Pilot pressure

The election of a militant head at the largest US pilots union signals a major shift in mood as labour moves to regain ground lost during the tough years following the 2001 terror attacks. It is a move that could have significant implications for airline boardrooms in the USA and further afield

In a crucial US election, the passions of disgruntled voters are stoked by high oil prices and economic fears, foreshadowing stormy times ahead. No, we are not talking about the early November US mid-term elections, when US citizens decide if they will keep President Bush's party in Congress, but about a little-noticed ballot last month that promises to make the next year a difficult one for North America's gradually recovering airlines.

Members of the wealthiest US labour organisation, the Air Line Pilots Association (ALPA), voted to oust incumbent Duane Woerth and replace him with hard-line militant John Prater, who won their votes by vowing payback. The election of Prater, and all that it could signify, is being scrutinised by unions well beyond US borders. Union leaders believe a healthier industry can afford to reward its employees better. As one comments: "We participated in the losses, now let us participate in the gains."

Prater, a Continental Airlines Boeing 767 pilot, becomes ALPA president in January, having won "after five years of concessionary bargaining, lost pensions, and battered work rules". In his victory statement, the 28-year union veteran said that pilots "sent a clear message that their union desires to return to its roots of aggressive bargaining, strict contract enforcement, tenacious organising, and pilot action to restore our contracts and our profession".

After his surprise defeat of Woerth, Prater declared: "The airline industry survived because of the concessions pilots and other workers made. Now it is time for us to see a tangible return on these bitter investments."

ALPA and Prater are not alone in their stance: the two other major US pilot groups are also flexing their muscles as their airlines lead the pack in profits. The independent Southwest Airlines' Pilots Association voted in a new president in October, having moved in summer to open talks toward a new contract with the discount king.

The largest independent union, the Allied Pilots Association at American Airlines, has been demanding catch-up wages since the summer too, three years after they made major concessions to keep alive the nation's largest airline. Elsewhere, ALPA members at US Airways have become increasingly strident in their demands to share in the newly merged carrier's robust earnings.

Union claims about sacrifice are more than rhetoric: pilots at Delta and United Airlines, where the richest contracts in history were signed before the 2001 terror attacks, are typically making about 25-35% less than they did under those deals. In the most extreme cases, some pilots suffered 70% pay cuts when they were demoted to first officer.

The bankruptcy filings of the various majors also hit pensions hard, with some retired pilots facing severe cuts in their pension income. Others, of course, lost their jobs altogether and it is estimated there are still 8,500 furloughed pilots in the USA.

Airline bosses will no doubt soon be receiving visits from ALPA's new team as they seek to establish a stronger negotiating platform. Unions in Europe, and further afield, already have strong industrial muscle simply because the market dynamics are different. Pilots are in short supply as low-cost, Middle Eastern, Indian and legacy carriers add capacity across the board.

This causes natural wage inflation. One union official talks of an eastern European airline chief who had to pay his pilots 500% more or else lose them. Meanwhile, union bosses say they are worried that the pressure of recruiting and training sufficient pilots raises genuine concerns about the lowering of licensing and professional standards.

Such worries are pressing in today's relatively buoyant market. Airlines understand them too, but warn that the market recovery is still nascent and potentially fragile. Industry profitability, which is fledgling in the USA but more generally sustained in Asia and Europe, remains far from satisfactory.

Against this background, the affordability of a new round of upward pilot wage demands is far from assured. This pressure already exists in many regions and is coming soon to the USA. Buckle up for a turbulent labour ride over the coming year.

Airline success is encouraging pilots to ask for more

Source: Airline Business