Unions, Airlines and Economics

[smellthejeta]

Anjinoo, answer me this...

Say you own something that, oh, I dunno, 100 other people have. 20 people have sold that something for $100. What do you think your something is worth? You're going to say $100, right? Well, what happens if nobody buys your something? It's not worth anything now.

That was a major problem with ESOP. The stock the employees had was not able to be sold on the open market, thus decreasing its value. Management was free to jerk the employees around, and there's nothing they could do about it.

 

[BluDevAv8r]

Anjinoo,

Have you read the RLA or do you understand how it works? Are you aware of the NMB and its role? Not just its "theoretical" role but the real role that it plays in today's negotiations processes? And are you aware of how the RLA differs from the NLRA?

-Neal

 

[anjinoo7]

Anjinoo, answer me this...

Say you own something that, oh, I dunno, 100 other people have. 20people have sold that something for $100. What do you think yoursomething is worth? You're going to say $100, right? Well, what happensif nobody buys your something? It's not worth anything now.

That was a major problem with ESOP. The stock the employees had was notable to be sold on the open market, thus decreasing its value.Management was free to jerk the employees around, and there's nothingthey could do about it.

Sorry Smelly but be that true or untrue, the fact remains the unionswanted it, got it and are now the owners. They are also the"management" you speak of. You keep trying to differentiate"management's" decisions from the unions, however in UAL case they areone in the same. The union was the major shareholder and had the mostvotes on the board and they agreed to whatever stipulations the ESOPspelled out, heck they designed it. Trying to rationalize blamesomewhere other than the union in this case is wrong. For all intensivepurposes the union and employees owned thier own airline.

Have you read the RLA or do you understand how it works? Are you awareof the NMB and its role? Not just its "theoretical" role but the realrole that it plays in today's negotiations processes? And are you awareof how the RLA differs from the NLRA?

Yes I am fully aware of the Railway Labor Act and the NationalMediation Board, I know the history of the RLA and why it came about aswell. I am also aware of the collective bargaining involved and thestipulations and timeframes associated with it.
If you are going to tell me the RLA takes all the power away from theunion in the case of a labor dispute please refrain. I was not bornyesterday and you know just as well as everyone else here there are,for lack of better words, tactics the union employs to make thierpresence felt on a daily basis.

 

[100LL... Again!]

A long time ago, businesses abused employees shamelessly.

Justice and reason prevailed, and unions were born.

Then, the pendulum swung and the unions began to abuse their employers, and consequently, the shareholders or owners.

Justice and reason will ultimately prevail, and that is why unions are declining steeply in power. They were not wise or reasonable in the use of their power, and will pay the price.

It's over for the unions for the most part.

 

[TonyC]

Anjinoo,

... And are you aware of how the RLA differs from the NLRA?

-Neal

I asked him that in paragraph 2 of Post 2 - - don't confuse him with facts, OK?

 

[enigma]

Here is my reference for the ownership stakeofUAL.Youmight be righthowever that that stake has changedsincethebankruptcyfiling butnone the less it was true up until it.

http://www.businessweek.com/2000/00_12/b3673128.htm

Oh yeah and another:
http://www.forbes.com/2003/03/05/cx_ld_0305esop.html
and another http://securities.stanford.edu/news-archive/2003/20030303_Headline08_Staff.htm
and another
http://slate.msn.com/id/2069362/

Try using Google sometime it's a great tool!

As far as the most profitable and and largest percentageofworkerswhoareunionized, please do tell. I wait with baited breathforyoutotell us all(please include references as I did).

anginoo7

My profile is correct, I'll assume the same about yours.Myinfocomesfrom being part of this business for 18 years. Whileyouweretakingmanagement 101, I was out dealing with the effectsofmanagerswhodidn't know what they were doing. I'm not going tospendtimesearchingfor a fact that I know to be true. I will tell youthatIread theunionization fact in a story that was linked to fromrighthereatflightinfo.com. If I truly thought that you were aseekerofknowledge,I might do the search. Unfortunately, I think thatyouarejust amanagement wanna-be troll.


SWA has the largest percentage of unionized workers. SWA isalsotheonlyprofitable major airline. SWA is also one ofthehighestpayingnarrowbody carriers in the world. Yes I LUV SWA andhopeto soonbehonored to be amongst their ranks.

I guess that it is possible that SWA's unionscouldturnagainstmanagement, but my observations tell me that unionstreattheboss in amirror image of the way the boss treats them. As longasthebosstreats his employees well, the employees willbehardworking,responsible, and efficient workers who willaccomplishtheirjobs with a positive, can-do attitude.

enigma

 

[TonyC]

I guess that it's time to start browsing FI with IE

It would certainly make it easier to READ your posts!






pssssst..... oh, and it's sepArately.

 

[~~~^~~~]

Unionization of the airlines is tough to understand unless you are an airline employee. If you notice, at every airline employees have grouped together to bargain collectively, even "non union" carriers like Skywest.

