, DAL, UAL and USAirways had already announced a hiring freeze prior to 9/11.

 

[publisher]

review

Perhaps for my friend Bobby, we need a review. A and B scale were actually started by Crandall at American in reaction to deregulation.

The airlines had no real incentive to keep costs down during regulation, it being fairly easy to pass the cost increases along to the consumer. With deregulation, it meant that suddenly you had a bunch of competition on your rear with much lower costs.

In a way, we have something similar here today. The playing field was chnaged by in this case an outside force. Someone needs to come up with a creative way to do it and get labor to go along.

As to lessors taking a cut,, that is not going to happen either. In fact that is a whole nother story. Certain lessors have become extremely powerful within the business.

Like in Viet Nam, sometimes being the big powerful dog on the block works against you. This is one of those times in this industry. The small efficient guys with a good cost structure, good modeling. and a strong customer base usually win in these type of times.

As to the comeback of business,,,, what did I miss? We basically dropped just under 19% and have come back about 4%.

This discussion has much merit but would take 6 months to review

 

[bobbysamd]

Hey, Pub . . . .

Just to clarify, was it not the circa '85 United strike bring on "A" and "B" scales? Remember how United brought in and trained other pilots in anticipation of a strike and paid them less than the current scale? Then, there was the strike, and union pilots came back, with their "A" scale.

I also recall that in '86 or '87, I believe, there was a strike at Continental. Our old buddy Frank Lorenzo, of Texas International fame, and who knew nothing about airline mentality and culture, started counting beans at Continental, and then at Eastern.

Publisher is correct about companies that can turn on a dime and change as opposed to the big dog (apologies for mixing metaphors). Yes, they are successful in these times, perhaps in part because there is less union influence. Are they paid fairly in comparision to pilots who work for more cumbersome, unionized companies?

The unions have to find a way to put furloughees back in the air but not through givebacks. Once again, the economy will get better because it always does. The mainlines will recoup their losses and their employees should be afforded similar consideration.

I'm taking a break just now from reading Flying the Line. One of Dave Behncke's principals was that all airline pilots should be paid equally, no matter where they work.

 

[RJFlyer]

Bobbysamd:

Are they paid fairly in comparision to pilots who work for more cumbersome, unionized companies?

I think in this context this should be 2 separate questions: "are they paid fairly?" and "how are they paid in comparison?" Are Southwest pilots paid fairly? They seem to think so (and they're hiring). How are they paid in comparison to Delta and United? Not as well. Are they paid fairly in comparison to Delta and United? Not really a valid question, in my opinion - you're comparing apples and oranges. The 'majors' are more cumbersome in large part because of the effects of heavy unionization. Note that Delta is in the best financial shape of the 'majors' - and that it is the least unionized of them.

Don't get me wrong, I'm all for better pay for all of us. But in tough times, people have to make certain choices and sacrifices. The current choices/sacrifices seem to be concessions or furloughs. The old saying holds true: "you can't have your cake and eat it, too." You can't keep your 'industry-leading' pay rates, and keep all your jobs. Take your choice. In order for the airlines to survive in the current climate, they need to reduce labor costs. Look at AirTran. The pilots took pay cuts across the board, rather than have people furloughed - that's 'brotherhood,' if you ask me. How else might labor costs be reduced? Voluntary early retirement and leaves of absence might work, but for some reason the Delta pilot group either didn't want or weren't offered that option. Why not? Again, I'm not against a better wage - but there's a time and a place for everything, including 'industry-leading' contracts. Now is not it.

 

[flx757]

Bobbysamd,

American, as publisher mentioned, was the first carrier to put a "B" scale into the pilot contract, and others followed. The strike at CAL was in '83.

 

[Rvrrat]

Union leadership carrying out any agenda not approved by the membership is just as bad as any capitalist in history which prompted union formation to begin with. Just as w&b is important to a safe flight so is honest balance required between employer & employee. When either is tilting the scale all involved can consider themselves to be on "The Road to Serfdom."

 

[enigma]

Re: Hey, Pub . . . .

Bobby,
Crandall invented B scales. He convinced the senior people to accept a pay scale that would screw "newbies", his strategy ultimately came back on him when the "newbies" grew to outnumber the A scalers.
As for Lorenzo, as much as I despise him and his attitude towards working men, he is not responsible for EAL. He bought Eastern only after the machinist union boss and Borman (If memory serves) played chicken with everybody elses livelyhoods. They all lost.

Personally, I blame most all of the trouble of the past 20 years, not on union nor management, but on grandstanding politicians who pushed deregulation onto an industry that wasn't nearly prepared for the problems. Senator Kennedy of Massachusetts, needed a platform to gain the medias attention so that he could continue his presidential aspirations and deregulation was it. Ultimately, he and a liberal activist lawyer named Phil Bakes(later the CEO of CAL under Lorenzo) managed to make enough waves that Senator Cannon, Chair of the transportation committee, decided to steal their thunder and take the glory for himself. In essence, the industry was put on a high wire and the safety net was torn down just so that those politicians could have an "issue".
Don't get me wrong, deregulating the industry was needed, but it should have been accomplised with an intelligent plan. Ultimately, the old line majors with their "regulated" cost structures, would have to cut costs, and when they did things got ugly, leaving scars that we still see today.


regards
8N