Airline Industry in Tailspin

Contributed by a labor activist with experience in airline industry

A wave of layoffs and concessions is sweeping the airline industry. Starting with U.S. Airways last fall, airline management began using the bankruptcy courts to blackmail unions into agreeing to massive wage cuts and sweeping work rule changes. The end result of this process, if it is not halted, will be a transfer of billions of dollars from airline workers to the owners of the industry.

The airline industry is one of the most heavily unionized industries in the U.S. Pilots at all of the major carriers and the vast majority of the smaller carriers are organized. Flight attendants are organized at all the major airlines, except at Delta and most of the regional and smaller national airlines. In contrast, the rate of unionization for all private sector workers is just over 8%.

Just a few years ago, airline unions were on the move, fighting to gain ground lost in the 1990’s. Pilots and mechanics were finally racking up wage increases in the double-digit range. Then, a combination of the prolonged recession - when business travel drops and people have less money for vacations - and the downturn in passenger flying following the airplane hijackings in September 2001 shook the industry. According to the Association of Flight Attendants, “the real problem is that $20 billion less in revenue is coming into the United States airline industry today than in 2000.”

The Drive for Concessions

The airlines are taking advantage of this crisis in the industry to try to beat down the unions, which rank among the most powerful unions in the country. The companies have been chomping at the bit to do this for years, frequently proposing legislation to take away the right to strike for airline workers.

Pilots at major airlines such as United Airlines and U.S. Airways have already agreed to pay cuts of 30% or more. Flight attendants, mechanics and other airline workers have taken large concessions at U.S. Airways and United. Other airlines have jumped on the bandwagon as well. Management at Northwest Airlines, American Airlines, Midwest Express and many other airlines are lining up at the trough and demanding concessions from workers.

The unions are faced with bosses who say, “Agree with these concessions or we will go into bankruptcy court and ask that the union contract be thrown out.” And, for the most part, the unions have been going along with the demands. The airline management is acting like management everywhere - the more workers give them, the more that they want. Without a strategy to halt the givebacks, there appears to be no end in sight.

At U.S. Airways, the pilots’ unions had granted management $646 million in concessions per year before the company filed for bankruptcy. Even those massive concessions where not enough for management. As soon as they had them in their pocket, they headed to bankruptcy court to seek to terminate the pilots’ pension plan. That would mean cuts of up to fifty percent in pension benefits that the pilots had already earned.

At United Airlines, the union heads sold concessions to workers by saying it was better to negotiate the cuts than have the bankruptcy court make the cuts. Flight attendants at United agreed to 9% pay cuts before United went into bankruptcy. Now that they are in bankruptcy, United management keeps turning the screws on the workers. They are seeking more concessions and are seeking to spin off 30% of the domestic flying to a low-wage subsidiary. The end result of these concessions is another massive transfer of wealth.

Roots of the Problem

One root of the problem is a system of labor bargaining that ties workers’ fates to the fate of an individual company and the unions’ failure to prevent the development of a two-tier wage system in the industry.

As with other industries in the United States, unions are forced to bargain with an individual company, rather than by industry. That bargaining system ties the workers’ fate to the success or failure of an individual company. It also prevents a class-wide solution to a problem and allows the companies to pick off workers one by one. So, even in relatively democratic unions such as the pilots and flight attendants, workers will vote for concessions rather than see the company go under. If the company goes under and a pilot or flight attendant has to start at a new carrier, they go to the bottom of the seniority list and pay scale. This puts tremendous pressure on even strong unions to agree to concessions.

A related problem has been the development of a two-tier wage system in the industry. In other industries, such as trucking, unionized companies spun off non-union subsidiaries in a process known as double breasting. Then they paid the non-union drivers far less and spun more and more of the work to them.

The airline industry has seen a similar development. Thus, the unionized American Airlines created American Eagle, where flight crews receive lower wages and have looser work rules, even though they are unionized as well. There has also been the development of lower wage regional and national airlines. These are both union, such as Southwest and ATA, and non-union such as Jet Blue. These lower wage competitors are helping to drive the majors into bankruptcy.

Rather than fight against the development of a two-tier wage system, union heads went along with it, negotiating lower wages at the smaller airlines. Beginning in the 1980’s, pilot unions began tying in the wages of pilots to the size of the aircraft. With bigger and bigger planes, that meant pilot wages for the biggest equipment at the major could go well over $200,000 per year, plus multiple pension plans. At the same time, pilots and flight attendants at the regional airlines could be making $15,000 per year. With such a disparity of labor costs, the high wage airlines over the long run were bound to run into trouble.

Short-term Fight-back and Long-term Strategy Needed

Faced with an employer onslaught towards concessions, an anti-concessions movement is desperately needed in the airline industry. Such a movement would argue against all concessions and advocate class-wide approaches to the attacks. While workers and unions at certain airlines may still agree to concessions, the companies would only get them after a fight. And at many airlines where management is jumping on the concession bandwagon, the take backs can be defeated.

In the longer term, the airline unions, as well as unions in every sector, must develop a strategy to break out of the rigid rules bargaining courts and politicians have straightjacketed unions with. Otherwise, weak unions, fighting company by company, will continue to face permanent replacements, threats of bankruptcy and relocations, and the resulting weak contracts. To do so will take intense class struggle and engaging in activities ruled illegal by the courts, with a goal of establishing solid industry-wide agreements. The current state of class conciousness in the industry and among the leadership of the unions is such that this approach will not be adopted in the short run. However, once a broad section of the advanced workers and progressive staff in the industry are won over to the necessity of a strategy, the battle will be half won.