When U.S. Pilots Vote To Strike, It Scares Customers But Little Else

Pilots for several USairlines, including Delta Airlines, American Airlines and Southwest Airlines, recently voted for the strike. This is an uncomfortable and sometimes embarrassing story if you are booked on a flight with one of those airlines soon. If the pilots are on strike, the airline cannot operate. If the pilots take their time and vote overwhelmingly to strike, then a shutdown must be inevitable.

This is not the case. If I live on the East Coast, don’t have a car, and am afraid to fly, I might vote today to eat at In-N-Out Burger if I make it to Los Angeles. It will take me a long time to get to LA, and I may not even have a trip planned yet. Similarly, US airline pilots have a long legal road ahead before they are allowed to strike, although they can vote to strike at any time if they ever get to that point.

Law on Railway Work

In 1926, railroad unions and management worked together to solve the problem. Railroads transported people and goods, and random strikes disrupted the entire economy. The result was the Railway Labor Act (RLA), which had a lot of characteristics and which made it much more difficult for railway companies to stop working due to workers’ strikes. In 1936, this law was applied to commercial airlines for much the same reasons.

The law describes the detailed process of negotiating collective agreements. Instead of the contract ending, the RLA found that the contracts would become variable. Even if the contract expires, both management and workers are bound to honor the contract until new terms are agreed upon. Both parties may negotiate in good faith for as long as necessary, and at some point the parties may agree to introduce federal mediator. The mediator is trained to find common ground to reach an agreement, but is independent and not concerned with the outcome of the economy. Historically, many labor contracts in the US Airline industry have been signed during initial negotiations or in the mediation process.

The mediation process can fail if the mediator believes that the two parties cannot reach an agreement. If this point is reached, the mediator can “release” both parties from the mediation process and then the two parties enter a 30 day “cooling off” period. During this period, both parties can continue to negotiate knowing that if the cooling-off ends without an agreement, each party can resort to self-help. This means that the union can go on strike, and the management can fire existing employees and replace them. In 2005 Northwest Airlines has locked out its mechanics and replaced them at this point in their negotiation process. The RLA has another strike-stopping function. This allows the President of the United States to convene a Presidential Emergency Board (PEB). The PEB forces each side to continue negotiations and does not allow any self-help actions to be taken. For one of the four major US airlines, each of which carries approximately 20% of total US air traffic, PEB is likely but not certain. PEB was used to prevent a strike at American Airlines in 1997.

Airline strikes are extremely rare

The RLA process can and often does take years. Often, big headline pay improvements are biased by the fact that some of the payouts need to be made up for years in negotiations without a raise. This process also makes actual strikes very rare. The last attack of the pilot in the USAit was 13 years ago, in 2010, with Spirit Airlines. I was the CEO of Spirit at the time, and that strike was only partially due to a disagreement between Spirit and its pilot union. It was also influenced by the need for the Air Line Pilots Association (ALPA) to re-establish credibility ahead of some major deals to come, such as those at Airtran and the then-announced merger of Continental Airlines and United Airlines.

Before 2010, the last significant pilot strike in the US was at United Airlines in 1985. American Airlines pilots went on strike for just over 10 minutes in 1997, but that was because President Bill Clint0n used the PEB process to quickly force the airline to flies again. The point is clear — pilot strikes rarely happen because the RLA process is designed to make it true.

Pilots get raises

Pilots, like all working groups, represent a market that is sometimes too much, sometimes not enough. This history of the US airline industry has often been shaped by fluctuations in this market, as beautifully documented in Thomas Petzinger’s classic book Hard Landing. Today, pilots are undersupplied for a number of reasons.

Beginning many years ago, the US military ceased to be a major source of recruitment for commercial industry. In 2007, the mandatory retirement age for commercial pilots was increased to 65 from 60. This created a five-year hiatus in terms of the need for many new pilots. Recently, the govt increased the minimum number of hours for employment as a pilot, and that initially caused a reversal for pilot salaries at regional airlines. On top of that, it has become very expensive to get the training needed to become a commercial pilot. This both limited the number of candidates and excluded many underrepresented groups from the pool.

The result of all this is an increase in pilot wages throughout the industry. This, not voting to picket and strike, is why every pilot flying today can be comfortable that they will be paid more for their services. Strike votes that have almost no impact on reality are made to scare customers and thus pressure airlines to step up and close new business faster. The biggest effect may be in galvanizing the rank and file into a new deal sponsored by their leaders.

The prices are high enough

Airline ticket prices are high this year and this summer. This is due to high demand and somewhat limited supply. The limited supply is slower capacity building by the industry, partly due to the limited number of employees. Both Airbus and Boeing have also delayed deliveries of new planes, further limiting capacity this summer.

The short-term high from the pilot strike vote actually works against their goal of higher wages. That’s because the pool of money to pay for the pilots comes from the company’s earnings. Trying to encourage customers to book is taken from the coffers used to fund the prices the market will offer. It is not realistic for airlines to increase ticket prices in order to spend more on pilots.

The Railway Labor Act is a model law

The RLA is one of the best examples of law in the US. I’m not a lawyer, so maybe I’m missing something when I say this. But consider these two important facts. The first is that the law was written as a process of cooperation between workers and management, albeit almost 100 years ago for railways as well. Second is the fact that disruptions due to strikes rarely occur, and minimizing these disruptions was the primary goal of the law. However, with this, there are no significant side effects. The RLA has been changed several times, but is still largely what it was when it was first set up.

One only has to travel through Europe and be subjected to a one-day strike at British Airways or Lufthansa, canceling all-day flights and leaving tens of thousands of passengers without flights, to see how nice it is that this is happening in the US RLA is great an example of legislation with a very specific goal and found a way to meet that goal while allowing both airline management and unions to continue to negotiate productively. Those who want to make our government more efficient should look at the example that RLA offers.

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Forbes – Business

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