Remarks of Capt. J. Randolph Babbitt, President,
Air Line Pilots Association, to Aero Club, September 29, 1998
Good afternoon. I'm delighted to have been asked to address the Aero Club today.
As Bo said, I'm winding up my tenure with the Air Line Pilots Association. I've been involved with it in some capacity for nearly 30 years –as a pilot rep for Eastern Airlines as a member of their Negotiating Committee.
As chair of the Association's National Collective Bargaining Committee and later ALPA's Executive Administrator, I got the chance to see all of our pilot groups' problems and concerns "up close and personal."
As a pilot, I got the industry's "before and after" shots both. I got to enjoy a pretty tranquil 12 years in a regulated industry, and then a bumpier ride for the last 20, since deregulation.
In aviation terms, you could say that I’ve given a lot of position reports. I've seen the industry through a lot of different windows.
I was thinking about what I wanted to share with you today on that perspective. . . I was doing a lot of thinking about it in the car, which is where you spend a lot of time when you work in Washington!
There is one thing I will absolutely not miss when I leave office, and that is Washington traffic.
We have an office in D.C. and another in Northern Virginia, so we spend some time shuttling between the two. It's especially frustrating, because in the last couple of years, they've put a lot of one-way streets in around the White House, which bottles up the traffic around K Street.
Sometimes you’re sitting there in traffic, frustrated that you're making painfully slow progress. A couple of times, I've wished for a new hood ornament on my car – A scud missile!
I was thinking about all of this, because over my 30 years in the industry, we've had to navigate around a lot of potholes, get used to some new traffic patterns, and dodge some major roadblocks. And I wonder if there's not – short of a scud missile – an easier way to get to where we all want to be going.
A little over two weeks ago, we settled the first major strike during my tenure as president – the strike at Northwest airlines. You look in the rear view mirror at that one, and you say – what happened? Did it have to happen?
We saw that situation as a basic issue of fairness: we saw a group of employees who had taken a 15 percent pay cut for more than three years, saving the company $365 million to help bail it out. And when the financial picture changed, what did they find? Roadblocks.
The employees had to arbitrate to get their negotiated snapbacks; they had to strike when the company wouldn't get serious about talking. It was simple. They were looking for a two-way street. All they ran into was a dead-end.
The Northwest situation is an interesting case, because it demonstrated a new dynamic that's been introduced into the collective bargaining process because of the consolidations in the industry.
I spoke at the Deregulation Conference in Washington last week and advanced the idea that maybe carriers and their employees should mutually agree to tighten the timelines for negotiations. Allowing talks to drag on for two years beyond a contract's amendable date – as they did at Northwest – allows expectations to grow and positions to harden, making solutions even harder to arrive at.
But there's another issue to look at here. The Northwest strike was finally resolved because the collective bargaining system was allowed to operate. There was, eventually, tremendous pressure put on the parties to resolve it quickly. Why?
Because there were some cities that simply had no other air service than Northwest.
A report by Lehman Brothers earlier this year predicted what was going to happen: Northwest controlled 75 to 82 percent of all seats in Detroit, Minneapolis, and Memphis. Places like Duluth had no other air service to speak of.
If you think a one-airline town isn't good for consumers, it may not be good for airline employees, either. When negotiations break down, the pressure builds on the parties and the process because the paying customers are concerned – as they have a right to be – about being cut off from air service.
It doesn't bode well for the future of collective bargaining if every time we pull up our chairs around the bargaining table we're going to have to worry about the threat of a PEB taking the process out of the hands of management’s and employee’s and putting it into the hands of politically appointed arbitrators.
To its credit, the Administration resisted the pressure for the PEB in the Northwest situation and used its good offices to force both sides to work it out themselves. But what about the next time?
Even with Northwest behind us, the issue of competition – the question of who's going to serve the underserved cities – is still very much in the minds of Congress and DOT.
We’re hearing a great deal of talk these days – really, for the first time since deregulation started -- about instituting legislative protections, whether it’s guidelines, or specific bills, to seriously address these issues of competition.
I would just caution one thing about going down that road. The lawmakers and regulators should consider what the long-term effects of such actions might be.
If you believe the industry is hypercyclic, as we do, the next time the industry is in a downturn, whatever type of restriction you’re putting on could hamper the efforts to find a way back out.
When the industry had just about hit rock bottom financially, in 1993, the president assembled the Commission to Ensure a Strong Competitive Airline Industry. I was privileged to serve on the Commission, as a member of the subgroup that was looking specifically at financial issues.
