Pilot union efforts at JetBlue fail, bigger issues continue across the industry

Airline pilot union issues intensify across the US industry - but ALPA loses JetBlue vote

The Air Line Pilots Association's (ALPA) for the second time has failed in organising JetBlue's 2,100 pilots. It is now clear that the rule change promulgated by the National Mediation Board (NMB) last year -- which was supposed to make it easier for unions to win elections -- has had little impact on union success.

Of course, that begs a bigger question that only unions can answer. Why do so many of today's employees think unions are no longer necessary?

Certainly the threats of strikes at British Airways and American, as well as the recent pilot strike at Spirit and the customer service agents at Air Canada, signal that unions are still willing to play that card. But a more compelling issue is why there is so much union infighting -- much of which has ended up in court and all of which is making peace more and more elusive. Activity at US Airways, United/Continental, American and Frontier clearly show unions are not only fighting management with slowdowns and other tactics but are fighting among themselves.

The union voting rule change continues to haunt the airline industry

The lack of union success from the NMB rule change does not mean the issue is going away. Indeed, it will continue, again threatening the passage of the Federal Aviation Administration (FAA) reauthorisation legislation, now four years over due. The battle will re-engage once Congress reconvenes since the 21st continuing resolution (CR) since the last reauthorisation expired runs out on 16-Sept-2011. The CR was finally reached after a two-week partial FAA shutdown and the loss of hundreds of millions in tax revenues, expires on 16-Sept-2011.

Republicans want to reverse the NMB change which overturned 70 years of labour practice that said a union could only claim victory if the majority in the work group on the property voted for the union. Anyone who stayed away from voting was assumed to be against the union.

That sets the battle between the House and the Senate if they ever get to the point where they form a conference committee to reconcile the differences between the House and Senate reauthorisation bills. The House is pinning its hopes on the anti-worker agenda item and has signalled that it won't give in. Consequently, despite a partial FAA shutdown, the loss of tax revenues and the layoffs of thousands of workers, not to mention four years of political procrastination since the last reauthorisation expired, more political wrangling is promised when Congress reconvenes in September.

The voting process is only one part of the problem

Clearly the fight is about more than just the front end of an election effort. The issue is two fold -- how the change was made in the first place and how the change created an imbalance between gaining and decertifying a union. The bar for gaining a union is straightforward and fairly low, according to Delta, which is at the focal point of the battle and has the airline impliedly threatening to move its HQ if it doesn't get its way. Meanwhile the bar for changing or decertifying a union remains very complex and high.

The bottom line is a need to correct the imbalance that exists between gaining union representation and the complex process to change or decertify a union. To gain an election a union must get 30% of workers in a craft or class to sign cards favoring an election but to change or decertify 50% + one must sign such cards. In addition, there is a complex process of voting with many more nuances than is necessary for the initial unionisation election.

If the rule change has had so little impact on union success, why are Delta and the Republicans are fighting so hard to overturn what the NMB did in 2010? (The Republican move to overturn the 2010 NMB rule change is in the House version of the FAA reauthorisation, but not in the Senate version, making it a pivotal issue.)

The rule change -- in which only those voting determine the election -- was clearly aimed at Delta, which faced elections among the work groups in the wake of its merger with highly unionised Northwest. But Delta is largely union free today, with the exception of its pilots and dispatchers. Four of the nine elections held since the merger were done under the new rules and the Association of Flight Attendants (AFA) and the International Association of Machinists (IAM) lost their bids to represent flight attendants, fleet and passenger service groups and stores employees.

Airline unions are calling on the NMB to intervene with Delta

Both unions have charged Delta with interference -- which Delta completely denies -- and has called on the NMB to implement another rule change. They want another election and a paper ballot instead of the phone and internet voting procedures that have been in place for years. The paper ballot would reverse the more 21st Century, computer-based voting method that is now in play across most of America.

Today, flight attendants from Delta and Northwest still have different pay scales and are restricted from transferring domiciles or changing jobs. In addition, Delta attendants are paid 12% more than their Northwest colleagues and have better profit-sharing and retirement policies. What's more, Delta attendants don't pay the monthly USD43 dollars for union dues.