The difference between being a pilot, or flight attendant, and other jobs is that as a flight crew member you are expected to be at the "office" as much as 400 hours a month. The Company has complete control over your schedule, can change your schedule and can require you to work when you would rather not be on the job.

So the quality of the majority of your life is at the whim of the Company. There has to be rules. For example, my airline used to "double bunk" on hotel rooms to save money. Without rules your airline could decide your day off is going to be on the other side of the planet, away from home. And of course there are the safety and sleep issues which were the genesis of the organised labor movement in the transportation industry. Pilots got tired of being pressured and flying being a death sentance....

There are also efficiencies in the collective bargaining process. My airline has around 1,700 pilots, one Chief Pilot, and 5 to 7 Assistants. There is no way you could manage that many employees with the traditional fashion with so little management structure. At my former ( non union ) employer we had a 4 to 1 ratio of employees to managers. At most airlines it is around 70 or 100 to 1 manager.

Having rules allows both the company and employee to have reasonable expectations. It provides incentives for good performace ( seniority ) and disincentives for problem children ( time off & firing ). Bottom line is that unions definately have problems, I am a supporter of a group actively suing my union over representational issues. But, there is no better way to run an airline. If you think of something that works, let us know.

~~~^~~~

 

[Publishers]

The Southwest points is interesting and true. The big difference has been the ability of Southwest to create and so far maintain a different culture than the rest.

Secondly, they came up with a model from the beginning that has worked that was equally different than the rest which has provided success in good and bad times.

Good for Herb and the management group.

That said, they have not had to fight the problems inherent in the legacy carriers. The legacy carriers were out of control long before the end of regulation. Of all fo them, only Dick Crandall was able to transition to the deregulated environment and come through in relatively good shape. Eastern, Braniff, National, Pan Am, etc all died from not being able to adapt.

Unions have not killed these off nor have they been much help either. What they do is bog down the entity in rules, regulations, and costs that someone else may not have which enables them to kick your ass like Southwest has done.

 

[flyinglow]

Anjinoo7,

Unions are creations of capitalism. Companies got greedy and to protect themselves employees created unions. Your text book analysis is all good, but like so many have said not reality. We do not live in a truly capitalist society. For your theories to hold up we would have to get rid off:

1. Railway Labor Act
2. FAA and all its regulations
3. Bankrupcty laws that allow the government to give one company and unfair competitive advantage.

Then companies and employees would be subject to simple capital market forces. It sure would be interesting to see it happen, but we all know that these things are not going away. Your argument has no validity to it. It is straight out of a textbook and academia.

 

[100LL... Again!]

How come socialist nations have powerful unions too? England had very powerful unions, although I do not know their recent state.

France has quite a few as well. I think they have a very srong nation pilot's union.

Abuse of the worker is not unique to any economic system. It is human nature.

 

[Crossky]

You are correct, unions are the biggest factor in PFT. In a true free marketindustry as it relates to pilots, PFT would not exist. This is the simple factthat those airlines that support them such as MESAwould be unable to find employees able to work at those low wage levels norpay for their training if the other half of the industries jobs fell tocompetitive levels. The supply of pilots as well as the demand for theirservices would reach equilibrium at all experience levels. You can look tocountless other professional industries without unions and you don't see thisproblem. Again, advantage goes to union employees at the expense of others whoare non-union within the same field. My previous post provided an examplerelating to how companies hire based on wages, if you can find an economiccounterpoint to it please post.

This is the biggest pile of crap I've EVER seen on flightinfo. How can you say that union employees have the advantage when right now there are non-union carriers (LCC's and regionals) left and right where the pilots make as much or more and have similar or better benefits than as at union carriers. Just compare the difference between MESA (ALPA Union) and SKYWEST (non-union). Or between American (APA Union) and Southwest (non-union). airlinepilotpay.com is one site we're all been to except you apparently.

Unions do have less influence over airlines these days than they used to. The reasons are that (1) non-union carrier's pay and benefits are good enough to be competitive with union carriers and that the lower operating costs of LCC's (which tend to be more non-union, except for SWA) make them more profitable and thus provide more job security and attraction to potential employees than traditional unionized carriers. THAT, my friend is free market economics in action during the Dubya era.

 

[smellthejeta]

Sorry Smelly but be that true or untrue, the fact remains the unionswanted it, got it and are now the owners. They are also the"management" you speak of. You keep trying to differentiate"management's" decisions from the unions, however in UAL case they areone in the same. The union was the major shareholder and had the mostvotes on the board and they agreed to whatever stipulations the ESOPspelled out, heck they designed it. Trying to rationalize blamesomewhere other than the union in this case is wrong. For all intensivepurposes the union and employees owned thier own airline.

Stock worth nothing now, so what do the employees own? Worthless stock. You could argue that is what the employees owned before the stock hit the crapper, because if you can't get money for it, it's not worth anything. So maybe, in this capitalistic society, the value of the airline is now worth the value of the stock the employees held?

