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Entries in airline labor productivity (1)

Tuesday
Jan252011

A Flight Attendant Representation Inflection Point?

There is no questioning the importance of a flight attendant to commercial carriers, whether as the onboard safety professional or as an extension of an airline’s marketing department.  As they themselves are quick to point out, of all airline employees it is flight attendants who spend the most time with customers, a role they say should have more value in their compensation. 

This blog has often been critical of pilots and the leadership at the major pilot unions for being unrealistic in their contract demands, particularly in an industry struggling economically. Today I look at the flight service unions and wonder if there is a fundamental change in direction afoot.

One has to look no further than the combined work forces at Delta, where the non-union Delta flight attendants and their unionized counterparts at Northwest recently voted against union representation.  Delta, where only the pilots are unionized, has flexibility and productivity built into its operation so that the airline can quickly adjust to market conditions rather than be hamstrung by contractual restraints. In return, Delta has long offered relatively high industry pay and a culture employees value.  That’s one reason that when Delta announced plans last year to hire 1,000 new flight attendants, more than 100,000 hopefuls applied. By all outward signs, Delta flight attendants are largely satisfied with their jobs, and tens of thousands of applicants would evidently love to join them. So perhaps it is no surprise that flight attendants at the “new Delta” rejected old-style union representation.

My question is whether contract negotiations elsewhere in the U.S. airline industry will challenge the status quo as defined by old-line labor agreements negotiated by the Association of Flight Attendants – CWA (AFA) and the Association of Professional Flight Attendants (APFA) to promote the level of productivity and flexibility today’s airline industry demands.

At American, for example, the mantra coming from management in its negotiations with flight attendants has been increased productivity in return for increased pay.  That formula works at Southwest and Continental and Delta – where high productivity has lead to higher pay.  The conundrum for the APFA at American is that their current contract pays flight attendants at or near the top of the industry but puts productivity near the bottom as compared to other carriers.

To be clear, “productivity” in this context does not measure how hard an employee works but, rather, is dictated by the work rules outlined in a collective bargaining agreement. Too often, these work rules limit the number of hours an employee can work as one way of forcing a company to hire more employees.

 In many old-line agreements, aircraft technology (flying longer and faster) is the driver behind the work rules.  This technology – more advanced aircraft that could fly more passengers faster and farther --created a false perception that employee productivity was increasing. Today there is little to no technology effect on flight crew productivity. And it’s high time that contract agreements reflect that reality.

From my perspective, the APFA is neither willing to acknowledge nor accept that fact. Rather than agree to increased productivity – even to a point that is at par with flight attendants at other carriers --  the union is insisting on pay increases without offering anything in return. Absent that, the union has threatened the sides have reached “impasse” and the union should be allowed to call a strike.

At this point, there’s no predicting the end game. Last week, the union reported that the National Mediation Board will not now act on its request for a “release” to strike and has scheduled no additional meetings, a story reported by Terry Maxon of the Dallas Morning News in a thoughtful recap of the difficult negotiations at American. The union, not surprisingly, blamed the company: “APFA Negotiators did everything they possibly could to achieve a deal,” the union said in a hotline message to members, “But the company is still unwilling to recognize the value Flight Attendants bring to this company."

Maxon then updated his blog post to include this statement from the company:  "We [American] are disappointed not to have additional dates. After more than seven months since our last negotiating session, the company team looked forward to meeting with APFA in early January in Nashville. During the week, we presented APFA with several proposals to move the process forward on items we know would affect all our flight attendants. Unfortunately, APFA did not respond to the company's most recent proposals or offer any proposals of their own. We believe this lack of movement contributed to the NMB's decision not to schedule additional dates.”

Clamoring for a strike in this environment is old school, chest thumping, red meat stuff that will probably ensure only that member flight attendants will wait longer than necessary to get a new contract. And it’s my guess that the NMB realized this in calling a time out, recognizing that the union’s failure to negotiate is not the same as negotiating in good faith and failing to come to an agreement.  That’s the definition of real impasse. What the APFA is doing is posturing rather than putting in the hard work of good faith negotiations as envisioned by the Dunlop Commission in its recommendations to improve airline labor-management relations.

Like it or Not, It’s Still About the Economics

Unless I have missed something, American was the only network legacy carrier to lose money in 2010 and is forecast to be break even at best in 2011.  And one trend that no one is missing is the price of oil that has settled for the moment around $90 per barrel.  Add to that the trend line in the crack spread, which has jumped from $10-15 per barrel in the last six months of 2010 to about $25 per barrel now.  So for airlines, the true cost of “in the wing” oil can top $100 per barrel depending on where they buy their fuel.

In most cases, the airlines are doing what they can on the costs they can control. They are keeping capacity increases in check. They have successfully implemented fees to bring in much-needed revenue.  And perhaps the profits we saw in 2010 are the return on this discipline and new pricing strategies. But one year of profits does not define a trend. And in the long term, it is not enough to compensate for labor’s outsized asks at the negotiating table or the expectation labor leaders create when they tell union members that they should “get back” the concessions negotiated during the industry’s restructuring period. 

Back to Flight Attendants

Which brings us back to flight attendants and the labor struggles at play throughout the industry. Consider the case at US Airways where five years after the merger with America West, the AFA represented flight attendants from each airline are still working under the agreements negotiated prior to the merger.

And that case merely sets the stage for what’s to come at United–Continental Holdings, where the old line AFA has petitioned the NMB to declare the merged company a single carrier in order call an election that would bring the Continental flight attendants, now represented by the International Association of Machinists and Aerospace Workers (IAMAW), under the AFA wing.  That would be a different direction for Continental’s inflight service, whose contract with the IAMAW emphasizes productivity and flexibility that has served the airline and its employees well in recent years.  So as with the decision at Delta, that election will go a long way in determining the direction of labor in the airline industry.

This industry has only begun a long overdue and ultimately necessary transformation that could bring sustained profitability, but only if that transformation is allowed to go forward. That will require the constructive participation of organized labor which, like the airlines themselves, must transform the way it conducts business.

United has that opportunity in negotiating a joint collective bargaining agreement for employees of the merged carriers. There, it is up to leadership to demonstrate the stark difference between one contract that produces high productivity and high compensation, and the other that produces low productivity and lower compensation, and work to convince flight attendants what is in their long-term best interest

And I believe that, ultimately, the AirTran flight attendants represented by AFA will come to embrace the highly productive, highly compensated terms of the Southwest flight attendant agreement negotiated by the TWU

American, for its part, does not have battling unions contend with – only a battle between expectations and reality.  The unions have so far been unwilling to reconsider contract language and provisions not even relevant to today’s industry. There are no more magic bullets like the jet airplane coming along to artificially inflate employee productivity.  The only way to get there is to rethink dated notions of productivity and job protections.  And that’s a real opportunity, for labor and for management.