E. Woerth, President
Remarks to 38th Regular Board of Directors Meeting
October 16 , 2000
As I said in the video we all just watched, it never ceases to amaze me what a clear vision our founding fathers had as they laid out their blueprint for our success seventy years ago.
How is it possible, one might logically ask, that a blueprint drawn up by a handful of air mail pilots, who were forced to meet secretly in a Chicago hotel, forced even to use false identities for fear of being fired for being union organizers – air mail pilots with no financial resources and fewer friends – how is it possible, that this blueprint could be the basis of what would grow into arguably the most successful skilled-craft trade union ever?
How is that possible? How can it be that in the face of extraordinary technological change, in the face of extraordinary regulatory reform, in the face of a globalizing industry, in the face of every comparable challenge that has confronted and all too often overwhelmed other trade unions – why is our union, the pilots union, ALPA, in many ways at our zenith?
Never before have we had so many members. Never before could we marshal such financial resources. (Next year's operating budget exceeds $100 million)
And not since the days of Dave Behncke and Franklin Roosevelt, has ALPA wielded as much political influence as we do today. But why?
We need to know why this is possible. Indeed, it is imperative that we understand the basis of our success if we are to have any chance of having it continue, or even hopefully, improving upon it.
I think you will agree, that no institutional blueprint, whether that institution is a business, a labor union, or a government, can endure for seventy years unless at its very core, are fundamental strategies and guiding principles that can withstand the test of time and that make technological change largely irrelevant.
So what were those guiding principles and strategies our founding fathers gave us that have served us so well?
The first and most important core principle was to create ONE trade union for ALL airline pilots. They consciously and deliberately rejected any notion of a loose collection of company or "in-house" unions as being totally at odds and in conflict with their mission statement.
That mission statement was and remains to take pilot pay, working conditions and safety completely out of the airline competitive equation. Simply stated: Deny every airline the ability to compete on the basis of lower pilot costs.
They also rejected the notion of elitism. All airline pilots were welcome regardless of the size of their airline. Why? Because they knew with absolute clairvoyance that small airlines with cheap pilots would quickly grow into big airlines with cheap pilots, and no pilot would ever be safe unless all were protected.
As you know, on top of this core principle of ONE union for ALL pilots, they overlaid a core strategy that would withstand the test of time and make them impervious to changes in technology. This was pure genius.
To ensure that changes in technology that produced aircraft that were larger, faster and had greater range worked to the benefit of pilots as well as to the airlines, they constructed a pay formula strategy that made pilots the automatic beneficiaries of changes that increased a pilot’s relative economic productivity. More passengers or cargo, flying faster and farther would produce more revenue not only for the airline but also the pilots.
Sounds simple, but it was the key strategy that separates airline pilots from other hourly workers and it was desperately hard to implement.
They had no chance of winning this one on their own – they would need governmental help – they would need the president of the United States.
Yes, our founding fathers were cold-blooded political pragmatists. They understood that to enact their core principle of ONE union for ALL pilots – to implement their core strategy of pattern bargaining based on leveraging productivity, incidentally for the first time in history to the benefit of workers, they would have to align themselves with the political friends and advocates of organized labor.
They did so with gusto and their early success was nothing short of astounding.
With Franklin Roosevelt as an ally, they actually got an exemption for airline pilots from the National Recovery Administration's wage controls during the Great Depression.
They quickly followed up by winning a stunning victory from the National Labor Board that gave them "Decision 83" which scrapped the old pilot pay system and instituted ALPA's productivity model. This was probably our most important compensation win ever.
Next, they won passage of the Air Mail Act of 1935 that basically gave airline pilots a "prevailing union wage" guarantee. This was the closest we ever came to having a national contract.
And to top it all off, a year later, they got Congress to amend the Railroad Labor Act to include the airlines.
