enigma
good ol boy
- Joined
- Nov 26, 2001
- Posts
- 2,279
I'm just standing on a soapbox at the streetcorner here. Stop and listen, or keep on walking.
As I read the ongoing strings about the UAL situation, and some of the arguments being made pertaining to blame, I just have to add a couple of thoughts.
If we take the situation and look upon it like we were dealing with a courtroom trial, we would be attempting to choose which side was right. To do so, we would look at arguments presented by both sides, determine who had the "best evidence" and then make our decision based upon that evidence.
If we take the situation and look upon it like we were dealing with a mediation, we would attempt to get both sides to accept some of the blame as a part of a compromise.
Now let us look at some facts.
*. The airline industry has never made a profit (according to the book "Hard Landings").
*. The major airlines (excepting SWA) have never been able to get off of a boom/bust business cycle.
*. Labor unions have made concessions in bad times and taken gains in good times.
*. Management has built up record losses in bad times and made record profits in good times.
*. The major airline business structure is based upon being able to charge top dollar for non-discretionary travelers and using yield management to fill the remainder of the seats.
*. Those non-discretionary traverers have accessed other ways of doing business, and are no longer a sure thing.
*. Low Service Carriers have gained a significant percentage of market share over the last decade and continue to make gains.
*. Most Importantly, the marketplace no longer supports UAL's business model.
So how can we resolve this conflict? Can we use the trial method and pick the "right" side, or should we use mediation?
If we take the trial method and attempt to choose the correct side in the UAL management vs labor fight, we then have to decide who is at fault. The positions are these: Labor says that management has completely mismanaged the company, but labor is still willing to make concessions in order to keep their jobs.
Management says that labor costs are too high and everything would be fine if the unions would go away.
If we go to mediation, we must attempt to get labor to reduce its rates and get management to change its propensity to make bad decisions (AAA merge, Avolar, golden parachutes for failed CEO's, etc)
It seems to me that method one is suitable for assessing blame, and method two is suitable for developing a plan for the future.
If I was the judge in our imaginary courtroom, I would issue this ruling: Labor rates at UAL were set by a legally recognized and acceptable bargaining process. Labor has show a historical willingness to make concessions at times when the companies financial condition warranted such concessions, and labor is currently willing to make additional concessions in addition to the large defacto concessions accomplished by furlough. UAL management has: squandered the gains made under previous concessionary labor agreements, failed to foresee a changing marketplace, and continues stagnation in the area of adapting to the market place. I place blame entirely at the feet of management. (remember, we weren't trying to resolve the issue, just place blame)
If I was the mediator in charge, I would give the same statement that I gave as judge. Then I would tell both sides that any further discussion of blame would be conterproductive, because blame for previous problems does nothing to solve the matter at hand. I would tell them that the marketplace no longer supports either their business model (for the managers) or their current labor rates. In recognition that labor is currently offering dramatic concessions in wage rates, I would demand that management offer a significant plan to adapt to the changed marketplace. I would offer AMR AAA and DAL for examples. Those carriers have (respectively) announced plans to: change the hub and spoke structure to "de-peak" the hubs, made dramatic changes to their fleet, and announced a LCC affiliate. I am unaware of any such plan on UAL's part.
OK, now I'm off of the bench. I find it very sad for my friends at UAL that their management had nothing to offer the ATSB except an overly optimistic view that revenue would return in the very near future. It is obvious to me that labor (at least the pilots) was very willing to make dramatic changes in each persons income in order to save their employer. That is so much more than the company deserves.
regards,
8N
As I read the ongoing strings about the UAL situation, and some of the arguments being made pertaining to blame, I just have to add a couple of thoughts.
If we take the situation and look upon it like we were dealing with a courtroom trial, we would be attempting to choose which side was right. To do so, we would look at arguments presented by both sides, determine who had the "best evidence" and then make our decision based upon that evidence.
If we take the situation and look upon it like we were dealing with a mediation, we would attempt to get both sides to accept some of the blame as a part of a compromise.
Now let us look at some facts.
*. The airline industry has never made a profit (according to the book "Hard Landings").
*. The major airlines (excepting SWA) have never been able to get off of a boom/bust business cycle.
*. Labor unions have made concessions in bad times and taken gains in good times.
*. Management has built up record losses in bad times and made record profits in good times.
*. The major airline business structure is based upon being able to charge top dollar for non-discretionary travelers and using yield management to fill the remainder of the seats.
*. Those non-discretionary traverers have accessed other ways of doing business, and are no longer a sure thing.
*. Low Service Carriers have gained a significant percentage of market share over the last decade and continue to make gains.
*. Most Importantly, the marketplace no longer supports UAL's business model.
So how can we resolve this conflict? Can we use the trial method and pick the "right" side, or should we use mediation?
If we take the trial method and attempt to choose the correct side in the UAL management vs labor fight, we then have to decide who is at fault. The positions are these: Labor says that management has completely mismanaged the company, but labor is still willing to make concessions in order to keep their jobs.
Management says that labor costs are too high and everything would be fine if the unions would go away.
If we go to mediation, we must attempt to get labor to reduce its rates and get management to change its propensity to make bad decisions (AAA merge, Avolar, golden parachutes for failed CEO's, etc)
It seems to me that method one is suitable for assessing blame, and method two is suitable for developing a plan for the future.
If I was the judge in our imaginary courtroom, I would issue this ruling: Labor rates at UAL were set by a legally recognized and acceptable bargaining process. Labor has show a historical willingness to make concessions at times when the companies financial condition warranted such concessions, and labor is currently willing to make additional concessions in addition to the large defacto concessions accomplished by furlough. UAL management has: squandered the gains made under previous concessionary labor agreements, failed to foresee a changing marketplace, and continues stagnation in the area of adapting to the market place. I place blame entirely at the feet of management. (remember, we weren't trying to resolve the issue, just place blame)
If I was the mediator in charge, I would give the same statement that I gave as judge. Then I would tell both sides that any further discussion of blame would be conterproductive, because blame for previous problems does nothing to solve the matter at hand. I would tell them that the marketplace no longer supports either their business model (for the managers) or their current labor rates. In recognition that labor is currently offering dramatic concessions in wage rates, I would demand that management offer a significant plan to adapt to the changed marketplace. I would offer AMR AAA and DAL for examples. Those carriers have (respectively) announced plans to: change the hub and spoke structure to "de-peak" the hubs, made dramatic changes to their fleet, and announced a LCC affiliate. I am unaware of any such plan on UAL's part.
OK, now I'm off of the bench. I find it very sad for my friends at UAL that their management had nothing to offer the ATSB except an overly optimistic view that revenue would return in the very near future. It is obvious to me that labor (at least the pilots) was very willing to make dramatic changes in each persons income in order to save their employer. That is so much more than the company deserves.
regards,
8N