Unions, Airlines and Economics

[TonyC]

I say again, the legacy carriers are burdened with rules, regulations, and costs that Southwest, Air Tran, and Jetblue do not have.

Let's not equate FEDEX with legacy carriers when I do not even think we should call these package people airlines.

I thought the topic was unions, and not legacy passenger airlines. But, OK, we can work with that. Please tell us what "rules and regulations" Delta has to observe that Southwest does not. Please explain how costs are regulated by one union but not the other.

Thanks.


And, just out of curiosity, what WOULD you call FedEx? UPS? DHL?

 

[Publishers]

For the most part, legacy carriers have more pension costs, more cost of living or other pay raises for years of service, more unionized employee groups, less farming out of work, higher pay scales, less productivity, more work rules, than do the LCC's. All of these things cost money.

I hate to call DHL, UPS, FEDEX or others airlines because it implies that they are in the same industry as passenger airlines which they clearly are not. Even within that industry, the overnight people are different than the freigh haulers.

From my generations perspective, unions were born of the need to protect workers from substandard working conditons and indentured slavery. There is a big stretch between that and representation of a group of educated professionals who think $100k is nothing to fly the latest and greatest Boeing hunk of metal.

I am not here to say unions are bad, not at all. The problem is that in a world based economy the only way the union can really protect its members is ---- well they can't, at least not in market driven business. Only government employee unions have the isolation necessary to keep power today.

Do you think for a moment that unions would have the place they do in our industry today had they not started back during regulation. From the union perpsective, they were attracted to this industry due to the high wages. Better to get 1% of $300k than some job that is barely above minimum wage.

The fact is that they got their foothold in a protected environment adn the rest is history. When ALPA represented the majority you could keep control. All of that has gone out the window.

Unions may not be bad but they are no better than the management everyone here isso critical of. Success like Southwest takes good management and good employee groups, and good union leadership. Very few have all three in combination.

 

[BluDevAv8r]

Southwest had one big advantage, they started later and I do not believe that their flight attendants have a union contract today.

Check your facts Publishers. SWA just settled a very ugly and long contract negotiations process with its FA's. SWA started in the early 1970's and oddly enough, they are the most unionized of any airline out there. Every single employee group is unionized there.

As Gordon Bethune said, if he could have fired everyone and started again every 5 years, it would have been easier.

Precisely one of the reasons why unions are formed.

I say again, the legacy carriers are burdened with rules, regulations, and costs that Southwest, Air Tran, and Jetblue do not have.

SWA and Airtran have two of the better pilot contracts out there right now and Airtran is about to start negotiating again.

-Neal

 

[TonyC]

For the most part, legacy carriers have more pension costs, more cost of living or other pay raises for years of service, more unionized employee groups, less farming out of work, higher pay scales, less productivity, more work rules, than do the LCC's. All of these things cost money.

I hate to call DHL, UPS, FEDEX or others airlines because it implies that they are in the same industry as passenger airlines which they clearly are not. Even within that industry, the overnight people are different than the freigh haulers.

From my generations perspective, unions were born of the need to protect workers from substandard working conditons and indentured slavery. There is a big stretch between that and representation of a group of educated professionals who think $100k is nothing to fly the latest and greatest Boeing hunk of metal.

I am not here to say unions are bad, not at all. The problem is that in a world based economy the only way the union can really protect its members is ---- well they can't, at least not in market driven business. Only government employee unions have the isolation necessary to keep power today.

Do you think for a moment that unions would have the place they do in our industry today had they not started back during regulation. From the union perpsective, they were attracted to this industry due to the high wages. Better to get 1% of $300k than some job that is barely above minimum wage.

The fact is that they got their foothold in a protected environment adn the rest is history. When ALPA represented the majority you could keep control. All of that has gone out the window.

Unions may not be bad but they are no better than the management everyone here isso critical of. Success like Southwest takes good management and good employee groups, and good union leadership. Very few have all three in combination.

All that, and you still didn't answer the question. I didn't make it up, I just repeated what you claimed.

What rules and regulations encumber Delta that don't affect Sotuhwest?



And if it's not too confusing to answer two questions at once, could you explain this:

Better to get 1% of $300k than some job that is barely above minimum wage.

(FYI, 1% of $300k is $3,000. Do you think that beats minimum wage?)

 

[Publishers]

Obviously we have a failure to communicate.

As far as I knew, SWA still had not ratified a F/A contract.

Usually the Legacies have cost of living increases, more restriuctive work rules, higher health care costs, years of service, tighter scope and more unions to deal with. The exception has been Delta over the years as only their pilots were, but, even in this highly non-union legacy, the costs above are much greater than the newer company becuse your employee group ages and costs more. Some companies try to combat that with job classes and scales with a top limit.