Even in those days, as gloomy as the financial picture was, the commission recognized that handcuffing the industry with a lot of new regulations wasn't the answer.
So, at the present moment, when the industry is doing well, it would be very easy for Congress to jump quickly into regulatory solutions to enhance competition. But I would caution them to be very careful about going down that road.
Don't forget why we had that Commission and why we went through all that angst. If you don't think through these proposals, you could be causing more harms than good. What starts out as a leash can just as easily become a noose.
Concern over competition issues is also bringing up the issue of foreign ownership once again.
I see where Mr. Branson was taking a break from his hot air balloons again last week to press his case to start up an airline over here. He's asking for at least 51% controlling ownership.
Right now, foreign ownership is limited to 25% for primarily national security reasons.
Everybody hated to see PanAm go out of business, but some of you may remember when a Saudi prince made a bid to take over PanAm's operations. (Given the political instability in that part of the world, any reasonable person SHOULD have been concerned.)
The subject of foreign ownership has been addressed in the telecommunications industry. If there are concerns there, why shouldn’t we have even greater concern about handing over this country's air transport system – a huge financial engine and one of its major arteries – to foreign interests?
The citizens of this country paid for the infrastructure. They paid for the airports, terminals and Air Traffic Control system. We did it with our tax dollars to provide service and jobs for US citizens.
Suppose we did allow people to come over here, to tap into our rich markets. What would happen? Where do those profits go? They go home – back to England, back to France, back to wherever. They don't stay here to help recapitalize the next generation of equipment.
The same holds true for cabotage. The UK continues to press for cabotage in the U.S. as part of our bilateral discussions.
I can't fathom why anyone in this country would seriously entertain such a proposal – starting with the obvious: Under current US laws, it is illegal. No other country in the world even allows cabotage – they just seem to think it would be OK to do it here.
The U.S. generates something approaching 50 percent of all air travel worldwide. What would we get in return if we – to use the old cliché – simply gave away the store? Apparently little. Even with our fifth freedom rights – few US carriers today actually operate between European countries. So it's safe to say the term "Quid pro quo" would not apply. Yes, I’d be careful going down THAT road, too. This industry has had a lot of problems over its deregulated lifetime, but lack of competition has never been one of them!
* * *
We're seeing MAJOR changes in the landscape with the mega-alliances that are forming globally. The STAR alliance, the Atlantic Excellence alliance and – the latest major marketing splash, oneworld -- all promising seamless service.
There are many directions these alliances could take – some heading to points of concern on labor’s compass. Where will future growth occur – at the low-cost partner’s operation? Who will decide the profit-sharing split among partners – five years into the partnership – especially if there is one super-dominant partner?
As a union, our pilots are forming parallel alliances right along with STAR, oneworld, and the rest of them, because we want to get an idea of their direction, of where they may be heading.
Northwest pilots signed protocols with their counterparts at KLM and pledged mutual assistance. Pilots at Delta and United have taken similar pre-emptive action with the pilots at their carriers' alliance partners.
Pilots at our major carriers have now begun to negotiate international job security provisions into their contracts.
Fortunately, with the domestic alliances – we had the foresight to build into our contracts some protections in that direction over the last 20 years.
Many of our pilot groups have veto authority over these new alignments . . . Delta pilots vetoed the code-share provision of their employer's proposed alliance with United when they were refused the quid pro quo of a board seat. (No two-way street. . . )
Lawmakers should take a good long look at these arrangements, too, domestically and globally, and figure out where they're heading. If you project five or 10 years down the road, we may be looking at the day when, for all practical purposes, two or three airlines control all of air travel.
Do you think world governments will tolerate that? Should they? Or should they be thoughtful and think about where the point of balance might be?
* * *
In nearly 30 years in the industry, I've been amazed by the tremendous growth.
In the late 60s, when I was flying Lockheed Electras for Eastern, the country had around 60 million passengers a year. Today, we've got TEN TIMES that number.
Air travel globally is increasing at an amazing clip. Through it all, we keep pointing out that flying has been, and continues to be, among the safest modes of transportation.
But we've heard expressed over and over the very real concerns about the risks of an increase in accidents if we don't take precautions TODAY to prevent accidents tomorrow.
There's a lot of reason to be concerned. There are more planes in the air than ever before, and we're trying to fly them into the same infrastructure that we had 30 years ago!
