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Oct132009

« US Pilot Unions’ Dirty Little Secrets »

I keep waiting for real leadership to emerge from labor unions in the US airline industry, particularly from pilot unions.  During past down cycles, pilot unions could be found taking the lead in creating a nuanced solution that addressed a company’s competitive needs and the concerns of pilots they represent.  The template crafted by pilot union leaders in the past often formed the framework for companies seeking help from the non-pilot workforce.

Today, more often than not, I see the work of pilot unions doing more to pose a barrier to an airline’s success than to promote it.  To be fair, the unions at Delta, Alaska and Southwest get credit for smart leadership. But the same can’t be said at other airlines, and here’s one reason why.

The legacy carriers all operate as part of networks that have formed over time, through mergers; asset buys; regulatory frameworks; and, importantly, union influence.  By this I refer in part to the dirty little secret in pilot union contracts: “scope” clauses that too often hamstring an airline’s operations in the name of job protection for pilots.

The question we in the industry should be asking is whether those scope clauses are really serving that purpose or, rather, whether some union leaders are using them in a way that is both misguided and harmful to the pilots they represent.

Evolve, Adapt, Reinvent – Or Risk Irrelevance

The ability of mainline carriers to employ regional jets is not new to the industry.  Neither is the ability of mainline carriers to engage in international code sharing arrangements with foreign airlines.   Both activities are governed by scope clauses in each carrier’s collective bargaining agreements with pilot unions. And before we go any further, let’s remember that the language in these collective bargaining agreements is just that – collectively bargained between the management and the unions. 

Much of what I have written at swelblog.com over the past two years has probably earned my picture a place on the dartboard at most pilot union offices. And this column is not intended to resurrect my image with certain pilot leaders in any way.  It’s just that union presidents are really the CEOs of their organizations and they deserve the same scrutiny as do airline CEOs.

And yes, I’ll name names. One is Captain Lloyd Hill who is president of the Allied Pilots Association – which represents only the pilots of American Airlines.  Another is John Prater, president of the Air Line Pilots Association, which represents pilots across the industry. After watching Captain Hill’s misguided attempts to garner leverage for AA pilots during contract negotiations and Captain Prater’s recent embarrassing diatribes before the House Aviation Subcommittee’s hearings on aviation safety, even I feel sympathy for the pilots they attempt to represent.

Captain Lloyd Hill

In the early days of the blog, I wrote a lot about American Airlines and its strained relations with the APA’s Hill administration.  The union was antagonistic toward the company from the very start and began negotiations with an outrageous opening proposal that demanded, among other things, a pay increase of more than 50 percent. I suggested then that it would be a long time before a deal will be reached with these players at the table. 

Two full years later, there is not only no deal, but not even the scent of a deal in the air.  And from my read of the contract cases now before the National Mediation Board, I could make a case that it will be at least two more years before American and the APA reach agreement or a NMB-declared impasse is declared.  But I will leave it to the APA membership and the Las Vegas odds makers to analyze what needs to change in order to improve the odds of a new working agreement.

Never before in my experience have I seen a more misdirected, miscalculated and mismanaged mess of a negotiation by a union.  And because we can all read Hill’s playbook and it’s clear he’s not moving the ball down the field, he keeps going back to his current whipping boy -- the “immunized alliance” the company is trying to achieve through a joint business agreement with British Airways and Iberia.  After calling the same play on second and third down, I am thinking that this fourth down attempt will result in a loss as well. 

Last week the APA issued yet another press release urging the DOT to dismiss American’s application. But this time, the APA was joined in its hollow and transparent opposition by ALPA.   In this case, ALPA was less strident, choosing not to oppose alliances generally but instead to urge DOT to ensure that jobs at US airlines are not eroded as a result of international partnerships.