What we are going through in this country is a change in the mentality that jobs are for life. Why other than the will of the company should you be employed. Florida is an employ at will state but these airlines are not. Is employment a right? These are not easy issues and you can say that unions are the answer. A good friend of mine was a large contractor employing over 2000 people. He paid reasonable wages and provided health care for his people. Eventually his employees were convinced that they could get even more if they joined the union. They elected a union and he elected to close the company. Was this not his right?

we have had this discussion before. In a huge company like these, it is not just the fat contracts of pilots, it becomes the fat contracts of all the aspects of the business. That cost, that flight attendant who used to quit after two years to get married is now there as a career and making $45k when the job value is maybe $26,000 a year like some LCC is paying.

If you think rules and regulations are the same for all companies in this country, you have not been in business long. There are ones for the over 100 employee companies, corporations, big corporations and others. They are all different.

The question on dues: It is more income to the union to represent higher paying professions than lowly ones.

 

[BluDevAv8r]

Obviously we have a failure to communicate.

As far as I knew, SWA still had not ratified a F/A contract.

No, we do not have a failure to communicate. We have a failure on your part to know that Herb stepped in and saved the day over at SWA.

As many have said, SWA is the most heavily unionized airline out there. They have a good relationship (generally) with their employees and have managed to do well. Is it due to their different business model? Good relationship with their employees? Other economic forces? Probably all of the above.

If unions are so bad for the airline industry...how do you propose we structure the pilot side of the house? No seniority list? 100% variable wages? You've told us of all the bad...but by all means, tell us how to make it "better" so that it better conforms to the "market" because as we all know...the market always wins, right?

we have had this discussion before. In a huge company like these, it is not just the fat contracts of pilots, it becomes the fat contracts of all the aspects of the business. That cost, that flight attendant who used to quit after two years to get married is now there as a career and making $45k when the job value is maybe $26,000 a year like some LCC is paying.

You're kidding right? Since when did it become mandatory that FA's should "retire" after 2 years of service to get married? I don't agree with a lot of what you write but it is generally intelligent writing...except for this paragraph. Wow. Who are you to decide what the job value is? When that 26k LCC FA stays for 20 years....are you going to chastise her/him for not getting married and leaving after 2 years like they were "supposed" to? God forbid an employee make a career somewhere.

-Neal

 

[Publishers]

I agree with your statement that all of the above were the ingredients in Southwest success. They came up with a different way of doing it, sort of a Peoples Express upgraded, and put togther employees that believed, Great for Herb and them.

Again, I am not opposed to unions/ They are an element in the downfall of major carriers. To me, no question. Is it just part of the problem, yes. The problem is that many times the union leadership is just as bad as the management of the carrier. Are there easy answers, not really.

Lastly I married a flight attendant and have a daughter who is one. The fact is that the turnover and average length of employment used to be relatively low. As Americans started more two parent working situations to live the good life, that time got longer and longer. I am not implying that it should be mandatory or even that the number I used is right, not the point. The point is what are the issues that effect the industry.

Have you looked at what first class medical coverage costs for one and his family. Many of these new carriers have a younger work force, less coverage, less costs, no more pensions, etc.

This afternoon I was asked to appraise the DC9-30's of Southeast. What do you think there costs were compared to a major carrier and they could not make it.

You see the unions as protection of workers. Great if it works. We are proving that it does not work all the time.

 

[pilotyip]

Publishers: This is a pilot's board, and it views the airline business from the pilot's prospective. As posted above in the discussion of "Mutual Aid”, once that went away the union’s could hold management hostage at highly leveraged airlines. The management knew if a strike came along, the airline was going to be doomed. Therefore, management to avoid a strike gave into the union with a contract it knew that would not work except by some miracle of 90% load factors. However, it was better to have chance and hope 90% load factors would appear, than cut your throat by allowing a strike to happen.

 

[TonyC]

Obviously we have a failure to communicate.

Yes, we do.

As hard as I try, I cannot make sense of what you're saying...

You said, and I quote, "they [unions] 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."

You have said more to contradict yourself than to support that claim, so I'm going to assume you didn't mean to say it in the first place.

It's kind of like this one:

The fact is that the turnover and average length of employment used to be relatively low.

Now, since turnover and length of employment cannot both be relatively low unless you have a brand new company, it's clear that you misspoke here, too. Rather than ask you to explain yourself and endure several more rambling posts that don't address the issue, I'm going to give up on this conversation and go visit another thread for a while!

 

[pilotyip]

I am a former union member, ALPA and Teamsters, both airlines out of business. The unions have made the airline job the great job it is today. Such things as single rooms, seniority bidding, days off, etc. are all a result of the airline union’s effort. Any company that wants to be successful in the airline business has to match the work rules of the union precedent. Working with these rules will reduce turnover and associated expenses. Much like the non-UAW factories run by the foreign companies in the US, they almost completely match what the UAW workers get in Detroit to control turnover. However there is limit of the union’s power. They can not make a silk purse of a sow’s ear, if wage demands reduce the operating margin the airlines below threshold attract capital the, airline is in trouble.

