By ALPA Communications Department Staff
Air Line Pilot, March 2004, p.14

The airline industry continues to suffer from the effects of an economic downturn and the burdens of new and costly security measures airlines have been required to implement since Sept. 11, 2001. No other business is quite as vulnerable to the unforgiving fluctuations of the economy as the airline business.

Cargo carriers are no less subject to these pressures than passenger airlines. However, signs of a comeback have emerged. And while many cargo operations are still struggling, others continue to be profitable and the industry as a whole seems to have made a slight recovery in past months.

ALPA continues to aggressively represent the interests of its air cargo pilot groups in collective bargaining and contract enforcement and in the legislative arena. What follows is a brief overview of ALPA’s all-cargo pilot groups and the status of their ongoing labor/management discussions.

For years, this carrier was known as DHL Airways. Now operating under a new company name, ASTAR, this group of cargo pilots faces substantial challenges arising out of a complex corporate reorganization and a serious challenge to the scope protections contained in its collective bargaining agreement.

For many years, the DHL network comprised multiple corporate entities, both foreign and domestic. In early 2001, Deutsche Post, a German corporation, bought DHL International. In May 2001, DHL International bought all the stock of DHL World Wide Express, which owned DHL Airways, and renamed it DHL Holdings. To comply with Department of Transportation foreign ownership limitations, the airline operations of DHL Airways were separated from the ground delivery operations and spun off as an aircraft, crew, maintenance, and insurance (ACMI) carrier.

Later in 2001, UPS and FedEx management began an aggressive campaign challenging the citizenship of the reorganized DHL Airways.

In April 2003, an American investment group headed by John Dasburg bought DHL Airways, providing 100 percent U.S. ownership, and renamed the airline ASTAR.

In December 2003, a DOT administrative law judge wrote that "a preponderance of reliable, credible, and probative evidence exists to support that, under the totality of circumstances, ASTAR is actually controlled by U.S. citizens." UPS and FedEx management have asked the DOT to review and overturn the law judge’s ruling.

The current collective bargaining agreement, which the DHL pilots ratified in 1998, contains scope provisions guaranteeing that substantially all of the airline’s flying would be done by DHL pilots.

After DHL Airways was spun off and renamed ASTAR, however, DHL Holdings began sending some of its flying to Airborne, in violation of the scope clause. ALPA is now aggressively pursuing enforcement of the ASTAR scope clause.

The ASTAR agreement became amendable on Dec. 31, 2003. However, because of company reorganization, ownership change, challenges to ASTAR’s citizenship, and the dispute arising out of the violation of the scope clause, negotiations have not yet begun.

The ASTAR Master Executive Council has been advised that the airline’s management would like to begin bargaining in the second quarter of 2004.

Number of flightcrew members: 498

Operation: ASTAR Air Cargo serves as an integral part of the DHL network, which links more than 120,000 destinations in 228 countries and territories. ASTAR’s hub is in Cincinnati, Ohio.

Company headquarters: Miami, Fla.

Equipment: B-727, DC-8, and A300 freighters

Atlas Air Cargo is wholly owned by Atlas Air Worldwide Holdings, Inc., which also owns Polar Air Cargo. ALPA represents the pilots of both Atlas and Polar.

On July 29, 2002, the Atlas flightcrew members ratified a 42-month contract, which includes improvements in compensation, scheduling, and job security. The contract is amendable in August 2005. Since ratifying that agreement, the Atlas pilots and flight engineers have experienced a great deal of uncertainty as to the future of their airline.

Atlas management filed for bankruptcy reorganization on January 30, after having announced its intention to do so on several occasions.

Using ALPA’s resources, the Atlas MEC has expedited all grievance filings and educated the flightcrew members on various aspects of bankruptcy and the effect it could have on their lives.