“As a result of two significant developments during the past several days, we urge the DOT to decline American Airlines’ application for worldwide antitrust immunity,” Hill said in the APA release. “The first of those developments was the EC’s announcement earlier this month that American Airlines’ plans may violate rules governing restrictive business practices. Given those stated concerns, we question the advisability of granting approval to a deal that may fail to pass muster with the DOT’s European counterparts.

“Closer to home, American Airlines management has refused to provide industry-standard job protections for our pilots, despite APA’s concerted efforts,” Hill added. “We can only conclude that our worst fears would be realized in the event American Airlines is permitted to proceed with what amounts to a virtual merger with British Airways and Iberia.

No Captain Hill, your worst fears should not be this alliance.  You see, your contract permits this arrangement and if this type of commercial activity were to be prohibited, your actions in fighting the alliance will all but ensure fewer US jobs – they may be primarily narrowbody jobs but US jobs nonetheless.  Maybe you should begin negotiating with the company with realistic and market-sensitive proposals rather than filing petty grievance after grievance that has resulted in a further weakening of your negotiating position.  Maybe you should stop putting up billboards openly criticizing your employer on product reliability and safety issues because trying to hurt the company that employs your members is no good path to trying to improve their contract.  

Maybe the goal of “restoring the profession” should be to recognize a changed environment and figure out how best the members you represent can prosper under the new economic reality.  

Maybe your dirty little secret is that you do not know how to tell your members that your strategy to “restore the profession” has failed.  But the real sad part is the real losers are the professional aviators who deserve better from their union leaders.

Captain John Prater

Over at ALPA, the world’s largest pilot union, we have John Prater at the helm. Prater won the election to head ALPA by beating out his predecessor, the very skilled and seasoned Duane Woerth, on a platform that overpromised and is sure to under-deliver. Over the years some of the very best union leaders in the airline business have come from ALPA:  J.J. O’Donnell; Hank Duffy; Randy Babbitt and Woerth to name a few, and that doesn’t include a line of great leaders during the union’s formative years.

Now we have ALPA testifying before Congress in ways that are not becoming of past ALPA leaders.  Prater testified at the September 23 hearing on the crash of Colgan Air 3407 about a number of safety initiatives ALPA is promoting across the regional spectrum. But he also spoke about the relationship between mainline carriers and their regional partners in a way I find troubling.

Prater attributed what he called the “low-experience pilot problem” to the mainline airlines’ business model. 

“Mainline airlines are frequently faced with pressures on their marketing plans that result in the use of the regional feed code-share partners, whether they be economic, passenger demand or essential air service,” he said. “These code-share or fee-for-departure (FFD) contracts with smaller or regional airlines provide this service and feed the mainline carriers through their hub cities.”

Before mainline airlines had regional partners, Prater said, all flying was done by the pilots of an airline on a single pilot-seniority list, where pilots were trained to and met the same higher-than-minimum regulatory standards."

“A safety benefit is derived from all flying being done from a single pilot-seniority list because it requires that first officers fly with many captains and learn from their experience and wisdom before becoming captains themselves,” Prater said.

Now, he argued, major airlines use multiple, regional “vendor” carriers to drive down their costs, a practice he said “harms safety”  because first officers on regional airlines can become captains within a year and “fail to gain the experience and judgment needed to safely act in that capacity.”

Prater goes on:  “When a regional airline operates a route for a mainline carrier and offers subpar wages and benefits, only low-experience pilots, who cannot qualify for a job with a better paying airline, are typically willing to accept such employment. It is not uncommon that training at such carriers is conducted only to FAA-required minimums. However, these low-experience pilots obviously need more training than more experienced airline pilots to gain equivalent knowledge of the operating environment, aircraft, and procedures before flying the line.”

Later, in questioning by members of the committee, Prater insinuated that airlines involved in the crash, as well as other carriers that ALPA is in contract negotiations with, are continuing work practices that may compromise safety.

