Cornell University

September 24 2012

Will It Fly?

Margolies clarifies pilot-airline dispute


As high-flying travelers worry about the pilot-management struggle at American Airlines disrupting their flights, Ken Margolies of the Worker Institute explains the dispute's genesis.

First, the scenario:

According to Reuters, the pilots' union at American Airlines says it has called no job action at the bankrupt carrier, which this week canceled hundreds of flights citing increased pilot maintenance reports and sick leave usage.

American began cost cuts for pilots this month after a U.S. bankruptcy judge ruled the airline could abandon its collective bargaining agreement with the union, the news service reported.

The airline said it canceled 300 of this week's nearly 24,000 flights. Its reasons included "an increase in maintenance reports filed by pilots, as well as levels of sick leave usage that have been running higher than historical norms."

The union announced Thursday "There is no job action of any sort that is organized, supported or sanctioned by the Allied Pilots Association."

Margolies says the labor discussions at American Airlines must be viewed in the context of airline industry deregulation.

"Before deregulation, the industry was very stable, the workforce was one of the most unionized in the country and labor relations were generally peaceful," he said.

"Deregulation changed the economics of the airline industry eventually leading to companies demanding and getting large concessions from the unions representing their generally and/or relatively well-paid workforce."

"At American Airlines, unions were enraged by management giving themselves bonuses and salary increases following years of compensation cuts for everyone else. In negotiations, unions sought to recover some of the concessions in pay and work rules they agreed to in past negotiations," said Margolies. He is a senior associate, based in New York City, at the Worker Institute. The institute is part of the ILR School.

"The pilots took the most militant position demanding, 'Restore and more,' meaning they wanted all the pay cuts and other compensation concessions restored, plus they wanted raises. This would mean very large increases in compensation."

Labor relations then and now are covered by the Railway Labor Act, which is designed to prevent strikes. Negotiations under the act traditionally take many years – and during that time American Airlines filed for bankruptcy and also began talks with USAir about a merger.

Mergers in the airline industry are particularly complicated because of the need to merge seniority lists for pilots. Seniority is used for choice of scheduling, routes and aircraft. A change in seniority can greatly impact pilot compensation. Efforts to merge pilot seniority lists in other airlines, especially at USAir, have been notoriously difficult and acrimonious.

"Pilots are the only union on the American Airlines property that has not reached a labor agreement with management. As a result, American Airlines management has used what it believes is its right under their bankruptcy protection – to move to impose changes to the pilots’ contract," he said.