A number of discrepancies pertaining to payroll deductions and insurance coverage were discovered. The discrepancies relate to supplemental life coverage for flightcrew members, spouses, and their children, and long-term disability or loss-of-license coverage for flightcrew members. The Negotiating Committee drafted, and management signed, a letter of agreement, which required management to refund all excess premium deductions collected and removed management from making future payroll deductions.

In 2003, management began deducting federal and state taxes from some flightcrew members’ paychecks for company-paid travel expenses. ALPA has retained outside legal counsel to help the Atlas pilots in challenging this onerous action.

Number of flightcrew members: 629

Operation: Atlas Air is an air cargo outsourcer and ACMI operator. It operates a worldwide all-cargo carrier primarily under long-term contracts with the world’s major international airlines.

Company headquarters: Purchase, N.Y.

Equipment: B-747-200, B-747-300, and B-747-400 freighters

Since returning to ALPA membership in June 2002 through the merger of ALPA and the FedEx Pilots Association, the FedEx pilots have been busy preparing for contract negotiations. The current agreement becomes amendable on May 31, and talks are scheduled to begin March 3.

Staff members of ALPA’s Representation, Economic and Financial Analysis, Retirement and Insurance, Legal, and Communications Departments have been working closely with the FedEx pilots to help with their planning and preparation for bargaining.

Members of the FedEx pilots’ Negotiating Committee attended the Association’s Negotiations Training Seminar, and ALPA staff conducted two training sessions in Memphis to educate members of other committees and the Master Executive Council on the ins and outs of collective bargaining.

The Negotiating Committee sent out a comprehensive survey to all FedEx pilots in the summer of 2003. ALPA’s Economic and Financial Analysis Department helped interpret the survey results, which are being used, along with information gathered through continuing polls and direct communications with members, to identify and track the pilots’ negotiating priorities.

In 2003, FedEx pilots were faced with a challenge from FedEx management to pilot-in-command authority relating to carriage of passengers on FedEx aircraft. Three captains were fired. The dispute was successfully resolved, and the three captains have been reinstated through an agreement with management that confirms the captain’s authority to make final decisions on this important security-related subject.

With ALPA’s financial and staff resources and the support of all ALPA members behind them, the FedEx pilots are looking forward to a successful outcome in negotiations for their second contract.

Number of flightcrew members: 4,100+ based at domiciles in Anchorage, Alaska; Los Angeles, Calif.; Memphis, Tenn.; and Subic Bay, Philippines.

Operation: The world’s largest express transportation company, with 347 airplanes, and serving 210 countries.

Company headquarters: Memphis, Tenn.

Equipment: B-727s, DC-10s, MD-10s, MD-11s, A300s, and A310s

In January 2003, the ALPA-represented Gemini flightcrew members and Gemini management began negotiations on an initial collective bargaining agreement. Initially, negotiations proceeded at an unacceptably slow pace. As a result, on April 1, 2003, the Gemini MEC petitioned the National Mediation Board to assign a mediator to facilitate negotiations. With the mediator’s assistance, the parties have tentatively agreed to approximately 20 contract sections.

Progress in negotiations has occurred despite major distractions away from the bargaining table. Management furloughed approximately 50 flightcrew members during 2003. Moreover, Gemini also made significant changes to its management team, appointing a new chief operating officer, a new director of operations, a new chief pilot, and a new scheduling manager. As 2003 came to a close, Gemini management announced that it had completed new financing and corporate restructuring with its bank group, aircraft lessors, maintenance provider, and equity holders. This restructuring, along with the resurgence of the air cargo industry, improves the overall outlook for Gemini Air Cargo in the coming year.

Gemini flightcrew members look forward to concluding a collective bargaining agreement with management in 2004, despite the fact that some of the most difficult areas of the contract, including scheduling, retirement and insurance, and compensation, have not yet been tentatively agreed upon.

Number of flightcrew members: 230

Operation: Gemini Air Cargo is an ACMI operator worldwide, serving a high-profile customer base, including Asiana Airlines, FedEx, UPS, DHL Worldwide Express, DAS Air Cargo, Air France, British Airways, Finnair, Lufthansa, QANTAS, Challenge Air Cargo, the U.S. Postal Service, and the U.S. Air Mobility Command.

