A Place at the Table in U.S.-EU Negotiations

By Peter Janhunen, Manager of Publications
Air Line Pilot,
May 2004, p.28

"The potential loss of jobs and employee dislocation that would result from such a shift in policy are tremendous and indefensible. National security concerns alone should dictate that foreign carriers must not be granted unlimited access to our domestic markets."
—Capt. Duane Woerth, ALPA President

As European and U.S. negotiators geared up for the next round of bilateral aviation talks at the end of March, ALPA and other transportation unions were stressing several concerns.

The talks came as the U.S. aviation industry and its employees continue to recover from the severe economic effects of the Sept. 11, 2001, attacks. The major air carriers are showing limited signs of improvement and are still struggling in a strained U.S. economy to return to profitability and meet the increased security costs that these horrific terrorist attacks have made necessary.

Meanwhile, most of the more than 9,000 pilots and nearly 150,000 other related industry employees laid off since 9/11 remain the victims of the airline sector’s economic meltdown.

"That fact alone makes it critical for the U.S. government to protect the aviation industry and its workers, including U.S. pilots, from the agenda of many foreign companies and governments that seek to gain unwarranted new entry rights into our marketplace," commented ALPA’s president, Capt. Duane Woerth.

North American Pilots Renew Mutual Assistance Protocols

Pilots of the United States and Canada, whom ALPA represents, and of the United Mexican States, whom the Asociación Sindical de Pilotos Aviadores de México represents, on February 25 renewed and updated their Protocols for Mutual Assistance and Support. The Protocols establish procedures and outline objectives for enhancing cooperation, communication, and coordination among North American pilot groups.

The agreement recognizes the need for joining forces in the face of increasing airline globalization and regulation harmonization and provides the mechanism for the pilot unions to work together to enhance the safety of airline operations, ensure the quality of pilots’ working conditions, and protect pilots’ careers, while at the same time respecting the national autonomy and individual rights of each pilot organization.

The North American mutual assistance agreement was first signed in 1992 as an early milestone in ALPA’s Global Pilot Strategy (see "ALPA in Evolution," December 1992) and renewed in 2000.

European moves

In November 2002, the European Court of Justice ruled that certain provisions of bilateral open-skies agreements concluded between eight EU member states and the United States were contrary to EU law. After this decision, the EU member states granted authority to the European Commission—which has long maintained that a bloc of nations could secure greater concessions from the United States than individual EU countries—to enter into talks with the United States to negotiate an EU-wide aviation accord. The first round of those talks was held in October 2003, with more rounds held in December and February.

In early March, the European ministers of transport met to consider their response to a recent U.S. proposal in preparation for the fourth round of talks later in the month. Their guidance to negotiators was clear: success would consist of an agreement that grants European carriers cabotage rights in the United States, liberalized foreign ownership laws in the United States, and other rights, such as those allowing wet leasing.

Meanwhile, the EU was moving forward with legislation that would give the bloc the power to impose sanctions on any air carrier that receives government subsidies. This move is a direct slap at the financial assistance paid to U.S. airlines since 9/11. EU airlines, many of which have government backing, say this has put them at a competitive disadvantage. EU Transport Commissioner Loyola de Palacio says that "the new instrument gives possibilities to react against very unfair practices."

Worker concerns

As negotiations continue, ALPA and other unions are urging the Bush administration to reject proposals to change U.S. laws or regulations that would threaten U.S. workers and the domestic airline industry. In particular, ALPA is concerned about any changes in policy that would permit foreign carriers to engage in cabotage, or the carriage of U.S. domestic traffic.

"The potential loss of jobs and employee dislocation that would result from such a shift in policy are tremendous and indefensible," Capt. Woerth said. "National security concerns alone should dictate that foreign carriers must not be granted unlimited access to our domestic markets."

To their credit, U.S. negotiators have included a prohibition on the carriage of cabotage traffic in their proposal to the EU.

In regard to current rules that limit foreign ownership and prohibit foreign control of U.S. airlines, ALPA opposes any change that harms U.S. pilots. The Bush administration, in its most recent proposal, indicated that it is willing to seek a change in law that will allow foreign interests to own up to 49 percent of the voting stock of a U.S. carrier. This proposal is identical to one the administration sent to Congress last year—a proposal that neither the House nor the Senate adopted as part of the then-pending FAA Reauthorization Bill.

The labor groups are also concerned about a U.S. proposal that would allow the EU to designate as a European carrier any EU airline holding a certificate in an EU country. In one fell swoop, this would create "flag of convenience" opportunities, like those that have eviscerated the maritime industry, through which a carrier could hold its certificate from an EU country with low labor and regulatory costs, yet enjoy the benefits of operating out of another EU country.

While some harmonization of EU laws has occurred, dramatic differences remain between various EU nations regarding, for example, the selection of collective bargaining representatives, the formation of collective bargaining agreements, and the enforcement of those agreements. The result of this change could lead to a "race to the bottom" in labor standards as foreign carriers seek out countries with labor laws most beneficial to their financial interests. This would jeopardize the rights of EU carrier employees and put U.S. workers and carriers at an unfair competitive disadvantage.

ALPA and others are also opposing changes to U.S. wet lease rules that the EU is pushing. These rules state that a U.S. air carrier, when it leases a foreign airplane, cannot also lease the services of a foreign flight crew. This limitation ensures that U.S. carriers do not use foreign airplanes as a way of circumventing the U.S. workforce.

The EU may also seek changes to the "Fly America Act," which stipulates that only U.S. airlines may provide transportation that the U.S. government pays for. Finally, EU countries may want to pursue participation by their carriers in the Civil Reserve Air Fleet, which is restricted to U.S. carriers. Airlines in the CRAF program voluntarily commit to provide aircraft, crews, fuel, maintenance, and ground support equipment to support U.S. military operations in times of conflict or national emergency. In return, participating carriers are eligible to receive peacetime government business, a market totaling $2 billion annually.

The U.S. aviation industry and its workers are just beginning to emerge from one of the worst economic downturns in history, and the challenges this sector faces remain serious. Given the importance of the aviation industry to the U.S. economy and security, ALPA is urging the government to reject one-sided international accords or rule changes that undermine these critical interests.

The results of the next round of negotiations will be reported in the next issue of Air Line Pilot.