Airline managements at the IATA annual meeting seemed ready to challenge pilot work rules, but few now seem prepared to take up the cause
Cheered on by many airline presidents IATA's director general Giovanni Bisignani seemed ready to break a taboo and again question ingrained pilot work rules. Speaking in June at the annual general meeting (AGM), he not only warned that pilots must help the industry in its struggle to survive, but went much further in pointing to the inflexibility of the seniority system.
"They must not hide behind old work rules, such as seniority lists, which are out of touch with today's competitive world. This industry needs to reward performance, not age or seniority," he said, raising a round of applause from the floor with his final comment. The IATA board, composed of chief executives from the world's leading carriers, had earlier given Bisignani rein to speak out.
Leo Mullin, chief executive at Delta Air Lines and chair for the AGM, agrees that it was time to post labour issues high on the agenda. "It really positions labour as part of the problem," he commented at the meeting, adding that there was a need for a collective approach.
Others too supported the call. Dr Cheong Choon Cheong of Singapore Airlines (SIA) and Jürgen Weber of Lufthansa, attending their last IATA AGM as chief executives of their respective airlines, issued parting shots on the need to tackle labour flexibility. While there have been tough lessons for all, Dr Cheong said that "some people, like pilots, are learning more slowly than others".
But, while most managements no doubt still agree with such sentiments, few if any airline chiefs have since been prepared to back the challenge in public. Indeed, one major European airline's chief executive returning from the Washington meeting, declined to comment on the pilots' issue, joking that he wanted to be able to board his flight home. And while continuing a vocal assault on other areas such as fees and charging, IATA itself has also stayed notably quiet on the labour issue. So is the subject still alive?
Given the industry's dire finances, there have been clear signs of a new willingness among some pilot groups to contemplate change. US pilots, especially when faced with management negotiating from within bankruptcy protection, have made large concessions, both in wages and work rules. The pilot deals struck at United Airlines and US Airways have in their own way become benchmarks for carriers which are outside the Chapter 11 bankruptcy process.
Delta, for example, has asked its pilots for significant pay cuts that reflect the concessions made at the restructuring airlines, although talks are currently at an impasse.
In Singapore, SIA demanded pay cuts of up to 22.5% and mandatory unpaid leave in response to the heavy losses stemming from SARS. After arbitration, pilots agreed in July on a package to run until March 2004, with the airline saying it would restore some or all of the cuts, depending on its performance this year.
During the dispute the airline's normally tight-lipped management did complain over the unco-operative attitude among pilots, but even Dr Cheong diplomatically turned down the opportunity to push the point further.
At Lufthansa, Weber's successor Wolfgang Mayrhuber argues that the airline has already achieved pretty good flexibility in its latest pilot contract struck at the end of 2001. "When you have the flexibility you don't need to hire and fire. You have the team on board," he says, dismissing the need for deeper reform of pilot work rules.
For their part, while pilot unions largely accept the need to renegotiate terms and conditions in the current economic climate, there have been angry reactions to Bisignani's implied call for a move to performance-based pay.
Seniority shortcomings
Pilots recognise that there are drawbacks to the seniority system - where a pilot's standing is strictly based on time spent with a carrier. "Seniority is a bit like democracy - it's not a perfect system, but nobody has found anything better," says Rick Brennan, professional affairs consultant for the International Federation of Air Line Pilots (IFALPA).
And this is not the first time the issue has been discussed. Mervyn Granshaw, chairman of the British Air Line Pilots Association, remembers carriers airing similar views during the downturn of the late 1980s and early 1990s, when they made little headway.
The concept of a performance-based system also gets short shrift elsewhere. "Seniority is part of the safety culture," says Georg Fongern, board member of the Vereinigung Cockpit union that represents most Lufthansa pilots, as well as acting as principal vice-president professional affairs for IFALPA.
"It is very difficult to compare the performance of pilots - how could you compete: by flying faster, being better on schedule, using less fuel?" he adds. For Fongern, a step towards a merit-based system, especially on the fuel, time and speed issues, very quickly turns into a safety issue. "Therefore, you need a system where nobody can overtake anybody else by being more efficient in flying," he says. According to Brennan: "You cannot have poor pilots and good pilots - everybody has to be good."
US labour agrees. Continental Airlines Air Line Pilots Association officer Michael Hynes says that seniority is "the basis of what we do", and that the concept of meritocracy would offend pilots, since it implies different levels of ability.
He can see how the European situation is different if a carrier sets up units across national borders, and says some US carriers have grappled with the issue by creating internal subsidiaries.
In the cockpit environment, seniority offers a transparent promotion system, says Granshaw. According to Don Johnson, president of the Air Canada Pilots Association (ACPA): "A seniority list is the only way a pilot can equitably expect to advance his career."
Adds Granshaw: "It is very difficult to work out a transparent form of meritocracy." If pilot career advancement were not transparent, it could introduce tensions onto the flightdeck, he says. "I take the view that our operating environment has to be as free from stress as possible."
The unions point out that carriers get some benefits as well as penalties from the seniority system. For example, it ties pilots to a particular carrier. Once a pilot has been at an airline for five years there is a compelling argument against leaving, says Granshaw. If they move to another carrier, they would join at the bottom of the list.
Drawback
A drawback, however is that, if a carrier wants to furlough pilots, they do so from the bottom of the seniority list, regardless of where the pilots are based, where they are needed or how much they cost. That represents a major constraint in trimming costs.
Another problem arises when airlines merge and seniority lists must be merged too. Such difficulties were encountered between competing pilot groups after the merger of Air Canada and Canadian Airlines, and again in Switzerland over seniority and pay between former Swissair and Crossair pilots brought together within the new Swiss.
While the Swiss case is in the courts, in Canada the dispute has been settled by the Canadian Industrial Relations Board. "Neither side was happy with the arbitration process," says ACPA's Johnson. "If we were to do it again, we would try harder to solve it ourselves."
While merging lists can be time consuming it is "not that complicated", says Granshaw. "The problem is that it becomes emotional." Strong feelings on seniority integration have hobbled US mergers and led to industrial action, such as an American Airlines pilot "sick-out" in 1999 over the purchase of Reno Air.
So it seems that, for now, the enthusiasm for a new debate on seniority is lacking. Doug Steenland, president of Northwest Airlines, says seniority is "the holy grail of airline labour", and is deeply sceptical of any major changes. Similarly, airline management says that "any serious attempts to change seniority would shut down the airline".
For Fongern, the issue comes back to the negotiating balance between the two sides. "You have a management market today, but when profits return it will be a pilots' market. We want to calm the whole process. We don't want these extreme amplitudes in conduct."
MARK PILLING IN LONDON AND DAVID FIELD IN WASHINGTON
Source: Airline Business