Despite the votes, Delta workers are not done yet and it is likely with all the challenges created by union maneuvering they may never be. Given the pro-union leaning of the NMB, it will likely find there has been interference, meaning the two unions will get their fourth bite at organising at Delta property. The political gamesmanship will mean Delta will keep facing more union tests, a distraction from other issues.

Delta and the Air Transport Association lost a court challenge, arguing the NMB didn't have the authority to make the initial rule change on how votes are counted. They are appealing. After that, Delta headed to Capitol Hill where a resolution of disapproval, calling for Senate to overrule the NMB was introduced by Senator Johnny Isakson - and also failed.

After all that, Delta CEO Richard Anderson appeared on television to remind viewers -- but more likely union viewers -- that "capital is mobile" clearly implying the airline would move if the issue were not resolved in its favour.

Why was the NMB rule change made in the first place?

Questioning how the change occurred has merit given the fact that it compromised what was intended to be a neutral government agency. The change was implemented after two pro-union members were named to the NMB in a recess appointment because Congress was stalling confirmation. The move by the Obama Administration was payback for union support in the 2008 election, one of many such IOUs paid to labour in the last three years.

President Obama has bent over backwards to live up to his union promises, as have the Senate Democrats, to prove that things have changed. Unions have long complained that they write cheques to elect Democrats, only to be ignored after the election is over. Since 2008, unions have worked hard to effect national change, something which is causing some of the dissension between the Republican House and the Democratically controlled Senate.

Further union power plays resulted in unions winning a victory when the National Labor Relations Board (NLRB) filed a complaint against Boeing alleging it illegally set up its 787 Dreamliner in South Carolina in retaliation for union strikes at its Washington plants. That, in turn, prompted House Republicans to call hearings in June to question the NLRB on its actions. Committee Republicans and Democrats bickered over the NLRB action with Republican representatives echoing South Carolina Governor Nikki Haley who characterised the board as a rogue agency.

Today, NMB is decidedly pro union and considering it is the mediator between management and labour in sticky negotiations, that cannot be good. But it also begs the question whether Delta is playing at the same game in not accepting the rule change as the unions are in not accepting the voting results.

Unions are losing confidence of rank and file - and inflexibility is one cause

Across the US economic spectrum union membership is declining. Only 11.9% of all workers and only 6.9% of private employees were members in 2010, dropping by more than half the 20% membership in 1983. The third rejection of the flight attendant's union at Delta cost the union 20,000 potential dues-paying members.

Given the state-sponsored attacks on public employee unions resulting from Washington's fiscal brinksmanship, the situation with union members is only likely to get worse.

Beyond the NMB fight is a real question about what is going on with unions that they aren't more successful, especially with the rule change.

Obviously, the concessions wrung out of members in the last decade have played a huge role in the dilution of confidence in what the major unions can achieve for their members. The problem is airlines cannot afford the snap-backs unions are expecting. For instance, one pre-merger Continental pilot proposal indicated it would only cost the company USD500 million - and that was just for pilots, without including any change to the contracts for other work groups.

Given the fact that airlines are today only profitable thanks to ancillary fees suggests there is little wiggle room for the airlines to accommodate such massive sums.

The tension between mainline and regional pilots is also taking a toll, as illustrated by the dissension in the ranks at American's Allied Pilots Association (APA), Continental and United, as discussed below.

But it is possible also that the inflexibility of union rules is getting in the way of members just as much as management, who wish to see changes in order to gain increasing productivity and efficiencies.

The issue centres on pay because union rules preclude pilots from maximising their available pay. Employees want to remain as flexible as possible, especially with their schedules, because union contracts do not yield the highest pay. Such rules are designed to force employers to hire more dues-paying members than can otherwise be supported. Management throughout the industry have already signalled they are trying to end these costly rules.

