Small-Carrier Bargaining Conference
By ALPA Staff
On March 20—the first day of the war in Iraq—pilots from more than a dozen ALPA carriers gathered at the Association’s Herndon, Va., office for the Small-Carrier Bargaining Conference. Although the fighting was more than 6,000 miles away, the war and its disastrous economic effects on the world’s airline industry were close by.
"We are at war," ALPA’s president, Capt. Duane Woerth, told the Conference participants during his opening remarks. "We are at war with airline managements who want to roll back all of the gains you have made in this segment of the industry," he said.
While ALPA understands the economic and political reality of the airline industry and will "make appropriate adjustments when necessary," Capt. Woerth also stressed that the express carriers are the "backstop" for the industry. "In this segment of the industry, we must try to hold the line and continue the improvements of the last few years," Capt. Woerth said.
"The reason you’re here today is to help figure out a coordinated strategy for waging our opposition," Capt. Woerth said. "We’re all in this together, so let’s use this Conference as an opportunity to come up with strategies and solutions to challenges we all face."
The March Conference brought together members of the master executive councils and negotiating committees of ALPA-represented pilot groups whose carriers have corporate or codesharing relationships with mainline partners. Pilot representatives from the following airlines attended: Air Wisconsin, American Eagle, Atlantic Coast, Atlantic Southeast, Comair, Continental Express, Mesa, Mesaba, Piedmont, Pinnacle, PSA, Skyway, and Trans States.
ALPA’s newly appointed resource coordinator, Capt. Matthew Kernan, and the Association’s Associate Director of Representation Bruce York hosted the forum.
ALPA’s Bilateral Scope Impact Committee (BSIC), which the 2000 Board of Directors established to "examine the challenges posed by the advent of the regional/small jet and the evolution of corporate structures in the airline industry," recommended convening these forums to promote raising contract standards.
This Conference followed a similar conference, held a couple of weeks before, which brought together pilot representatives from ALPA’s mainline carriers for the same purpose—to provide a forum for coordination of ALPA’s bargaining strategies in today’s difficult negotiating environment—and a similar conference held in July 2002 for flightcrew members of small carriers.
An important part of this Collective Bargaining Conference was an opportunity for pilot leaders to share information with their peers regarding ongoing or recently completed contract negotiations and bargaining goals. Following is a summary of the reports:
• Air Wisconsin: Although Air Wisconsin pilots are not in negotiations yet, they expect management to request concessions sometime in the near future, based on United’s financial status and Air Wisconsin’s marketing agreement with United.
"Management will likely seek pay and work rule changes," said the Air Wisconsin MEC Negotiating Committee chairman, Capt. John Mondus. "While we recognize that these are troubled times, we also know from our company’s history how hard it is to regain important work rules. Air Wisconsin pilots are willing to work with management, provided management demonstrates real need and is willing to address pilot issues, too."
• Atlantic Southeast: Delta Connection carrier Atlantic Southeast has been in direct negotiations with its pilots using the interest-based bargaining process since September 2002. Their current contract became amendable on Sept. 15, 2002.
Atlantic Southeast pilots and management have a very aggressive negotiations schedule in place with 3 weeks of meetings scheduled each month through June. "Management seems anxious to get a deal done," said the MEC chairman, Capt. Bob Arnold.
Management has not sought any concessions, and the Negotiating Committee remains optimistic that the contract will have improvements.
• Continental Express: The Continental Express contract became amendable in October 2002, but negotiations were delayed after 9/11. Direct bargaining began in July 2002 and entered federal mediation in January by advance agreement of the parties.
"Talks are proceeding fairly well and management seems eager to get a deal done," said the CalEx executive administrator, Capt. Mark Leneski.
Approximately 10 contract sections have been completed, and bargaining has entered the economic phase. With the current economy, pilots have been flowing down from the mainline. Consequently, "some 383 pilots have been furloughed from the bottom of the CalEx seniority list," Capt. Leneski said.
• Mesaba: Northwest Airlink Mesaba pilots have been negotiating since June 2001 and in federal mediation since July 2002. The contract became amendable in June 2002.
The Mesaba MEC chairman, Capt. Tom Wychor, reported that Mesaba pilots used to have a very good relationship with management, but relations have been going downhill in these difficult negotiations. "Management seems to really be dragging out the negotiating process," he observed. Only nine items had been tentatively agreed to after months of negotiations, and economic issues all remained open.
Capt. Wychor noted that with Mesaba’s recent acquisition of Big Sky Airlines, scope and job security issues went from "barely on the screen with the pilots" to one of their top priorities.
Mesaba management has stated that growth at the airline is tied to a contract that does not increase costs. Pilots’ negotiating goals remain high.
• Skyway Airlines: Midwest Airlines’ express carrier Skyway Airlines has been in negotiations with its pilots for a new contract for 2 years. The current contract became amendable in January 2002. Although negotiations initially progressed well using interest-based bargaining, talks stalled as substantive economic issues were introduced. Negotiations have been conducted under the auspices of the Federal Mediation Board since August 2002.