All of this was accomplished within the first five years of ALPA's existence, mostly by Behncke and his closest associates and, of course, our charter members which numbered around 500 pilots. A six-foot wide bronze plaque inscribed with all of their names hangs at the top of the stairs in our Herndon office.
Truly, this was ALPA's greatest generation. Their victories and our legacy came at a price, however. Of our first three national officers: – Behncke had been fired by Northwest four years before ALPA was formed, which was why he was a United pilot.
Homer Cole, one of the other national officers, also from Northwest, was also fired. Homer Cole was Canadian by the way.
John Huber, from Thompson Aeronautical Corporation, later American, was harassed until he resigned. Indeed, a high percentage of the charter members never enjoyed a full career and few reached retirement because vindictive managements finally got to them one way or the other.
Right about now some of you, perhaps many of you, are thinking: "Well, Mr. President, that's all very interesting, but what does all that have to do with me? After all, I am not from the "greatest" generation, I’m from the "me" generation. I'm cool – I've got cell phones, I've got computers, I get new software twice a week, I'm wired, I'm on-line, I've got e-mail. I have my own web page! I work in a new economy.
Ever heard of deregulation, Mr. President? Everything's new, everything is different now."
WRONG! WRONG! WRONG! Nothing is different now!
Is pilot pushing different now?
Is working 20-hour days different now?
Is being away from your home and family 2/3 of your life different now?
Is Schedule with Safety less important now"
Is working for a company that thinks of you only as a replaceable unit cost, different now?
Is the basic struggle between the rights of capital vs. the rights of labor, different now?
Nothing is different now!
Deregulation, whether domestic in both the United States and Canada, or internationally across the entire planet, has zero effect on the economic value of our core principle of "one union for all pilots." (Monopolies, or at least overwhelming market share, generate the maximum premiums in every enterprise whether that enterprise involves a business or a labor union.)
Deregulation has zero effect on the wisdom and benefit of our core compensation strategy of leveraging our own productivity. Decision 83 still works, -- just ask the United pilots.
Deregulation has zero effect on the necessity of having governments in the hands of politicians friendly to organized labor. If anything, deregulation exponentially increased this factor's importance.
So if all that’s true, what's up with all the turmoil in the airline industry in the last twenty years since deregulation?
What's up is this. The managements in charge of this industry at the beginning of deregulation were charter members of the Flat Earth Society!
All that deregulation did was cause a gigantic blood letting as clueless managements, driven by their gigantic egos used every tool at their disposal to sell their product at prices below cost in an effort to wipe out the competition in what they saw as a zero sum game.
They succeeded in wiping out their balance sheets instead.
Every time I testify in front of Congress and listen to executives brag that 300% more passengers are flying today than twenty years ago, at average ticket prices that are 40% cheaper in real inflation adjusted dollars – I just want to scream.
Prior to deregulation, in both the United States and Canada, airline managements frankly didn't know the unit cost of their product on a flight segment basis – as they had never before priced their product – the government had always set the prices for them; which wasn't much help since the government didn't understand unit costs either, so it based prices almost solely on mileage. Which, as we know now, was dangerously naive in that mileage is only one factor and often the least important factor driving costs.
This ignorance factor on costs and prices in the early years of deregulation, was a prescription for disaster. Under regulation, short-haul flights were almost universally under-priced which is why the government needed to give subsidies to local service carriers to make up the difference.
When deregulation came and subsidies were withdrawn, management cried – "There is no money in short-haul!" -- and abandoned small markets by the thousands. A huge vacuum existed – the modern regional industry sprang up to fill it with smaller aircraft.
No money in short-haul? No money in small markets? Then why is the regional industry growing 300% faster than the mainline? By the way, there is no money in cargo either, that's why it's also growing 300% faster than passenger traffic.
My point is only this – the turmoil caused by incompetent managements in the early years of deregulation did not and does not invalidate our core values and strategies of our founding fathers.