US union activity intensifies, with mergers and coalitions

Meanwhile, unions seem to be re-arranging the deck hairs as they form more coalitions to increase power. The IBT, Transport Workers Union (TWU) and the Coalition of Airline Pilots Association (CAPA), together representing 140,000 aviation workers, have joined to form the American Aviation Labor Alliance (AALA) to combine their lobbying efforts to push the union agenda. Two items high on their wish list are stemming the trend toward maintenance outsourcing and bankruptcy reform. US airlines were able to abrogate contracts and pensions during their trips through bankruptcy court in the in the last decade.

The five members of CAPA are: Allied Pilots Association (American Airlines), Independent Pilots Association (UPS), Southwest Airlines Pilots Association (Southwest Airlines), Teamsters Local 1224 (Horizon Air, Southern Air, ABX Air, Atlas Air, Polar Air Cargo, Atlas Worldwide, Kalitta Air, Cape Air, Miami Air, Gulfstream Air, Omni Air and USA 3000), and US Airline Pilots Association (US Airways).

Such coalitions are gaining ground as illustrated by the coalition created by the regional airline pilots within the US Airways Express subsidiaries.

The recent election at JetBlue comes on a backdrop in which the epicentre is industry consolidation and the target is airline on-time performance.

Southwest and AirTran pilots nearly reached a seniority deal, until AirTran members baulked at putting the prospect of a similar outcome to US Airways, now in the sixth year of its merger with America West and without such a deal. That means US Airways has yet to reap all the synergies promised by the merger.

United/Continental is nearly a year into its merger and such a deal was scheduled for year-end but has now been pushed further out. Management had tried to forestall protracted negotiations by offering to match Delta's much richer pilot hourly rates plus USD1 - which was rejected because there were larger issues on the table, including scope clauses.

Historically, management and unions have used scope clauses to leverage their positions in getting what they want. As a consequence, scope - how much flying can off loaded to regionals and with which aircraft size -- is a growing issue. But management from Delta, United/Continental and US Airways have all used language that indicates things will be different this time, now that the industry has restructured for profitability rather than market share. US Airways CEO Doug Parker said the restructuring of the industry over the last decade includes the end of signing what he termed "bad contracts."

Experts believe that, historically, airlines have paid too much for scope relief. Delta has few restrictions on what regional airlines fly as long as the aircraft is not larger than 76 seats. Continental caps scope at 50 seats, putting it at a competitive disadvantage to its peers. This promises to be a fertile area for dissent, as the next-generation regional aircraft are fielded.

Aircraft size, however, is only one issue and goes beyond regional relationships to the globalisation of the industry. The relaxation of Continental's scope is the only thing standing in the way of implementing the United/Air Canada/Lufthansa joint venture. Delta already enjoys joint venture benefits.

United and Continental management and pilots recently fought a war of words on whether or not Continental pilots are staging a "sick out" banned by the Railway Labour Act (RLA). ALPA denies it but staff shortages caused two days of cancellations. The company sent a letter the Continental chapter of ALPA and to ALPA headquarters asking the union to help keep the airline reliable.

Pilot association confrontations increase, with scope one part of the problem

Continental's pilot union told workers that if calling in sick is part of a labour ploy, it should stop but then added the company is understaffed, something it has repeatedly brought to management attention. The union added understaffing has been exacerbated by the busy summer season. Three years ago, United pilots pulled such an action for which the company won an injunction.

Both United and Continental unions have complained that negotiations to merge the two unions are taking too long. This is one of the key negotiations to watch because the difference between United's more liberal and Continental's far more restrictive scope clause is a major issue - and reportedly behind an effort by 3,300 Delta pilots to create an independent union, with scope the focus of their difference between ALPA and the proposed union. Regional pilot issues are also playing out at American.

US Airways' pilot disputes could continue for years - costing USD377,000 daily

Labour problems have plagued US Airways since its merger with America West in 2005 and CEO Doug Parker sees that pilot unrest continuing for years. It is now in a pitched battle with pilots who flew for US Airways before the merger.

