A complex issue has its roots in preventing erosion of pilot contracts
By ALPA Staff
Air Line Pilot, March 2003, p.12
Editor’s Note: ALPA’s Bilateral Scope Impact Committee reported to the 2002 Board of Directors that a general lack of understanding exists among ALPA members about airline scope provisions and recommended additional education initiatives on the subject. This article was compiled from thorough discussions with professional experts and ALPA advisors to address the Committee’s recommendations.
Anyone who doubts that ALPA’s collective bargaining has changed dramatically over seven decades has only to look through its "blueprints"—the pilot contracts that have grown in strength and complexity in response to the times.
Most ALPA members are familiar with their own contract’s provisions, but a lack of understanding remains concerning the content of many ALPA-contract scope provisions and the principles underlying them.
Recognizing this problem, ALPA’s Board of Directors in 2002 called for a communications program "on the critical importance of scope protection" for all ALPA pilot groups.
The communications should include a general discussion about airline scope clauses, how they have developed, what they are designed to protect, and a look ahead at the development of "next generation" scope.
What are scope clauses?
Although used frequently as short-hand, the words "scope" or "scope clause" typically refer to a variety of related contract paragraphs generally found in Section 1 of pilot agreements. Section 1 often includes provisions on the scope of the work covered by the contract; the application of the contract to a new owner or successor; how the contract will apply when assets (aircraft) are transferred to another entity; the way the contract works in a merger situation, during furloughs, and in code-sharing arrangements; and an expedited enforcement mechanism.
Why are scope clauses important?
ALPA’s president, Capt. Duane Woerth, has told members on many occasions that "every pilot group needs a scope clause" as a means of protecting the standards established in their particular contract and the standards of the profession in general.
The Bilateral Scope Impact Committee, the most recent group to undertake a study of the issue, expressed the same belief in its report to the 2002 Board of Directors. The Committee’s reasoning was straightforward: "The U.S. airline industry will always have a finite number of pilot jobs. Management would like to see as many of those jobs as possible be subject to low pay, few benefits, and loose work rules. ALPA would like to see its members enjoy high pay, good benefits, and fair, well-defined work rules.…
"If adequate scope protection is absent," the BSIC report said, " it gives management the discretion
"(1) to use whatever pilot group, union or nonunion, it chooses, even when this involves displacing incumbent groups by subcontracting [jobs], forming alter-ego companies, or [using] other tactics and
"(2) [to use] whatever size aircraft it wants at whatever carrier in an effort to whipsaw one pilot group against another, resulting in a loss of highly desirable jobs on similar or larger equipment being flown under good contracts by pilot groups [that] traditionally have done that flying."
Association members do not have to look too far to find recent examples of a "whipsaw environment" that pits one pilot group against another to create a downward spiral in pilot contract standards:
• Comair pilots reacted strongly to their replacement in the Orlando hub with pilots from Chautauqua Airlines.
• The Association has vigorously challenged Mesa Air Group’s attempts to operate nonunion Freedom Air and move jet flying from its ALPA-represented subsidiaries.
• ALPA faces a challenge from Mesaba’s purchase of Big Sky Airlines, which operates with lower-paid, non-ALPA flight crews.
How is the profession protected?
Just as with contract terms in general, a common thread runs through scope-related provisions: All scope-related provisions seek to protect gains in wages, work rules, and fringe benefits for which pilots have fought hard, to protect them by preventing management from moving the work to avoid those improvements.
In the most basic sense, "scope" means the protection of bargaining unit work, specific contract wages, benefits, work rules, and favorable contract standards or patterns.
Unions try to raise contract standards for represented employees at any given company as high as possible and to achieve consistency of contracts among represented employees across companies. In other words, unions seek to negotiate good pay and work rules and to remove wages from competition by bargaining for contract "patterns" that are similar.
On the other hand, management tries to lower wage and benefit standards to make its product cheaper —either by driving its own employee costs down or by moving work to a lower-cost entity.
Because airline managements compete with each other (unlike employees), management typically tries to avoid consistency of wages, except to match the lowest industry cost.
Are these clauses used elsewhere?
Provisions that protect contract standards by preventing management from moving the work someplace cheaper are widespread. Union contracts in the auto industry, other manufacturing sectors, and trucking, and those for professionals in broadcasting and journalism, often include them.