"The managements at Pinnacle and Colgan have not changed their ways. The management at Trans States Airlines haven't changed their ways. Do I need to go further? I have a big book," Prater told the subcommittee. He then suggested that carriers were actually punishing Captains that report maintenance issues with their aircraft, concluding: "Some managements are still insisting that they are going to beat their pilots into submission."

What Prater fails to share is ALPA’s dirty little secret: that the wage rates, working conditions, training provisions and other particulars he criticizes were negotiated by his union. ALPA represents the majority of regional pilots flying in the US today.  So maybe ALPA needs to step up and take some responsibility for its contribution to building this sector of the industry.  Only by agreeing to lower rates of pay and more flying time at the regional carriers can ALPA justify and sustain the generous pay, benefits and work rules that benefit pilots at the mainline airlines. 

Look at any significant relaxation of the scope clause at the mainline carrier that allows the airline to increase its use of jets 70 seats or less. In just about every case the mainline pilots received a significant pay boost in return for that “concession.”

The fact is that ALPA has played a major role in creating the labor Ponzi scheme that survives at the legacy airlines. How does ALPA find a way to pay another group of new pilots less in order to buy “better” contracts for the regional pilots it now represents? It can’t. And you can bet that ALPA would not ask its mainline pilots to take a pay cut to help increase the wages for pilots flying at their regional counterparts.  A conundrum indeed.

Concluding Thoughts

Labor leaders in the pilot ranks would have you believe that this (international code sharing and the use of regional flying) is all about management abusing provisions of their collective bargaining agreements to enrich their shareholders.  In fact, the creation of B-Scale constructs and the relaxation of scope provisions has been labor’s “quid” in return for increases in compensation and benefits for 20+ years [the “quo].”  Even when the industry economics suggested the quo was too much.  As I have said here before, labor likes to “eat their young.”  This is an issue that is fundamental to the difficulty of today’s negotiating environment.

Hill and Prater are resorting to 1920’s tactics rather than trying to lead pilots in a new world of airline economics. Labor’s “Old New Deal” cannot be supported by today’s competitive environment.  What is needed is a “New New Deal”. It will not look anything like the “Old New Deal” to be sure.  Just as airline executives have been forced to adapt to new economics shaping the industry, labor, too, must adapt because it has no more young to consume to keep senior pilots fat and happy.

It is hard to be at the top - whether looking for necessary capital or creatively searching to support the expectations of pilots.    

Reader Comments (11)

Oh, I can almost see the flak coming... although your entire point about pilots eating their young is true (making junior pilots make huge sacrifices for the benefit of the senior ones), I just love the "labor ponzi scheme" expression. I think I will steal it and pass it off as my own.

The fact that ATI and code-sharing creates more jobs and not less is so evident that I really don't know how you can have a serious discussion with someone who refuses to see it.

MVP

I hope that there is flak, but probably will remain quiet. I have already received a few notes on the piece regarding my anti-labor bias. I made no bones about that up front in this piece. I probably would not have written based on Hill's predicatable actions, but Prater's performance on the Hill warranted a write.

It was suggested in one note that we re-regulate. Seems we would only continue to get smaller if the industry charged the full price of the product. And that is before we pay labor more as was insinuated.

I guess another purpose of the piece was to point out what others won't - and that is labor has fault as well in creating the structure the US has built. But no one owns up to it. Oh well.

10.14.2009 | Unregistered Commenterswelbar

If everyone drops scope, management benefits from a generation of too many pilots too saddled in debt from flight training to find other careers, and very willing to work for peanuts, until the next generation of entrants realize that a pilot career is not especially lucrative.

10.14.2009 | Unregistered CommenterAB

What is wrong with this picture?

http://i569.photobucket.com/albums/ss140/pejorative/09ca2c17.jpg

(Don't worry because I know you'll miss it.)

