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Monday
Apr192010

« What Would Yoda Say to the APFA? »

Where I would typically use this space to talk about the fact that the rumor mill has United and Continental in serious merger talks, I am not going there.  My feelings on a US Airways – United hookup are well documented in a number of posts.  I will be most pleased if United and Continental are indeed in talks.  Each carrier has aggressively pursued a path to the least exposure to the US domestic market, and that is a path resisted by US Airways.

I respect many people at US Airways, particularly those managerial types who have done yeoman’s work with a network that, in my opinion, holds little promise long-term. It is, as I say, presence everywhere and a dominant piece of meaningful real estate nowhere.

To me the biggest piece of news this past week was the fact that the National Mediation Board (NMB) did not release either the Association of Professional Flight Attendants (APFA) or the Transport Workers Union (TWU) into a 30-day cooling off period that each union sought in their negotiations with American Airlines.

At least until we see the rule drafted by the NMB on representation elections, all seems right at the Board.  They did not release a case that is nowhere near exhausting the mediation process, even though I had feared that they might given the political winds in Washington.

So, the APFA is, for the time being, reduced to trying to convince the world of the numerous grievances its members carry. The union’s You Tube videos claim that AA flight attendants are oppressed.  They talk of the past like somehow it will reappear,  even when reality knows it is but a faint memory.  And through it all, APFA’s reckless talk of a strike continues – reckless because the circumstances don’t justify the action as I have written before, most recently in Self-Help or Self Sacrifice or Self Fulfilling Prophecy? What Will This Accomplish?

I am reminded of a quote by Yoda in Star Wars: "Fear is the path to the dark side. Fear leads to anger, anger leads to hate, and hate leads to suffering."

American’s Conundrum

Few people, if any, have been as critical of American’s union leaders as I have.  The one union that has been left unscathed by swelblog has been the TWU because, as a leader, John Conley is typically careful in misusing power and rhetoric.  But in this case even Conley has come close to the line.

Is the fear that a union working to address American’s productivity deficiencies in return for improved wages somehow collaborating with the “dark side”?  I think it is.  The fear of reprisals from a vocal minority of members toward a union’s leadership has led to a campaign based on anger toward the employer.  The anger has become hate as unions try to tie everything wrong in the industry to executive compensation, particularly that part of their pay in at-risk company securities.

But without executive pay, what are the unions really protesting? Change? We’ve got plenty of that in the airline industry, which is all the more reason cooler heads should prevail in approaching negotiations in a way that promises the best long-term pay and job security for airline employees.

But that’s not how the flight attendants union is approaching it. The APFA is trying to stir up a lot of anger and hate with a strike vote that, if it eventually led to a strike, runs the risk of doing serious harm to wages and working conditions for their members.

The APFA has been speaking out of both sides its mouth in urging members to support a strike a vote. On one side it encourages flight attendants to send a message to management and channel their anger by threatening a work stoppage that would bring the carrier to its knees. On other other it tries to calm flight attendants with reassurances that they themselves would not be hurt by going out on strike.

And that’s just wrong. APFA President Laura Glading should be careful what she asks for.

What good did the strike do the BA flight attendants and their union Unite?  Zero. Nothing.  Nada.  It did entice a management to put into place a plan to fly through the “three strikes.”  Three strikes and you are out right?  Glading’s plea to her members is pathetic.  All the while she reminisces about 1993 and 2001, she mentions that a “yes vote” does not mean that they will strike.  She talks about the power of yes.  But she does not once mention the potential risks of a strike to her members.

Glading also does not mention that her flight attendants are the highest paid among her network peers according to MIT’s Airline Data Project; the least productive in terms of hours flow per month; generally lagging in terms of in terms of passengers served per flight attendant equivalent; and the beneficiary of a relatively costly benefit package.  It makes the negotiations between American and its flight attendants very complex and difficult to conclude - even for the most skilled negotiator and/or mediator.  American is asking for increased productivity for one simple reason:  whereas American’s salary per flight attendant is comparable to that received by flight attendants at Continental, if American achieved the same flight attendant productivity as Continental the carrier would require 1,254 fewer flight attendants.  And the carrier has offered to grow into the productivity over time rather than lay off even more flight attendants.