In the construction industry, for example, "scope of work" provisions have historically protected carpenters, masons, painters, and other trades from encroachment by nonunion, cheaper competition and prevented outsourcing to avoid strong union contracts.
"Double-breasting," a term used in the construction industry, refers to the practice of a unionized company establishing a nonunion subsidiary.
Broadcasters have tried to avoid using their own high-wage employees, who have strong collective bargaining agreements, either by contracting with other entities to provide traffic reports and other information services, or by creating or buying those entities.
Commercial agreements seek to protect the value of what they determine to be "their work" in similar ways. McDonald’s franchisees, for example, will bargain vigorously to carefully define their franchise territory and to protect it because they understand that their franchise agreement with McDonald’s is less valuable if someone holding another McDonald’s franchise can enter the same market territory.
When did these issues arise in the airline industry?
Flying the Line II, the second installment of ALPA’s history by Prof. George Hopkins, chronicles the end of the "golden age of aviation" and the massive changes following deregulation of the U.S. airline industry in 1978. Controls were lifted on airline ticket pricing, and restrictions were eased on how carriers could operate and where they could fly.
So, airlines really started competing with one another during the 1980s, and managements became more creative in trying to lower labor costs through out-sourcing mechanisms.
During this early post-deregulation period, airlines began to structure holding companies and to try to set up "alter ego" operations—entities owned and operated by the same parent corporation or holding company, but staffed by different, nonunion employees without benefit of a contract.
The poster child for labor abuses during this era, many ALPA pilots remember, was Frank Lorenzo, who set up New York Air as a nonunion subsidiary of his Texas Air Corporation to divert flying from unionized Texas International. ALPA fought vigorously to resist these efforts and Lorenzo’s later attacks on pilot contracts at Continental and Eastern. But a new and sometimes ruthless game plan was clearly at work in the airline industry, with companies seeking to gain competitive advantage by a variety of means.
How did ALPA respond?
One of the several ways ALPA responded to the threats posed by the removal of regulatory barriers and the start of greater competition was to develop and try to negotiate new and improved scope clauses that would prevent the shifting of work away from existing bargaining units covered by strong collective bargaining agreements. Many of the scope clauses before deregulation were a single paragraph. When an airline did all its own flying, pilots had little need for contracts that had more than general prohibitions on subcontracting or wet leasing.
As relationships among carriers became more sophisticated, so did scope language. Added clauses dealing with the transfer of assets and mergers are an example of this development, as are agreements to bind the parent or holding company.
Realizing that contractual work protections would not suffice to maintain and raise contract standards if nonunion airlines, without union standards, were competing, the Association embarked on a long-term comprehensive plan to raise contract standards more generally by organizing new airlines.
The initial step was the 1982 merger into ALPA of the Union of Professional Airmen (UPA), formerly an affiliate of the Association.
The move brought into ALPA the pilots of eight airlines of what were then termed "commuter" carriers, including Air Wisconsin, Altair, Pocono, Ross, and Suburban.
A concerted effort to organize the pilots of other small carriers was also launched. In 1992, the Association named an assistant director of representation, John Bradley, to oversee representation matters for the then "regional" carrier groups and to spearhead a renewed organizing drive for the Association, aimed at what were then considered "feeder" carriers. More than 50 pilot groups were organized during the 1987–99 period.
B-scales and ALPA’s response
At the same time during the 1980s and early 1990s, managements tried to expand their networks and lower costs through the use of "B-scales," which were pay scales that paid new pilots at lower rates than pilots already on the payroll. The first round of these initiatives, at American for example, led to permanent B-scales. By the late 1990s and early 2000s, ALPA’s persistent and coordinated bargaining had resulted in the elimination of permanent B-scales and the merger of B-scale rates with A-scale rates. Managements, cut off in this effort to lower costs through B-scales, again pursued other options.
Growth of code-shares
Looking for new means of enhancing revenue and expanding the presence of their airlines under deregulation, airline managements turned to code-sharing relationships, leading to today’s domestic and international airline networks.
After surviving legal challenges and aided both by the growing globalization of business and advances in small-jetliner technology, these code-sharing relationships began to grow, flourish, and mutate into many different forms, ranging from contractual arrangements to partial or full ownership of the code-share partner.
