The Future of Commercial Aviation - Commentary - January 8, 2010

The Next Wave of Deregulation – Part Three The Unfinished Revolution – October 23, 2009
October 23, 2009
The Future of Commercial Aviation – Part One – January 15, 2010
January 15, 2010
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The Future of Commercial Aviation – Commentary – January 8, 2010

It is a new year, and this month I will begin a new series on where I think commercial aviation is going;. However, I want to highlight a specific area this week that needs attention by all who work in the industry, and everyone who flies as a passenger. As always, I would like all aviators to connect with their roots and one of the ways they can do that is by using the “Third Dimension Blog” as a resource.

Quote of the Week

The fundamental problem is government people—pointy-headed bureaucrats—telling people what to do. There is an environment in this city, Washington DC, of people unwilling to admit their mistakes and move ahead. The attitude toward rule-making has been so curtailed that common sense recommendations now take years and years. —James Hall NTSB, 1996.

Who Offers The First Line of Defense In A Commercial Airliner?

It has to be the aircrew up front right? Not exactly. The Flight Attendants have been charged with that responsibility along with serving drinks, serving food, dealing with unruly passengers who think they own the airplane, and last, but not least, they have to help get half of the carry-on bags in to the overhead.  There is a lot more they are responsible for, but what I want you to consider is how badly they are abused by management when considering their responsibilities. I would elaborate further but I recently received a great blog post from www.independentlight.blogspot.com, and this particular article was written by Carl Finamore who was a former President, Air Transport Employees, of the AFL-CIO Local Lodge 1781. The article should be read by anyone who has an interest in the future of commercial aviation.

Friday, January 8, 2010

They Are Pissed! United Airline Flight Attendants
As well they should be.

Does anyone know how much the corporate officers are making?
By Carl Finamore

Pioneering women at United Airlines (UAL) organized the world’s first Flight Attendant (FA) union in 1945. The carrier quickly recognized them as the official bargaining representative when the CEO said “they need a union.” Today, these same workers stand last as the lowest paid among all the major airlines and are hardly getting any notice from management. Negotiations have stalled.

We are working at 1994-wage levels after suffering wage cuts, staff reductions, and rising health care costs,” Chris Black told several hundred flight attendants and other union supporters picketing on January 8 at UAL departure gates at San Francisco International Airport (SFO).

Black is SFO Council 11 President, Association of Flight Attendants (AFA-CWA), and it was her national AFL-CIO union that organized protests on the same day their contract became amendable. A preliminary count by the AFA is that over 1,800 participated at airports all over the world.

Contracts negotiated under the Railway Labor Act do not actually expire but rather become “amendable” with terms remaining “status quo” throughout negotiations overseen by the National Mediation Board. So, while the system does retain contract protections during negotiations, extremely long delays lasting several years have become commonplace.

In ordinary times, this means workers fall further and further behind rising living expenses as talks drag on. But the 2002-2006 bankruptcy of UAL forced even more extremely onerous concessions that substantially compounded the normal burden of delayed negotiations.

“We were promised the cuts would remain in place for a certain amount of time, but we continue to live under these concessions while executives have rewarded themselves with millions of dollars in bonuses.”As one example, UAL CEO Glenn Tilton’s bonus upon exiting bankruptcy was by itself sufficient to provide a 10% bonus for all 15,000 FAs then on the payroll.Race to the Bottom has Hit Rock Bottom.

Attempting to achieve early settlements, each of the six unions currently in talks with UAL now have contract clauses providing for the commencement of negotiations several months before the amendable dates.

The AFA, for example, has been bargaining with UAL since April 6, 2009. But to no avail. According to an AFA press statement, “members are angry that management has not discussed the improvements envisioned, seeming only interested in delaying….”

United, now dropped from first to the world’s third-largest airline, claims that a weakened economy, rising fuel costs, and fluctuations in demand has enormously reduced profits. We heard this argument during bankruptcy when prominent union financial analyst Dan Akins estimates airline workers suffered reductions in wages and benefits totaling $11 billion.

This could actually be a low figure. A Government Accountability Office report estimated a “loss of $3.2 billion to [UAL] participants” alone just from the pension default.

In any case, everyone realizes the airline industry has always been characterized by intense competition, high fixed costs such as fuel, cyclical demand, and vulnerability to intermittent economic lows. We also know from experience that whether in good times or in bad times, carriers have continuously sought concessions.

But with the enormously rising fuel costs since the Gulf War, United embarked on an even more dramatic and sustained burn and slash program of service, route and fleet reductions combined with unprecedented employee layoffs.

For example, the Company reports that its workforce fell from 100,000 in December 2000 to 46,000 in December 2009 with FA numbers at 23,000 and 13,000 in that same period.

However, cutting back is an extremely controversial and unproven method of returning airlines to profitability.

Union leaders explain that reducing passenger capacity is not the answer. It is passengers that pay the bills and it has been shown historically that eliminating routes and laying off employees in fact lowers passenger-generated earnings more rapidly than reducing stable fixed costs.

Reducing the operation is a discredited shortcut that utterly fails to increase revenue and therein lays the problem.

“Cutting its fleet of airplanes does not address the larger cost problems that continue to beleaguer this airline,” said then UAL Air Line Pilots Association (ALPA) chairman Captain Steve Wallach back in 2007. “Instead of doling out hundreds of millions of dollars to shareholders and pocketing millions of dollars in bonuses and salary increases, perhaps management should reinvest that money into our operation.”

His comments are still relevant today. They are echoed by the current UAL ALPA chair, Capt. Wendy Morse, who commented on the day of the AFA picketing that “United’s tactics to shrink to profitability has proved disastrous.”

Simply put, when airlines cut back, earnings generally fall more rapidly than costs.

With United management flying in the wrong direction, it is likely to be a tough round of negotiations for flight attendants. But there is some relief in sight. Airlines have made millions from their numerous increased fees. Fuel costs have also stabilized at around $80 a barrel from the high of well over $100. Even Wall St. analysts are cautiously optimistic.

“To sum up,” writes airline analyst Michael Derchin in the November 30, 2009 Yahoo Finance report, “we are looking for 2010 to be a modestly profitable year for the industry [even if fuel goes to $90 a barrel], setting a stage for a nicely profitable year in 2011 and beyond, assuming the global economy continues to recover.”

In fact, there are already signs of deep-pocket business travelers returning to the soft, cushy, leather recliners in the front.

These trends should provide some bargaining leverage for FAs and other UAL employees who want to recover from their losses of recent years. But, of course, it is the collective solidarity of all the six unions currently bargaining that will be the most important factor influencing management.The AFA set a good example by beginning to mobilize members and to reach out to other unions. This is a winning combination. As one Machinist union Local President commented to me wishfully, “we may be negotiating separately but we should be fighting together.”

BUZZFLASH GUEST COMMENTARY

Carl Finamore was a UAL baggage handler at SFO and former President (ret), Air Transport Employees, Local Lodge 1781, AFL-CIO. He can be reached at local1781@yahoo.com.

Next week we will move forward with our series for the month but remember to thank the Flight Attendants on your next flight. They do a lot, they put up with a lot, and they are not getting paid what they should be paid considering that they are the first line of defense when things start going wrong in the back of the bus. As always, take some time to look back, connect with your past and remember as an aviator you are a “Gatekeeper of the Third Dimension.”

Robert Novell

January 8, 2010