 

[Publishers]

Tony -- you are right, I mispoke about the turnover, it should have been high with length low, please shoot me.

While it may seem like a contradiction to you, I believe that when you look at the big picture, SWA ends up much less impacted for a number of reasons, one is that it has not been around as long, probably outsources more, etc. Who knows-- maybe I am wrong but then again this is an internet board so who cares.

 

[SDF2BUF2MCO]

Pure speculation on my part, but SWA management and employees probably do a better job of treating each other with respect. There is not the "traditional" adversarial relationship between management and labor - either by design or accident. Another thing to consider is that SWA has always been the little guy vs. the big guy. That has worked in their favor. Well now they're a big guy. Time will tell if they can sustain that culture especially if their profit and/or margins decline. Hopefully, they will not have to experience it.

I don't picture FredS hanging out with TonyC any time soon !

 

[Publishers]

Some things become less problem just by their model. One type aircraft, shorter trips, no international. Their simpler approach means less problems and more equality leading to less conflict.

 

[U-I pilot]

Anyone read the book: "Free Fall; The needless destruction of eastern air lines and the valiant struggle to save it" by Jack E. Robinson?

Im in the process of reading it now....kind of interesting. So far the information presented points the finger at the Unions.

Im not choosing sides or attempting to be one sided about this stuff but just trying to get an idea of what goes on during bankruptcy. Everyone keeps talking about how history repeats itself....just want to get an idea of what could potentially happen.

Any thoughts?

 

[smellthejeta]

I think a couple of things...

WN has *a lot* of efficiencies in their system that other carriers don't, and has done a lot of things right up through now. Not all of their workers enjoy "the big bucks" like the pilots do. First year pay on the WN ramp is $8.25, or at least it was when I checked a year and a half ago. Next, because they don't employ the hub and spoke model, their station workers work rather continuously. Compare that to a traditional hub-and-spoke model at the network carriers: I probably actually "worked" no more than 4 hours of every 8 hour shift when I was at ACA. WN gets a heck of a lot more value out of their rampers than ACA ever did, no matter how you look at it. United rampers enjoyed the same types of schedules we did, heck, they even had ping pong tables in their break room.

Next, if WN ever has to furlough or gets rid of a particular aircraft model, what happens? The pilots now fly what... oh still the same old 737. When United was retiring the 727s and what not, that bumping and flushing created a lot of training events and a lot of expenses for them, not to mention the number of pilots who sat at home getting paid while they were waiting for their training slot.

Let's look at their fuel hedging... WN has even said if it wasn't for their great hedges that they wouldn't have made a profit in the recent quarters.

I also think that corporate and fractionals are taking the high-yield customer that the airlines have depended on for so long. Those high yield business customers that the airlines have used to subsidize the below-cost leisure traveller are gone... and now they can't figure out why they can't make money on the below-cost leisure traveller. It has been said in airline economics that passengers pick on price and they pick on schedule. Well, nothing gets better than picking your own schedule *and* picking your own airport as well.

U-I, as far as the book goes, who is the author? What's his background? Even "factual" books can be slanted.

 

[Publishers]

Hopefully without igniting a debate on Frank Lorenzo, let me say that Eastern was the result of two parties grossly misjudging the other and letting strong personalities take over the negotiation in a personal way, not a business way.

Smellthe is pointing out what I have been trying to. While pilot pay may be the most visible, it is just as much the other employees who are paid more and produce less in these huge unionized companies. The legacies used to want to have their own baggage people, their own catering people, etc etc etc and they all tended to be paid in the context of the heavily union employees. The ramp people are but one example.

 

[enigma]

Hopefully without igniting a debate on Frank Lorenzo, let me say that Eastern was the result of two parties grossly misjudging the other and letting strong personalities take over the negotiation in a personal way, not a business way.

Lorenzo was just the vulture trying to pick at bones. Eastern was dead when he acquired it. For that, we can thank Borman and (if memory serves) Charlie Bryan the head of the Mechanics union.

enigma

PS, this in no way, should be taken to give any level of respect or credibility to Lorenzo. He was at best, a thief.

 

[Publishers]

Strangely, Enigma and I agree on this completely.

Charles Bryan's ego demanded he prove how powerful he was. While he won, he lost the golden goose. Eastern, if I remember right, had some of the highest cost of maintenance of any major airline.

United may be on this same course as we speak.

 

[soarby007]

unions

Name one industry that has thrived under a union? Umm, let me think.

garment industry, auto industry, steel, mines, agriculture, aircraft manufacturing, AIRLINES?

Unions were great under Samuel Gompers and child labor. But where have all the other industries gone? Overseas.

Unions are nothing but a political, corrupt machine that eventually seeks to serve themselves.

 

[Publishers]

Garment -- Hong Kong and China
Cars Japan German
Steel Mines --Gone somewhere
mines --south africa south america
etc etc