Company headquarters: Dulles, Va.

Equipment: DC-10-30 and MD-11 freighters

Kelowna Flightcraft pilots signed their first collective bargaining agreement with management in 1997.

The pilot group is currently operating under its second contract, which was negotiated in 2002. At present, Kelowna pilots enjoy a good working relationship with management and are looking forward to maintaining that relationship in future negotiations.

Number of flightcrew members: 130

Operation: Kelowna Flightcraft, which operates a Canada-wide cargo service for Purolator Courier, maintains crew bases in Hamilton, Thunder Bay, and Toronto, Ont.; Calgary, Alba.; Saskatoon, Sask.; and Vancouver and Kelowna, B.C. The airline also engages in charter flight operations between Montreal and destinations in Florida and the Caribbean and operates a joint-venture charter service with Excel Airlines in the U.K.

Company headquarters: Kelowna, B.C.

Equipment: B-727s, Convair 580s, and a B-737-800NG

In October 2003, the Kittyhawk Pilots Association, which was an independent union modeled after ALPA, overwhelmingly approved a merger agreement with ALPA. ALPA’s fall Executive Board gave its approval to the merger. The merger between the two unions became effective on January 1 of this year.

"We are extremely pleased that the terms of the merger met with the approval of our pilots, and we look forward to starting the new year as members of ALPA," said the MEC chairman, Capt. Tom Gothard.

Shortly after the Kittyhawk Pilots Association and ALPA merged, Kitty Hawk flightcrew members, including flight engineers, agreed to a 10-year contract.

Capt. Gothard says, "ALPA’s expertise, experience, and the support of its 64,000 members will be a great benefit to our pilot group now that we have ratified a new contract."

The airline emerged from Chapter 11 bankruptcy in 2002.

Number of flightcrew members: 132

Operation: Kitty Hawk Aircargo is the only large-scale scheduled service solely dedicated to freight forwarders, both domestic and abroad, serving more than 50 major U.S. and Canadian airports. Cargo operations are centered in the carrier’s hub in Fort Wayne, Ind. Other bases include Atlanta, Ga.; Boston, Mass.; Charlotte, N.C.; Houston, Tex.; Los Angeles, Calif.; Miami, Fla.; Minneapolis, Minn.; Newark, N.J.; Philadelphia, Pa.; Portland, Ore.; and San Francisco, Calif.

Company headquarters: Dallas, Tex.

Equipment: B-727s

In November 2001, Polar Air Cargo was acquired by Atlas Air Worldwide Holdings, Inc., which also owns Atlas Air Cargo. The past year has been a difficult one for Polar pilots and flight engineers. Management filed for bankruptcy on January 30, after having announced plans to do so on several occasions.

In anticipation of the bankruptcy, the MEC, with the support of ALPA’s professional staff, has placed grievance processing on a fast track and taken steps to inform the members of the effect a bankruptcy could have on their careers.

In 2003, management began deducting federal and state taxes from some flightcrew members’ paychecks for company-paid travel expenses. ALPA has retained outside legal counsel to help the Polar flightcrew members in challenging this onerous action.

The Polar pilots and flight engineers are in negotiations. Their current collective bargaining agreement became amendable on Nov. 30, 2002. The pilot group filed for mediation on May 31, 2003.

Number of flightcrew members: 352

Operation: Formed in 1993, Polar Air Cargo is a global airfreight service that flies to Asia, Europe, Australia, New Zealand, and the Americas. Polar Air Cargo also has a charter service that specializes in charter and wet-lease operations. Atlas Air Worldwide Holding purchased Polar Air Cargo from GE Capital Aviation Services in 2001.

Company headquarters: Purchase, N.Y.

Equipment: B-747-200 and B-747-400 freighters