"At the end of February, management demanded immediate concessions," said the Skyway MEC vice-chairman, First Officer Mike Purves. After thorough economic analysis, the MEC Negotiating Committee offered temporary pay concessions in exchange for concluding a new contract and addressing pilot concerns in later years of the new contract. During the mediated negotiating session in late March, Skyway management rejected the pilots’ proposal, despite the immediate financial relief offered.
York told the representatives from the small carriers that, considering the economic and political climate, the goal of the Small-Carrier Bargaining Conference was twofold: To determine a strategy for continuing the progress that ALPA has made toward raising the contract standards at the small carriers over the past few years and a strategy for limiting any backward movement in contracts that might be appropriate because of real and substantiated financial hardships at some carriers whose pilots ALPA represents.
ALPA’s Economic and Financial Analysis Department reviewed for attendees the economic state of the airline industry—that airlines are struggling with historic losses sustained since 9/11, that yields continue to be severely depressed across all sectors of the industry, and that airline managements are erroneously and unfairly focused on cutting labor costs as a way to repair their balance sheets.
However, the small-carrier sector of the airline industry is generally weathering the economic storm better than its major airline counterpart for the following reasons:
• Small-jet departures continue to be strong, and passenger growth continues to outpace the passenger growth rate of the mainline carriers.
• The smaller carriers generally have more-efficient route structures and fleets with less complex equipment, thus providing an advantage over the major airlines.
• Because of the contracts and codeshare agreements that small carriers have with mainline carriers (i.e., fee-for-departure agreements), many of the small carriers are enjoying higher operating margins and are not as sensitive as their mainline partners to drops in yields.
• Smaller airlines have few or no international routes, and their route systems are not as vulnerable to the effects of the war in Iraq as those of their major airline counterparts.
• Because the smaller airlines generally do not have defined-benefit retirement plans, they are not facing the pension-funding crisis that many major airlines are now confronting.
Optimism among pilots of smaller airlines
Phil Comstock, president of the Wilson Center for Public Research, which does extensive polling for the Association and other unions, spoke during the conference and explained that current polling results show that the differences in the airline operating environments of the large and small carriers affect the attitudes of pilots working in the two segments.
Comstock said that the overwhelming attitude among all ALPA members at the start of 2002 was simply, "I hope we can hang onto what we have." However, polling shows that by the summer of 2002, and continuing into 2003, pilots began expressing distinctly separate views based on their sector of the airline industry and the circumstances of their airline in particular.
Although the United Airlines bankruptcy did cause a brief drop in optimism among small-carrier pilots, their bargaining expectations remain high for the most part, as they are confident that their segment of the industry will experience continued growth.
"What your pilots are saying," Comstock said, "is ‘The future is ours. Growth will be significant, and we’ll continue to have bigger and more airplanes.’"
Changing negotiations environment
Although focusing on what’s happening at your own airline seems contradictory to what ALPA is trying to achieve through the bargaining forums—a coordinated, collective approach to negotiations among ALPA pilot groups—pilots must understand that each negotiation is different.
"In just the two years since the successful Comair pilots’ strike, the negotiating environment has changed completely," said Capt. Kernan. "From a political point of view, the environment for labor is the worst that ALPA has ever seen."
So, as Capt. Woerth noted in his opening remarks, the challenge for ALPA and the small-carrier representatives is to work collectively to come up with successful strategies for today’s environment.
Addressing a wide range of scope and job security issues is an integral part of both major airline and small airline bargaining. Air Line Pilot has provided readers with a comprehensive look at most of these scope issues (see "Scope," March).
During this Conference, ALPA’s Representation Department updated the attendees on the work of the Association’s Bilateral Scope Impact Committee.
As the BSIC stated in its interim report to the 2002 Board of Directors, "The Committee believes that the pilots within one codeshare, airline family, or ‘umbrella’ group should undertake a new project: discussing and coordinating steps leading to ‘system’ or ‘global’ scope, or ‘branding.’ In concept, pilot groups that are part of a codeshare 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 assign that flying to other airlines and pilot groups."
York explained that the BSIC has looked at the issue of defining a family, or "brand" of flying, and providing job security and contract protections within that family, in many different ways. "The concept of establishing ‘labor standards’ within an airline family appears to offer one solution," York explained.
The BSIC and ALPA’s Collective Bargaining Committee, which makes recommendations for collective bargaining policy within the Association, will continue working on the concept of minimum labor standards within a family of flying. The BSIC will make a report to the May Executive Board. ALPA pilots can expect to hear and learn a lot more about this concept in the future, York said.
At the end of the day-and-a-half meeting, the Small-Carrier Bargaining Conference participants expressed unanimous agreement on the need for, and value of, working collectively to advance the airline piloting profession.
"We need to know what’s going on with our peers and work closely with them," said the Continental Express pilots’ executive administrator, Capt. Mark Leneski.