East and West pilot groups have been fighting over seniority, despite the fact that it was resolved by binding arbitration at the union in the Western group's favor. East pilots, who hold the majority, rejected the decision, kicked ALPA out and formed the US Airways Pilots Association (USAPA). Since East pilots hold the majority, West pilots, less senior than their Eastern counterparts, could do little except take USAPA to court to force the implementation of the seniority list. That, too, came down on the side of Western crews which USAPA also rejected. Meanwhile, management could do nothing but stand by and watch the disaster unfold.

Pilot/management relations have deteriorated further as the airline filed suit against the union citing what it called an "illegal slowdown" by pilots based on the East Coast. It lost its request for a temporary restraining order but a hearing is scheduled for 19-Aug-2011 on its request for a preliminary injunction to halt the alleged job action.

The union denies the allegation but has questioned US Airways' safety at the same time, instituting a work action under the guise of spurious safety issues. US Airways said the alleged slowdown is costing the company USD377,000 daily.

As with the alleged Continental slowdown, the US Airways slow down has damaged the carrier's on-time performance at both Charlotte and Philadelphia, where only 42% and 55% of flights were departing on time, respectively, well below its Phoenix hub staffed by Western-based, former America West crews.

The US Airways suit against the pilots disclosed apparently compelling evidence of a pilot action including the increase of maintenance write ups by 50% above normal, from just below 25% to over 35%. Delayed flights in the East have risen since 1-May-2011. Fatigue calls have more than doubled. Taxi times were longer by more than one minute, for an 11-point decline in on-time performance, coupled with nine to ten additional flight cancellations per day. Express and Western operations have not changed.

Evidence submitted by the airline maintains the union is behind a campaign to use safety as a weapon, including full-page USA Today ads saying the airline is unsafe, coupled with a lawsuit against the airlines alleging US Airways pressured pilots to fly unsafe planes. The union has also issued lanyards to those who pledge to be "on board" the safety campaign, according to an email explaining the lanyards to Western crew members. Decals have been distributed with "+16", implying 16 minutes late - which qualifies for notation in the Department of Transportation on-time statistics. One email said being "on board" means helping the pilot cause, including being more than 15 minutes late. In addition, communications suggest there has been retaliation against those who do not agree.

US Airways is also taking flak from the flight attendants at one of its regional subsidiaries -- PSA -- who want management to come to the bargaining table without their "regressive" proposals. PSA Flight Attendants and their supporters signed a petition en masse urging airline management to negotiate in good faith on important economic and quality of life issues. PSA Flight Attendants, represented by the Association of Flight Attendants-CWA (AFA), turned the heat up on management by delivering the petition to US Airways Group CEO Doug Parker recently.

After the merger, the two pilot groups failed to come to terms on a combined seniority list with each side resorting to court battles to settle their differences, a solution which hasn't really worked.

Waiting for the two unions to agree puts what is otherwise an attractive merger opportunity in US Airways in jeopardy. US Airways has tried three times to further consolidation but has yet to get to the altar. Meanwhile, the airline continues to run itself as a profitable, stand-alone company awaiting future opportunities.

Mr Parker suggested an agreement to create a single contract for flight attendants is in the offing but doubts the same can be accomplished for the pilots groups any time soon, largely because the seniority issue is still tied up in thhe courts and is expected to take years to resolve.

American Airlines and Frontier pilot unions are also in dispute with management

American and Frontier unions are also turning on themselves. The Allied Pilots Association (APA), representing American pilots, momentarily lost the backing of ALPA for the current contract talks with American, after the national union took umbrage with comments made by APA's Boston and New York domiciles complaining about ALPA representation of regional pilots to the alleged disadvantage of mainline pilots. The APA noted that its closer relationship with the national pilot union has saved it USD2 million in the first year.

APA benefited from the experience of a professional negotiator lent to the union by ALPA in addition to ALPA's expertise and quantitative analysis capabilities as well as its economic and financial analysis.