These changes produced another round of challenges for ALPA. While the growth of international and domestic code-sharing presented growth and revenue opportunities for affiliated carriers, the potential to disrupt historically positive pilot wage and benefit patterns was also huge.
A systematic approach
Early on, ALPA’s leaders began to examine ways to bring together pilots at these new airline "networks" in some type of systematic fashion for their mutual protection.
ALPA’s Board of Directors in 1986 adopted an affiliation coordination policy (amended in 1997 and reaffirmed by the Board of Directors in 2002) to foster communication on "mutual issues and problems" that pilots of larger ALPA airlines and what were then still called "regional" carriers were experiencing, "especially those issues and problems relating to the affiliation network." The policy also suggested that the larger pilot groups offer and provide direct negotiating assistance and general negotiating support to the regional affiliates’ pilots if such help was requested.
ALPA encouraged "airline system meetings" of pilot groups under affiliation agreements, and formal meetings of pilots of affiliated carriers were conducted at each ALPA Board of Directors meeting during the 1990s.
In addition, the Association moved to examine scope provisions more closely.
In 1995, ALPA’s then-president, Capt. Randy Babbitt, appointed a Scope Clause Review Committee to examine concerns between pilot groups on the issue of scope. The five-member panel (later expanded to nine ) undertook the first major study of scope provisions, affirming ALPA’s commitment to the affiliation policy goals and procedures. Meanwhile, the regional or small jetliner, which had been introduced in the early 90s, caught on with the traveling public, and grew in size and range. Comair became the launch customer for the 50-passenger Canadair RJ in 1992, blazing the trail for jet service among ALPA’s smaller carriers. Within the past 4 years, the number of daily small-jet departures in the United States increased more than sevenfold. (See chart, opposite.)
As the new airplanes evolved, airlines began using them in ways not fully anticipated at their introduction. The U.S. General Accounting Office reported in 2001 that, rather than being used to start service to small cities, the "small jets" were being used to serve medium and large city markets (those with populations of 250,000+) more than 75 percent of the time. The GAO also noted that SJs more often than not were being used to replace or supplement flights by larger jets in an airline network, rather than establishing service to new cities. [See SJ route map, above.]
While pilots on the carriers that flew small jets were frustrated with limits on the size and number of airplanes contained in scope clauses at the major airlines, shifting allocations of flying were also producing tensions among network carrier pilots. All of a sudden, flying that they had previously performed was being moved to affiliated carriers at pay rates and benefit levels that were much lower than theirs.
Bilateral Scope Impact Committee
The Association’s Board of Directors in 2000, finding that "ALPA policies and procedures may need to change…to accommodate the needs of all ALPA pilots within an airline system," an assignment requiring "a great deal of study and research," directed ALPA’s President to appoint a new committee. The Bilateral Scope Impact Committee (BSIC), made up of one pilot from each of three major airlines and three express-type carriers, was charged with "developing new/amended ALPA policies and procedures including, but not limited to, the impact of scope provisions on ALPA pilots within an airline system."
At meetings throughout 2001 and 2002, the BSIC conferred with pilot representatives from ALPA carriers and spent many hours discussing the input received and more hours on internal discussion and formulation of suggestions.
The Committee has issued three interim reports, which have already led to a number of changes in the Association.
In October 2001, the BSIC recommended two actions to help raise contract standards and improve pilot group relationships within airline code-sharing families.
• The first was to establish annual collective bargaining conferences specifically designed for smaller pilot groups to help establish and extend favorable contract patterns such as those at Air Wisconsin, Atlantic Coast, and Comair. The first forum was conducted at ALPA’s Herndon offices in late July (see "ALPA Bargaining Conference Tracks Express Carrier Trends," September/October 2002).
As an outgrowth of that meeting, Capt. Woerth named a six-person Task Force to supplement the Association’s Collective Bargaining Committee.
The Task Force, which represents pilots of affiliate carriers, includes pilot representatives with bargaining experience from Air Wisconsin, American Eagle, Comair, Continental Express, Mesaba, and Piedmont.
The Task Force is expected "to look more carefully at bargaining trends and patterns at the express carrier level…and help develop direction and policy on bargaining issues that are specific to these carriers." The Task Force’s first, organizational meeting was held during the ALPA 2002 Board of Directors meeting.