"We’ve all got to be talking with each other," echoed Capt. J.C. Lawson, the chairman of the Comair MEC. "Our moving forward as a cohesive unit is extremely important."
Airline managements need to understand that the pay rates in the Mesa contract reflect the very unique circumstances at Mesa and that they are not going to become the new industry standard.
At the same time, other pilot groups should use the Mesa Air pilots’ scope agreement, which binds the entire Mesa Air Group holding company to the contract, as the new industry standard for pilot job security.
With the need for timely communications and coordination among the ALPA small-carrier pilot groups, the Conference participants requested that ALPA facilitate improved communications.
To that end, ALPA’s Representation Department will reinstate the periodic conference calls that were held among the leaders of the various pilot groups in the aftermath of the September 11 terrorist attacks. The conference calls are an ongoing opportunity to keep each other informed about the status of collective bargaining at each airline and to coordinate collective Association goals.
Additionally, ALPA’s Collective Bargaining Committee and the Bilateral Scope Impact Committee will continue to work together, and in close conjunction with the small-carrier representatives, to advance the Association’s collective bargaining goals at each airline.
As Capt. Woerth said, airline managements don’t have any real cohesive, coordinated agenda. "They’re ruthless competitors out for blood. They seem to cooperate on only one thing—trying to force the lowest labor costs possible."
ALPA pilots groups, on the other hand, aren’t competitors. "By working together, we can win this war," Capt. Woerth said. "Let’s get our building blocks in place and determine our collective strategy for winning in this new environment."
Mesa Air pilots announced the successful membership ratification of their new contract just 3 days before the Small-Carrier Bargaining Conference convened, and a significant amount of time at the meeting was spent discussing and understanding the circumstances surrounding negotiation of the contract.
The Mesa Air pilots’ Negotiating Committee chairman, Capt. Don Lyons, first explained that the effort to engage Mesa management in Section 6 negotiations started in October 2001 with very frustrating results.
Capt. Lyons said, "We requested the assistance of the National Mediation Board after a few sessions with management. The NMB recognized that we were making no progress and assigned us a mediator. Management stalled the process so that it could buy time to grow Freedom Air.
"In January of this year," Capt. Lyons continued, "management proposed a package that was designed more for publicity than agreement. In the discussions, the CEO proposed an agreement that included ALPA’s proposed scope protection along with other sections that had previously been agreed upon.
"The Negotiating Committee accepted, the MEC sent the tentative agreement out for membership ratification with an endorsement, and the members ratified the agreement by 76 percent.
"It was not a concessionary agreement in any respect, Capt. Lyons said, "but quite frankly, we had to pay a price for scope coverage of CCAir and Freedom."
Freedom is the new airline that Mesa Air Group started last year to fly 70- and 90-seat jets as a nonunion, alter-ego carrier.
As Capt. Lyons explained, Freedom wasn’t an idle threat from management—the airline was up and running, and more airplane deliveries were scheduled. Additionally, all of the ALPA pilots at CCAir had lost their jobs in 2002, after Mesa Air Group shut the doors at the Charlotte-based carrier.
The new scope language in the Mesa Air pilots’ contract brings all of the Mesa Air Group pilots, including those of CCAir and Freedom, together as ALPA-represented pilots under a single contract and a single seniority list. The contract is also binding on the Mesa Air Group holding company and applies to any other carrier the company establishes, acquires, operates, or controls.
The new 54-month agreement also includes pay raises, an increase in per diem rates, a guaranteed 401(k) plan with company match, and other quality-of-life and scheduling improvements.
ALPA Assistant Directors of Representation Stephen Crable and Bill Roberts, who worked with and advised the Mesa pilots’ Negotiating Committee during mediation, said that given the financial difficulties of Mesa’s two major codeshare partners (America West and US Airways) and the U.S. government’s financial risk associated with the Airline Transportation Stabilization Board loan guarantees for these carriers, the likelihood and the timing of an NMB proffer of arbitration and release into a 30-day cooling-off period were real question marks.
Capt. Lyons said, "The Mesa MEC Negotiating Committee knew that Mesa management was expanding Freedom rapidly and discussing other nonunion options for existing Mesa flying. We were confident that the scope offer would never be put back on the table again."
Mesa Air Group management was building a corporate structure that did not include the Mesa Airlines pilots. Without the protections of this pilot contract, management would have continued to rapidly grow Freedom as a nonunion carrier with substandard pay rates, and that would have been the greatest threat to similar ALPA pilot groups and the Association.
As Capt. Lyons said, "It was very unlikely that we would have been released for self-help before Freedom assumed a majority of our flying or our airplanes were removed from us and leased to another entity. We also knew that time was short for US Airways to implement the Jets for Jobs program as a factor in that airline’s emergence from bankruptcy, and we needed to secure jobs both for our pilots and for the furloughed US Airways pilots.
"We have secured scope protection with a single contract for all pilots under the holding company, while improving other sections of our contract, including pay rates," Capt. Lyons concluded.