But wait a minute! You are forgetting code-sharing! Isn't code-sharing new and different? No. It is still just interlining. People get off one airplane and get on another airplane. Big deal. Why should that change pilot pay and benefits?
We all know we have much unfinished business before us in regards to code-sharing.
When we chartered and launched our Global Pilot Strategy eight years ago, we put great effort and enormous resources into dealing with our international code-sharing partners. Not surprisingly, we have had great success internationally resolving international pilot alliance issues.
It's time, it's past time – to put the same effort, the same serious commitment of energy and resources into dealing with our domestic code-sharing systems.
We cannot, we must not, let small jets become a wedge issue to divide us – especially when these same aircraft are capable of being the bridges that bring us together.
The blame game surrounding this subject, is a waste of energy and time. We are fully capable of figuring out how to give junior mainline pilots job security while at the same time providing reasonable career progression to regional pilots in the same system.
I believe the answer lies, like it always has, inside the framework of our core values and strategies. As I said just a moment ago, our founding fathers' values and strategic plans have been validated by the test of time.
To prove this point, let's do a little visualization exercise right now. Visualize a graph where we plot out the success of airline pilots over the last seventy years using the three critical parameters:
If we plot our success and failure against these three parameters, the results are clear, unmistakable and irrefutable. Let's plot the first parameter: -- ALPA's market share. When ALPA's market share drops -- pilots lose.
When ALPA loses market share – pilots lose! Average pilot pay, benefits and job security decline.
Now lets plot parameter number 2.
When we deviated from Decision 83 and our productivity negotiating model, we always "dollar averaged down." It was concessionary. There was always some "special" reason given for the deviation – but the result was always the same. Pilots lost every time.
How about parameter # 3?
When we had friends in the White House, pilots won – when we had enemies, pilots lost badly.
In 1948 – Truman settled the National Airlines strike in ALPA's favor on pure political grounds. ALPA and the AFL supported Truman; National management supported Dewey. It was as simple as that.
In 1962 – The two-year old Southern strike ended when Kennedy replaced Eisenhower and replaced a Republican CAB member with a Democrat named Robert Murphy, a friend of ALPA and the AFL. Suddenly, the CAB had three Democrats and only two Republicans. Just as suddenly, by a vote of 3 to 2, the CAB for the first time ever invoked its legal power and found Southern guilty of bad faith bargaining. Shortly thereafter the strike ended on ALPA's terms. Once again, rawboned partisan politics made the difference.
Standing in sharp contrast is the 1983 loss of Continental, which can be laid squarely at the feet of Ronald Reagan. The same can be said of George Bush in 1990 in the Eastern tragedy.
Lorenzo was no tougher than Frank Hulse, the CEO of Southern, or Ted Baker, the CEO of National. In 1948, we had Truman and in 1962 we had Kennedy to save us, and snatch victory from the jaws of defeat.
In 1983 and 1990 we had Ronald Reagan and George Bush who fed us to the lions instead.
There is a lesson in here somewhere.
Visualize our graph of seventy years of defeat and success. Visualize your future and where you and your family want to be in twenty years. Now visualize a union; -- this union on the march to achieve your goals; because that's exactly what we are doing!
This is a union that is returning to its roots, its core principle! Its core negotiating strategy. A union that is politically engaged at the highest level – the pilots union, -- ALPA is on the move today.
We're regaining market share and winning because of it. With more market share we will win even more! As your president, I've signed more first contracts with significant gains this year than anytime in the last twenty years.
United pilots just finished using Decision 83 to blow everybody's doors off, and Delta pilots are chomping at the bit to go even farther.
This environment for success for pilots was made possible because President Clinton hung tough with the Northwest pilots and returned the right to strike and the right to win to the pilots in 1998.
Last November, when the world wanted aviation included in GATTS and the World Trade Organization, -- ALPA said: "Hell no! to the WTO". The president of the United States and the Prime Minister of Canada said: "We’re with ALPA!" We won.