• The BSIC’s second recommendation in 2001, adopted by ALPA’s Executive Board, was that all of ALPA’s airline network families form Joint Standing Committees to meet at least twice a year to encourage dialogue on any issue that concerns them, including scope, job protection, and career progression.
In addition, subgroups within the Joint Standing Committees are encouraged to meet more frequently, if needed, to consider issues demanding immediate attention.
The Joint Standing Committees began to meet last year and were found to be valuable vehicles for exchanging information and enhancing relationships among MECS of related ALPA carriers.
In October 2002, the Board of Directors, reviewing Joint Standing Committee operations, modified the original policy to encourage more widespread JSC activity. For example, the Northwest family of carriers has become one model of how the system can work. Even before the JSC concept was established, a 1999 story in Air Line Pilot on "union-building" detailed the mutual support shown by pilots at Northwest, Mesaba, and Express I (since renamed Pinnacle) during the Northwest pilots’ strike the year before.
Pilots of the Northwest airline system have continued to meet formally through the Joint Standing Committee and informally through attendance at joint local council meetings to discuss common concerns.
Career protection, progression
Next on the agenda of the Bilateral Scope Impact Committee, as it fulfills the 2002 Board of Directors action, is to "develop the concepts of ‘system scope’ or ‘branding,’ and proposed models for career protection and progression."
Capt. Woerth told ALPA’s Executive Board in September 2002: "We will never be able to stop the race to the bottom in every economic downturn or to stop competing for jobs within a code-share alliance if we don’t get some degree of control over what the terms and conditions are for qualifying for a code-share.
"I firmly believe," Capt. Woerth said, "that if we coordinate our joint campaign for this next-generation scope, which involves more code-share governance [and] puts as much or more emphasis on the quality of the pilot contracts involved as in the quantity of aircraft types permitted, then the profession and every pilot in the code-share arrangement will be better served."
Rather than a narrow view of scope, the Association is encouraging the MECs of affiliated carriers to broaden their outlook to encompass a "system view" that would seek to protect an airline’s "brand" with stronger contracts for all pilots working under the brand and by a complementary and coordinated approach to scope protection.
The Association’s leaders and the Bilateral Scope Impact Committee clearly understand that managements within airline networks are seeking to lower costs and extend their presence by moving flying without regard to the effect that such moves may have on pilots or the contract standards that have been negotiated over many rounds of bargaining.
First Officer Ron Abel (United), BSIC co-chair, says, "Scope is an important and necessary tool for protecting our jobs, but it cannot be truly effective unless pilots within an airline system understand that all our jobs are at stake if we don’t work together to provide scope protection on a system or global basis.
"No one should pretend that the way ahead will be easy," F/O Abel says, "but drawing lines around each pilot group’s flying isn’t providing the protection we need for the whole system."
The BSIC’s report to ALPA’s 2002 Board of Directors meeting included suggestions for how that might be accomplished: "In concept, pilot groups that are part of a code-share family would seek to negotiate provisions that dedicate flying performed by the airline group to members of that group, instead of permitting management free rein to outsource that flying to other airlines and pilot groups.…
"Alternatively, or in connection with this effort, pilot groups could try to negotiate ‘union standard’ clauses that require flying in the group to be performed by a carrier that provides substantially equivalent economic terms and conditions of employment to its pilots," the report said.
The BSIC has already devoted considerable time to career progression and protection for all pilots in a code-share system. The Committee has discussed several potential models to address the upward and downward flow of pilots.
The BSIC has considered and discussed these issues and will be actively doing so during its meetings in February, March, and April. Similar issues are now being discussed by several ALPA airline MECs.
As the BSIC reported to the Board in October 2002: "The fundamental issues identified by the Committee in its initial report remain valid and must continue to be addressed.
"The BSIC believes that our long common experience as pilots—the continuing change in technology that marks our industry, the unpredictability of how our industry and individual airlines will fare over the years, and the consequent [effect] on employees—remains the jumping off point for valuable discussion and greater understanding of each other’s concerns in the areas of scope.…"
Recognizing scope’s complexity, ALPA will continue to examine the issue and encourage dialogue among Association members. As it has throughout its history, ALPA continuously strives to balance the interests of its broad group of constituents to raise the standards for all.