Read the history of the ESOP program. It came about because management wanted concessions from the labor groups, and the labor groups told management that if they wanted paycuts *again* they'd have to answer for it. No matter who owns controlling shares of stock, the president is still the president and the CEO is still the CEO. Look at FlyI... the owners of the stock want the company to do a certain thing, but they can't really force them to do it.

As other people have said, your economic theory is all fine and good, but there is a reason analysts hire industry employees to work for them. It takes a lot of sweat and labor to understand the ins and outs of this business. You can point fingers at the unions all you want, but if management was so great, the unions never would have existed. Unions are always a byproduct of crappy management. I speak as a former employee of an airline labor group who had a failed union drive. You speak, I assume, with 10 hours of flight simulator? How much do you pay your flight instructor, anyway? Is it enough for him to make a living? Ask any consulting business... If you want to have your customers happy, keep your labor happy. You can't piss off your labor groups and reasonably expect them to smile at the customer and tell them how great of a day they're having.

 

[RW/FW Ex-Army W]

Stock worth nothing now, so what do the employees own? Worthless stock. You could argue that is what the employees owned before the stock hit the crapper, because if you can't get money for it, it's not worth anything. So maybe, in this capitalistic society, the value of the airline is now worth the value of the stock the employees held?

Read the history of the ESOP program. It came about because management wanted concessions from the labor groups, and the labor groups told management that if they wanted paycuts *again* they'd have to answer for it. No matter who owns controlling shares of stock, the president is still the president and the CEO is still the CEO. Look at FlyI... the owners of the stock want the company to do a certain thing, but they can't really force them to do it.



As other people have said, your economic theory is all fine and good, but there is a reason analysts hire industry employees to work for them. It takes a lot of sweat and labor to understand the ins and outs of this business. You can point fingers at the unions all you want, but if management was so great, the unions never would have existed. Unions are always a byproduct of crappy management. I speak as a former employee of an airline labor group who had a failed union drive. You speak, I assume, with 10 hours of flight simulator? How much do you pay your flight instructor, anyway? Is it enough for him to make a living? Ask any consulting business... If you want to have your customers happy, keep your labor happy. You can't piss off your labor groups and reasonably expect them to smile at the customer and tell them how great of a day they're having.

You appear to be quite knowledgeable about and a supporter of unionized labor. So perhaps you could answer a quick question or two.


Does ALPA/APA/AFLCIO and such have paid employees? Or is it all volunteer labor? Oops - disregard that question as I am sure an organization founded to ensure the rights of working men and women would never accept free labor. As an example, I have seen ALPA's web site and it is impressive. I'll bet ALPA would never use a scab developer for that piece of art, or god forbid - OUTSOURCE it to a non-union or foreign firm!!


As such, I am certain each of these organizations have employees represented by great unions of their own. Would you know which union would represent, say the clerical workers of ALPA? Could one take a look at the rates of pay and benefits ALPA provides to those workers? I am certain it would be "industry leading". And as a union man I am certain you will pay whatever dues required to make sure these workers receive the highest level of pay, health insurance and vacation time possible. After all, you wouldn't want management to be sticking it to them - right?

So, does anyone here know the status of the labor that does the work for labor unions?

 

[~~~^~~~]

Does ALPA/APA/AFLCIO and such have paid employees? Or is it all volunteer labor?

I am certain each of these organizations have employees represented by great unions of their own.

Most people who do the work in unions are volunteers on the local level, pilots helping other pilots with safety, professional standards, hotel standards, scheduling and contract administration. The status representatives elected by the local pilots and Master Executive Counsel members are also volunteers.

When called on to perform ALPA work that takes these pilots away from flying they get "trip drops." The union reimburses the pilot what they would have made, if they had been flying. In some airlines, there is so much union business that one or two local people may be on full time ALPA leave and are paid as if they were pilots flying a schedule. However, for every person on ALPA leave, there are probably 80 to 100 various volunteers helping other members to make the airline a better place.

On the national level, most of these people are professional union managers and administrators. These include attorneys which serve the local membership. Some get trip drops, if they are pilots, and others are salaried positions. The payments to these people are public record and you can probably find them through a google search. The President of ALPA, Duane Woerth is a Northwest Airlines 747 Captain and I think his salary through trip drops was $437,000.

ALPA National's employees are members of a union and even the unions sometimes have union troubles. It seems I remember something in Flying the Line I on the subject. I imagine these employees are AFL-CIO affiliated. The union contracts with other unionized businesses whenever possible. Best to practice what you preach....

Overall, the union is a good deal for what it costs. Much of the union's benefit are the legion of volunteers who help other employees and the Company. For instance an unsafe Hotel situation is often dealt with by union volunteers. Making sense of a muddled CVR recording is most commonly done by ALPA safety volunteers with the various engineering representatives from the manufacturers. These are just a few examples of the mutual benefits that the Company and ALPA members enjoy.