For fifteen years the Reserve Rest Rule was in place but unenforced. ALPA said: We want it enacted now. – Management said: It will never happen. – December 12, 1999 it happened, the reserve rest rule went into effect. We won.
For thirty years, the Aviation Trust Fund was a political shell game and taxes collected were not used for its intended purpose.
This Spring, ALPA built and led a political coalition that got $33 billion out of the Trust Fund – for our future – for our jobs – for our safety – WE WON.
Early this summer, the FAA, under huge pressure from airline managements, reneged on our negotiated LAHSO agreement.
As your president, I called for an all pilot moratorium on LAHSO in the United States and Canada. Our opponents said: "modern day pilots are incapable of that degree of cooperation across company lines, -- let's call their bluff."
You responded to me, our members responded to you, and LAHSO in North America was shut down completely! By August the FAA and the airlines were begging for the old "deal" back. We won!
Don't forget that the moratorium is still on in Canada – the Canadian government has not yet agreed to our terms.
And finally, two months ago, the Clinton Labor Department ruled in ALPA's favor that pilots are entitled to coverage under the Postal Service Contract Act, meaning that all pilots whose carriers have postal service air mail contracts are eligible for a "prevailing wage determination" standard. Back to the future .... just like the Air Mail Act of 1935.
We truly have come full circle and landed where Dave Behncke and our forefathers began.
Which only goes to demonstrate the value and necessity of going back to your roots. ALPA is BACK!
We are winning now because we have returned to our core values, our core strategy, and we’re fully engaged politically where we belong – on the side of labor – on the side of working families.
But what’s next for ALPA? Will we build on the momentum we have today, or relax and rest on our recent laurels?
This board, this group of pilot representatives, this highest governing body of this great union, is gathered together at the dawn of a new century. And, ladies and gentlemen, we are at a crossroad. A crossroad where the choices we make will directly affect the quality of life for airline pilots, their spouses and their children for a generation.
When you deliberate the ambitious and terribly important agenda before you, look through those pieces of paper and see the faces of the hundreds of thousands of men, women and children who depend on you to use your power, the power of trade union leadership, courage and pragmatism to bring real value to their lives.
ALPA is not a social club. ALPA is not a fraternity. ALPA is the licensed and legally recognized collective bargaining agent for 58,000 families with billions in wages and billions in pensions and health care at stake. If that is not a big business responsibility, I don’t know what is.
This business is not a game. It is not a sophomoric political sport to be conducted in a virtual reality. This is the real world with real and measurable consequences for working families.
Throughout the course of our history there have been high points and low points, but at every critical moment, the airline pilots who sat in the seats we occupy today, did not fail us. They rose to the occasion, made the hard decisions that only leaders with courage and internal strength can make.
Fifteen years ago, in 1985 ALPA leaders in our darkest hour when insolvency was a real possibility – when the piloting profession seemed to be spinning out of control in a race to the bottom, ALPA leaders sat where you are sitting now and basically doubled ALPA’s dues and created the Major Contingency Fund. That decision saved this union and it saved the piloting profession. We take it for granted today, but it was a gut-wrenchingly difficult decision at the time. Many delegates worried that the membership would rebel at higher dues. They couldn’t have been more wrong. The membership rejoiced that their leaders acted forcefully and with conviction rather than wallowing in self-pity and playing yet another round of the blame-game while pilot families and futures were at risk.
I say again, my fellow pilots, we are at a crossroad. The first generation built this union to a gold standard. The last generation saved it when every pundit in the industry predicted our demise.
This generation has an opportunity to take this union and the families it is responsible for to new heights. Why should this union settle for the status quo? Why should we settle for a few recent victories that still leave too many pilots behind and puts at risk these tenuous victories?
Let’s be worthy of our legacy and our forefathers. Let’s build the most powerful and influential union possible for ourselves and future generations of airline pilots. Let’s make this Board of Directors of the year 2000 the launching pad for ALPA’s next greatest generation.