If I am an American flight attendant, I would carefully consider these facts.  Negotiations are now data driven – just like a Presidential Emergency Board (PEB) would be.  APFA likes to talk to the world about labor cost per available seat mile (CASM).  But that metric is fraught with potential error as the calculation is influenced by a wide number of items which are not in the control or purview of the flight attendant collective bargaining agreement.

In fact, as CASM is influenced by factors as varied as seat configurations, stage length, aircraft utilization and network design to name a few, even analysts and economists would be hard pressed to make the kind of bold analytical statements and sweeping conclusions that the APFA is making.  Pay and productivity are expressed in hourly rates and hours worked and that is why the MIT Airline Data Project examines pay and productivity against an hourly foundation.  The APFA refers to staffing as the culprit in American’s  high flight attendant unit cost.  The problem is that the 3-class fleet is a very small portion of the fleet.  Can 3-classes really be responsible for the highest flight attendant costs in the industry among the legacy carriers?  Warning to United:  the same argument is coming your way.

American does have a conundrum in that it is the first major case in front of the NMB and it has the highest costs among its peer group, particularly with its flight attendants who, as a group, are highly paid relative to their low productivity.  In a recent Dallas Morning News, I was quoted by author Terry Maxon suggesting that there will be an airline strike.  Inside of my comment was a challenge to management:  Is the airline ready to take a strike?  If American caves in its position, the industry suffers.   The American Airlines flight attendants suffer because American will have agreed to pay more than it can afford.  Even the best heeled US airline cannot afford what American’s employees are asking from their management. 

American’s unions constantly point to management compensation as unfair but, as is typical, they use only the parts that serve their purpose.  Conveniently, forgotten is the fact that there have been years in which management got well below their target pay (and well below their industry peers) because the system of pay linked to performance actually works.  Yes, management pay is higher than pay on the front lines.

That’s pretty much the way it works in every industry. That’s because the market for management labor is different than the market for flight attendant labor.  That’s a reality.  And in a market-based economy, no one is entitled to more for their labor than what the market will pay. The NMB got it right at this point.  Exposing the company to the destructive threat of a strike doesn’t serve anyone’s interest.

Yoda was right to focus on fear as a path to the dark side.   In this case, the dark side is not so much a strike but, rather, the fear, anger and hate churned up by union leaders that could lead to a disastrous outcome for the members they represent  

Reader Comments (3)

This "urge to merge" or "If you can't beat'em, buy'em" posture is interesting, particularly when one considers The McCaskill-Bond Seniority Intergration Amendment and the smaller (but well heeled) non-union carriers like JetBlue. JetBlue (B6) is a formibable presence at JFK (hence AA's alliance). The McCaskill Bill (as interpreted) wouldn't cover the employees (pilots) at B6. It appears to be easy pickings, for any legacy operation who wishes to improve their position in New York. AA (for example) could simply buy B6, send the employees packing and recall the 2000 AA pilots who are furloughed.

04.19.2010 | Unregistered CommenterDave

Hi Bill,

Married to an AA flight attendant, and I can reassure you that beyond Laura and the union press releases, cooler heads do prevail though still hot at times. However, you must understand that a lot of these laborers are not the desperate workers you and so many others in the industry paint in your columns. Many of these workers are married, have second carriers, or simply don't need this anymore. They DO remember the pay and benefits that attracted them to this industry in the first place. Yes, in terms of pure economic supply/demand theory, your arguments above make a lot of sense. But what industry's leaders have continually failed to understand is that with the exception of a pilot group, not all laborers are in desperate "take it or leave it" straights, or "married" to their company. Defined benefit packages are largely gone, passes now come with a price, and the 401k is a liberating financial tool.

My wife and her friends have historically enjoyed their jobs and their airline, but the reality of today is quite different that it was 20 years ago when she was first hired. If AA would offer an attractive buy-out scenario then they might have some success and weaning off of these "legacy" employees. But the reality is these girls have nothing to loose.

Finally, as long as the Southwest Airline's productivity is being flouted in their faces on a daily basis, I think they do have every right to question the same productivity and make the same comparison's of the company leadership. These are not newly installed, reformed minded execs. They are the same men responsible for having driven the situation to this point. This latest breakdown in talks is not about simply the last few years, it's about a failure in the industry that just isn't what this employee group signed up for years ago. And right or wrong, it is that expectation which separates the legacy employee from that of the upstarts.

04.27.2010 | Unregistered CommenterCharlieFoxtrot

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