The US Airline Industry’ Labour Relations

Abstract

Labor unions play a critical role in the US airline industry given that relatively all the workers are either unionized or covered by collective bargaining agreements. The American Airlines Allied Pilots Association (ALPA) has recently rejected a concessionary contract offered by the management. The association rejected a pay rise of up to 13.5 per cent. There has been an insignificant consideration of the America’s economic reality by the ALPA. Previously, the group’s president was forced to resign owing to his quick acceptance of a deal that majority of the union pilots had opposed.

The labor cost of the airlines represents a considerable high wage bill owing to the large workforce. The airline industry offers high wages that attract highly trained staff. This paper is, therefore, researched on the basis of the future position of the ALPA as a union and whether there is any risk in the American airlines owing to the union’s demands. The paper will also delve into the effects of such controversies on the employees and whether there is need to make changes to the labor laws in the United States.

Introduction

The airline workers, compared to other workers in different industries, represent the highest paid unionized workers. Airline workers are able to bargain strongly for the high pays, in addition to the fact that they are favored by the factors of demand and supply. The Labor Management Relations Act was enacted to create an environment that promoted fair labor practices. Later on, the Act was amended to help curb the unequal advantage that unions enjoyed because the Act permitted duties to be levied on unions (DeMaura, 2012).

The airline bargaining power is strong because of strike ultimatums, which can cut down all flight operations. They can also lead to wages being determined on the future economic conditions because of long term contracts. Given the anticipation, the contracts cannot be renegotiated if the aspirations of the economic base are not attained (Chen, Kacperczyk & Ortiz, 2011). The adverse conditions that have recently faced the US airline industry are partly caused by the increasing marketing shares of low cost carriers and increasing fuel prices (Hirsch & Macpherson 2003). The US Airways has twice entered bankruptcy protection and later avoided it after receiving concessions from the union

Labor relations in the airline industry

The main changes imposed by the Act were meant to prohibit secondary boycott and allow the union to exist under specified conditions in the Act. The Act also required the National Labor Relations Board to accord equal consideration to independent and affiliated unions. It also permitted the employer to file a representation petition, even in situations where one union seeks to represent the employees. The employees were also allowed to file a dissatisfaction petition in the determination of whether they want to keep their bargaining agent. The Act provided that the federal district courts could hear cases regarding collective bargaining and award damages for any aggrieved parties, including private parties.

Similarly, the Labor Management Reporting and Disclosure Act, 1959 has provided a mandatory disclosure of the financial transactions and administrative roles of labor organizations and employers, as well as the protection of the funds and assets within the union (Hirsch, 2006). The Act also guarantees certain rights to all the members of the union, which are to be enforced and administered by the office of the Labor Management Standards.

The American airlines union is negotiating an agreement, lest workers go on strike amidst these multiple labor regulation laws. A second hearing of the airlines’ request for carriers’ collective bargaining agreement with the pilots is scheduled for September 4th. Airlines in the US market enjoy the advantage of maintaining the financial strength, making labor relations contentious (Verma, 2005).

Ideally, the organizational campaign, unions, and employers are meant to attempt to surmount challenges of communication with workers and to protect unions’ adherents in the workplace. However, in disagreement, striking in itself is a protected activity. There must be authorization to strike as conducting strikes improperly or contrary to the law would inhibit the bargaining process. Strikes, in the meaning of unions’ policy, have been defined as authorized or ratified. Consequently, they are protected by the NLRA. Section 13 of the NLRA specifies that nothing within the law of that Act is meant to interfere with the right to strike. There are also prohibitions of the strikes during emergencies that affect the nation’s safety and health.

The employer may use his own economic weaponry and protect his bargaining position, especially in the case of the airline union mobilizing its members. In the American Ship Building company vs. NLRB, the Supreme Court indicated that the employers may lock out the demands of the workers under certain circumstances (Devinatz, 2013), mainly with the aim of protecting the collective bargaining position. This may also be used by the union as long as it is not used in a manner that intends to destroy the process. The test in the circumstances here is whether the union in the collective bargaining process continues to function, despite the employer’s lockout.

Airline labor strikes have exerted adverse impact on the economy given that airline labor contracts do not really expire, but reach an amendable date. The collective bargaining process between the airlines and the union involves a process of about five stages. In the first place, there has to be a negotiation process where the airline and the union exchange proposals to modify the existing contract.

This also marks direct negotiations that may involve other parties. If parties cannot settle the contract, then there is mediation from the National Mediation Board. The mediation may be invoked without the parties’ consent. If mediation fails, then arbitration will take effect where both the union and the airline must agree to arbitrate and the arbitration board convenes a meeting. If the parties fail to agree in all these stages, then there is an allowance of 30 days to allow the parties to rethink. After this period, the union may strike or take actions it considers fit and lawful.

The airline industry can boast of reduced strikes over the years. For instance, most of the major strikes were experienced before the 1990s. It may also be said that the labor regulations have shaped the industry, thus there are less causes to strike. When workers in the airline industry go on strike, several economic hiccups are experienced in the country (Federal Mediation and Conciliation Service, 2012). The airline industry grapples with numerous effects of strikes, including missed opportunities making earnings due to reduced number of travelers and low spending levels among the few travelers who use their services. Sometimes the strikes cause other workers to be laid off, while airports suffer from a reduction in landing fees.

Conclusion

The airline industry, precisely the workers, has uncertain labor relations. It may prove difficult to implement and sustain the labor-cost structure that was formulated to address wages for contractual workers. This may lead to more problems between the labor unions and the employers, making the labor relations sour. However, hostile labor relations in the environment may not have a positive effect on the substantial effort to resolve labor disputes.

Reduced profitability to the extent of incurring losses is experienced by carriers when they abide by the demands of the labor unions. How the two parties play out is the critical determinant of the overall US airline industry. The labor relations must also be tuned up to the standard that is required to cure such employee-employer relations. Labor laws require a corresponding adjustment to ensure that airline disputes have a clear and consistent legal development on resolutions.

Changes in the labor laws must be implemented to ensure that the negative economic impact is reduced and eventually avoided. It has been observed that union strike effects are substantively negative, especially when there is a lack of managerial conduct in the unions themselves. To facilitate productive collective bargaining, the labor law must also address the issues in the unions and their mode of operations. The current labor conditions in the airline industry can, therefore, be resolved through amicable practice within and between the parties, as well as through considerable amendments to labor laws regulating this industry.

References

Chen, H. J., Kacperczyk, M., & Ortiz-Molina, H. (2011). Labor unions, operating flexibility, and the cost of equity. Journal of Financial and Quantitative Analysis, 46(1) 21-58

DeMaura, S. (2012). Not just public unions: private sector unions hurting business. Web.

Devinatz, V. G. (2013). The crisis of US trade unionism and what needs to be done. Labor Law Journal, 64(1), 5-19.

Federal Mediation and Conciliation Service (2012). What is grievance mediation? Web.

Hirsch, B. T. (2006). Wage determination in the U.S. Airline industry: Union power under product market constraints. IZA Discussion Paper No. 2384

Hirsch, B. T., & Macpherson, D. A. (2003). Union membership and coverage database from the current population survey: Note. Industrial and Labor Relations Review, 56(2), 349-354

Verma, A. (2005). What do unions do to the workplace? Union impact on management and HRM. Web.