Here is another one for ya:

http://www.usdebtclock.org/

Along with all the other fun numbers rattling around check the ticker on Domestic vs. Foreign Auto Sales

10.15.2009 | Unregistered CommenterChitragupta

I must apologize in advance for my ultra long posts and some irrelevance to this article. Lots to say! Although incredibly biased, it is an interesting article to say the least. I hate to be blunt, but let’s face it, compared to the majors, most regional carriers offer entry level pilot positions, which only merit entry level pay. The qualification and experience level of a new hire regional pilot is generally not comparable to a new hire major pilot. In the past, pilots have mostly used the regionals as an apprentice position stepping stone with hopes of acquiring a job with a major in the future. Paying their dues as we used to say. Some pilots used the military in the same manner, but with much higher training standards. Years ago, pilot jobs were a huge “catch 22.” The only way to get hired was to have huge amounts of turbine or jet time and lots of PIC time, but the only way to get that was by being hired first! With the huge shift to regional jet flying, this has all dramatically changed within the last fifteen years or so. The flying public may not like it, but that is the way it is, and they are not willing to pay for it to significantly change for the better. Additionally, one must be delusional to assume that all pilots are created equal, yet I see post after post indicating this is what most people believe. From what I’ve seen, most people will choose their ticket solely based on the lowest fare even if it’s just a few dollars; however, if asked directly if they would choose to save ten dollars on their fare if they knew the pilots were much less experienced, we get an entirely different answer. So the problem is that people want the most experienced pilots, but they are unaware of the differences and unwilling to pay for the difference.

What has changed in the last fifteen years will assuredly make the problem worse before it ever gets better. What has dramatically changed the flying industry landscape is: 1) The major airlines have shifted (outsourced) much of their flying to the regionals by buying or leasing thousands, yes thousands, of regional jets, 2) The major legacy carriers have nearly all shrunken in size and have had very little hiring if any, 3) Upstart carriers like Value Jet and others were granted various waivers to begin operation thereby dragging everyone else down to the lowest common denominator. What does it all mean? It means that there is a huge amount of entry level regional pilot positions available, and nowhere for them to go after they have acquired the experience level required by the majors. So we are now hearing how dismal there compensation and training truly is and always has been. Remember, there is no shortage of people who want to fly jets for a living, even if it’s for food stamp wages. The problem is there is a growing shortage of highly trained pilots willing to do this job for the plummeting compensation packages and lack of pensions. If Captain Prater or the public thinks the problem is bad now, just wait until the pool of highly trained and highly experienced pilots start going away, i.e. military trained pilots. You ain’t seen nothing yet!
Waves
P.S. MVP: Don’t kid yourself; the airlines are one of the most regulated businesses in the country.

10.15.2009 | Unregistered CommenterWaves

Regional Inexperience? American Eagle pilot longevity is 12 years and most Captains have over 15000 hours in the aircraft. I would compare any amount of experience at a mainline to any captain at American Eagle. I do my job and I do it well. Yes I "want" more money, but I don't care to go to "mainline" and start at the bottom of the list. Its a cost vs benefit.

There are exceptions to every rule, and American Eagle is one that has a higher average level of experience than other regional carriers. You cannot say the same for Colgan, TSA, Mesa, CHQ, Skywest, Compass, Gulfstream, Gojets (although they have a lot of furloughed UAL pilots now), and the list goes on.

