Air Line Pilot, November/December 2002

President’s Forum: Brand Management  

What’s so important about a brand name?

Everything about it is important if you’re an airline employee and especially if you’re an airline pilot. As consumers, all of us are inundated with brand names. Every product or service we obtain has undergone massive amounts of marketing to focus our attention and to get us to take some action. Airlines are no different in this respect than any other marketed commodity. U.S. manufacturing industries have a history of outsourcing work to cheaper domestic and international labor markets. U.S. airlines are now trying to outsource pilot jobs in the same manner.

During the last 18 months, I have been invited to speak at numerous management, investment banking, and law conferences, which seem to have one overriding theme—passenger airlines are no longer stand-alone business entities but are conglomerates under single brands. Airline managements are not just concerned about their individual carriers, but have the goal of forming multiple holding companies that “own” individual FAA or Transport Canada operating certificates. These managers then market their product as a single brand and expect each individual airline unit to compete against each other on the basis of lowest cost and highest revenue.

Airlines have been applying their brand strategy against us ever since the U.S. Justice Department deemed code-sharing legal. To Delta management, for example, the fact that a passenger is buying a ticket on the Delta brand is important. The fact that this passenger might travel on Delta mainline, Atlantic Southeast, Atlantic Coast, Comair, Chautauqua, Air France, Aeromexico, or any other member of the “Delta family” is less important to management. The goal is to maximize profits within the holding company while brand managers move traffic freely from one entity to the next to lower labor costs. Nearly all airline groups now follow this model, which the cargo airline industry has used for decades to suppress cargo pilot wages, benefits, and job security. When Mesaba formed a holding company to purchase Big Sky Airlines for more than five times the stock trading market price and run it as a separate entity, our skepticism about how desperate airlines are to develop new substandard brand units should have disappeared.

We must define and implement a counterstrategy. The only stumbling blocks these brand managers face are our union contracts that define what work will be performed within the bargaining unit. So, any attempt to dilute those contracts, to create “alter ego” airlines that do not have standards set by union contracts, or to purchase other existing units with substandard pay and benefits must bear our most vigilant scrutiny. That brand managers have been lobbying Congress in support of the McCain-Lott bill to ruin airline employee collective bargaining should not be a great surprise.

We must do some brand management of our own. Our goal, however, is to raise the standards for airline pilots to the highest possible level, not ratchet them down to the lowest common denominator. Our brand management began a decade ago with the Global Pilot Strategy campaign, which called for ALPA to organize all North American pilots under a single union and to assist, through training and bargaining resources, foreign pilot unions to achieve better wages, benefits, and working conditions. When international code-sharing became popular, we formed pilot alliances and working protocols to counter management tactics. When domestic code-sharing and wholly owned smaller airlines became the rage, we formed coalitions among airline families to allow pilots from related carriers to share information, issues, contract language, and resources.

What we need now is brand governance—protection for pilots within a brand. Traditional contract scope language that spells out what flying will be performed by what pilot group will still be needed. We will, how-ever, need to look at a next-generation scope clause that sets contractual standards for brand eligibility. Rather than focus just on the number of small jets allowed within the brand, the new scope clauses will focus more on the quality of overall contract provisions. The goal is to remove managements’ financial incentive to create ever more substandard units within the brand in their race to reach the lowest possible labor costs.

Ensuring that airline pilot work rules, compensation, and benefits are not eroded in this branding process will be a major focus for ALPA members for the next few years. We must continue to thwart any attempts to move our pay and work rules to the lowest common denominator among our single-brand airline groups.

s/Duane E. Woerth