In my time in the industry, I can think of only two major airports, and fewer than a dozen new runways, that have been built in this country.
We're spending a lot of time and energy on sophisticated concepts. We're working on free flight, talking about satellite uplinks and down links, but I wanted to add that while it's tempting to be distracted by these sexy high-tech developments, we can't forget about the industry's low-tech needs, and that means concrete.
We inch along with incremental increases in airport expansion while that phenomenal passenger growth continues.
What good does it do a pilot to have all the high-tech stuff to get him or her to LaGuardia more quickly -- just to be 70th in line to land? We have to keep improving the airport infrastructure as well as the airborne infrastructure.
We also seem to be turning to fixes like land and hold short operations, Precision Runway Monitoring, designed to move more traffic and make the pilots and controllers do more and more with less and less. Our pilots are reporting an increasing number of incidents connected with these new capacity-enhancing techniques, and that should concern us.
What should concern us, too, is the delay in modernizing the equipment our controllers have to work with. The outages we've experienced in certain key cities during the last few years should have all of us breaking out in a cold sweat.
With the increased volume in air traffic, think about the terrible risk of having something like that happen five or ten years from now.
Sometimes a hard dose of reality is what breaks down the roadblocks. A good case in point is the enhanced Ground Proximity Warning System. To my mind, it's the greatest intuitive device I've ever seen to help pilots gain and maintain situational awareness.
As a result of recent CFIT accidents, two U.S. carriers – United and American – decided to move ahead and introduce it to their cockpits. Several more carriers have followed suit. The FAA is currently working on a rule to mandate enhanced GPWS in all commercial aircraft.
Enhanced GPWS moved ahead relatively quickly, as safety enhancements go. With FOQA programs, we're still cooling our jets on the runway.
It's been recognized for a long time that FOQA programs – collecting and analyzing Digital Flight Data Recorder information from line operations – would be a valuable tool for enhancing air safety. Three and a half years ago, ALPA and the Air Transport Association signed a letter to David Hinson, asking the FAA to develop a rule which restricts use of FOQA data to safety purposes.
That question is still rattling around between the Justice Department, FAA and DOT, waiting for someone to step forward and make a decision.
We're compromising safety while we sit in a holding pattern waiting for our clearance through government red tape and bureaucracy.
We have long recognized that, from a safety standpoint, we need to collect data and use it, if only to get a handle on the things we need to look at first.
We were very encouraged by the strategy contained in the Safer Skies initiative that Vice President Gore, Secretary Slater and Administrator Garvey laid out earlier this year. The plan requires that we work together on issues that are data-driven, and not incident-driven, to make better use of our finite resources.
I think that the key phrase in all of this is "working together." It sounds simplistic, even trite, but I truly believe it's the only way we're going to progress. Trying to work through the roadblocks and finding those two-way streets, in all of the areas we work on.
We've covered a tremendous amount of ground in the 30 years I've been with ALPA -- In the last eight years that I’ve been president, I think we have opened a lot of dialogues. And in every case, we have seen major advances where that give-and-take, that two-way street, has opened up.
-- We've seen it in interest-based bargaining, which the National Mediation Board has introduced to get carriers and their employees dialoguing to attack problems, and not each other. And it does take two.
-- We've seen it even in traditional bargaining such as that at US Airways, where the pilots helped craft a competitive response that we know as Metrojet.
--We've seen it in employee ownership arrangements such as those at Northwest and United and TWA.
--We've seen it in the tremendous strides we've made in air safety down through the years.
The idea that employees and unions don't fit into the picture is an idea that we have to throw on the scrap heap. It should have gone out a long time ago, along with range stations and Curtis Condors.
This is a tremendous industry that helps fuel a great economy of a grand country. It blends high tech into both machines and marketing. But don’t lose sight of the fact that its primary component is people – it's what the industry runs on.
I’ve been very fortunate to get to work with a number of super people over the years. From colorful Herb Kelleher, who once responded to a rhetorical question "Why would anyone want to get into the airline business?" With "I did -- only because all of the baseball teams had already been bought!" . . . to thoughtful citizens like David Hinson, who volunteered to serve the travelling public as the FAA Administrator – and did by any measure a great job and -- by doing so, "put a little back" for the industry.
If we aren’t working together as people, the turn of the new century will find us in gridlock, like that traffic around K Street. Let's look for those two-way streets together, because if we find them, we'll be gearing up for a future of tremendous possibilities.