In response to: Regional Inexperience? American Eagle pilot longevity is 12 years and most Captains have over 15000 hours in the aircraft. I would compare any amount of experience at a mainline to any captain at American Eagle. I do my job and I do it well. Yes I "want" more money, but I don't care to go to "mainline" and start at the bottom of the list. Its a cost vs benefit.
I believe your post was directed to me, but Im not really sure what you mean by --AE pilot longevity is twelve years. Do you mean that the average Captain has twelve years with AE? This statement is probably true, but it is irrelevant to what I said. As my previous post stated, I am talking about inexperienced new hires, not twelve year highly experienced, 15,000 hour Captains. Apples and oranges my friend. By the way, a pilot would have to fly the FAA maximum yearly limit every year for fifteen years to get 15,000, so I doubt you are correct about most of AE Captains having 15,000 hours. Also keep in mind these are generalities and there are certainly always exceptions as the next poster pointed out. Additional, I don’t believe anyone was inferring that any particular group wasn’t hard working and not performing their job to the best of their ability. Many years ago as a DAL new hire 727 instructor, I occasionally had the pleasure of giving IOE’s to former regional carrier pilots including AE guys. Every one of them did a great job, but they got hired by DAL only if they had around 5,000 hours or more and had a minimum four year college degree. Unlike most regional new hires, these guys were highly experienced pilots. This is the big difference I am referring to.
Starting at the bottom of the list is something that outsiders simply do not understand. Starting at the bottom of any list is only palatable if there will be a lot of growth, or lots of retirements coming soon. Neither will be happening real soon anywhere that I know of.
Later, Waves

10.17.2009 | Unregistered CommenterWaves

Mr. Swelbar: I loved this article and am so glad someone came out and painted the perfect portrait of Hill and Prater.

Me thinks your picture will be safe and sound on the dart board...perhaps even their kids' birthday parties. You know, "pin the tail on the Swelbar"!

10.20.2009 | Unregistered Commenterwhenry

I have tremendous respect for pilots everywhere, I took my first stick on an old Taylorcraft when I was five years old (with the help of my uncle). I understand the cost involved in training, and I understand the frustration of legacy mainline airline pilots that have spent countless hours working only to now see a reduced wage structure. Regardless of that understanding, the fact remains that every legacy carrier is losing money, American in particular. American actually operates a revenue premium compared to many other domestic carriers, but its cost are most higher that, that premium has become almost irrelevant. The fact that the airline has had the balls to stay out of bankruptcy, has actually created an environment where the airline struggles to make money. It is absolutely baffling to me how every union representing labor employees at American in particular fails to see that damaging the company through smear campaigns and ridiculous requests, doesn't actually gain anything. If American were to chose (they have proven at this point that it would be choice) to go into bankruptcy, which it obviously has made an incredible effort not to do so, then the pensions, and the salaries that the pilots union so desperately cling to, will disappear. A judge will decide who gets what. American would probably come out on the better end of that deal, just look at Delta. Enter bankruptcy, get your debt oligations cut in half, exit bankruptcy, merge, become the largest airline in the world. They haven't because they chose not to, for guess who...their employees. Many of the very people who are trying to screw the company to the wall. Wake up and realize that while being a pilot is still a lucrative job, the days when a 737 pilot made more that a managing director of an organization within the company are over. They were unsustainable, and the industry has finally reached the tipping point where if you continue to push for packages that you once had, you will bankrupt multiple companies and cost yourselves and many others their jobs. Or...you could just continue down the same path and just see what happens (hope you like Russian roulette)

10.21.2009 | Unregistered CommenterArceneaux

Thank god for Lloyd Hill. I mean, honestly, is there a more entertaining charade to watch anywhere else? Reading the steady stream of crap from the APA convinces you that his strategy - if you could call it that - will go down in aviation history as one of labor's greatest failures. For those that disagree with that assessment, I would ask one simple question - what has he accomplished in his tenure? Presumably, he was elected to represent the interests of his pilots and to secure a contract. Well, how's that working out? Any progress whatsoever on a contract? I will give him his props, however. He is a transformational figure. He has single-handedly transformed an organization of highy-dedicated and professional aviators into the laughing stock of the industry.

Sadly, AA is in terrible shape - take another gander at those 3Q results - and make no mistake about it, there are many livelihoods at stake, particularly within the very group Hill is supposed to "lead". I hope some smarter heads prevail there, if it's not already too late. Surely, there must be some signs of intelligent life in the APA. God knows it absolutely doesn't reside at the top of that organization anywhere.

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