As noted earlier, the relationship between regional and mainline pilots is a growing pivot point as merged airlines try to get rid of regressive scope clauses. In the United/Continental case, the merged company wants to get rid of Continental's 50-seat scope cap (which prevents it from flying any regional jets larger than 50-seats). United's scope divides at 70-seats and the company said the 50-sesat cap is costing it efficiency and market share. Continental's solution was using the 70-seat Q-400 turboprop, a solution which may gain more traction as fuel costs rise. But, for now, mainline partners are opting more for the larger jets.

Finally, after the Frontier Airlines Pilots Association (FAPA) reached agreement with parent company, Republic Airways Holdings for concessions that would help save the airline, the International Brotherhood of Teamster's (IBT) filed suit to stop the deal. IBT had previously won the right to replace FAPA in the wake of its merger with Midwest Airlines and, as a result IBT asked the court to nullify the deal, despite the fact that it was overwhelmingly approved by Frontier's rank and file pilots. It charged that Republic Airways Holdings had "colluded with FAPA" during the balloting period and thus interfered with the election. Frontier denied the allegation.

Unsettled conditions are undermining attempts at industry efficiency

Whether it is the changes wrought by the National Mediation Board or individual union battles resulting from consolidation, it is clear the increasing activity is making for some unsettling times in the US industry. It is also clear that it is hindering airline efforts to maximise efficiency and to further consolidate.

The question then becomes whether or not airlines can sustain the unrest. The answer, so far, seems to be yes. The issues are not unique to the US, however, and are being played out across the world, in Europe at least.

Moreover, there are glimmers of hope in the US - as illustrated by the Delta contract and the ascendance of former Delta Master Executive Council Chair Lee Moak to the presidency of ALPA. But they are being overshadowed by the self-destructive acts of unions that suggest they are operating in an alternate reality; one that is not prepared to accept or even recognise a decade of industry restructuring.

The question for rank and file members then becomes can they withstand the uncertainty of indefinitely being stuck with an old contract. The answer to that is unclear, considering the protracted labour/management battles now in play. Even so, what is at stake can be illustrated again by the infighting between the East and West pilots at US Airways. The company offered to bring East pilots up to West pilot rates but the East pilots, who hold the majority, rejected the offer. The result was the loss of six years of higher wage rates. With that sort of stubbornness and illogicality, it is little wonder that unions are not making more headway in the industry.

One thing is clear: the unrest holds great risks for both sides.

Summary of industry negotiations (per Reuters)

United/Continental

• ALPA is in joint negotiations to cut a new contract and merger the two groups;
• International Association of Machinists (IAM) won a new contract for Continental flight attendants which was ratified on 25-Feb-2011;
• AFA, whose talks with United management are in federal mediation, recently won the right to represent flight attendants at the combined company;
• International Brotherhood of Teamsters represents maintenance technicians at both airlines. IBT mechanics ratified Continental's new IBT contract 5-Nov-2010 while United's is in mediation;
• IAM, representing ramp and fleet service workers, is currently in negotiations. IBT represents the same group at Continental where a new contract was ratified last December.

Delta

• AFA is seeking a new vote on grounds Delta interfered with the last election in which AFA was rejected. Union charges are under investigation by the NMB;
• IAM is also seeking new votes on the same grounds after Delta ground workers rejected the union in 2010.

American

• Allied Pilots Association is in the third year of negotiations;
• Association of Professional Flight Attendants (APFA) and American have been in mediation since early 2009;
• TWU is in various stages of negotiations with one of the seven groups of ground workers it represents having already ratified a new contract in 2010. Four are in mediation since early 2009. The remaining two groups are in mediated talks since 2008 and 2009, respectively.

Southwest

• TWU's contract for ramp, operations, provisioning and freight workers became amendable in June 2011;
• Aircraft appearance technicians, represented by the Aircraft Mechanics Fraternal Association, have a tentative agreement in place to replace its previous contract amendable since 2009.

US Airways

• US Airline Pilots Association have been in negotiations since the merger in 2005. Negotiations are in mediation;
• Similarly, flight attendant negotiations to reach a single contract representing both America West and US Airways flight attendants are in mediation.