“Preparing for a Billion”
Remarks by Capt. John Prater, President, Air Line Pilots Association
The Aero Club of Washington, D.C.
Thursday, June 28, 2007

Thank you all for inviting me here today. It is indeed a privilege.

While this is my first opportunity to address the Aero Club, I feel especially at home here because I know that every person in this room shares my commitment to the airline industry. In one way or another, each of us works to ensure its safety, security, and financial stability. It is also an important day for our industry and for my members’ profession, as the House T&I Committee begins the mark up on the FAA Reauthorization bill even as we speak.

I know we all understand just how important the current debate over the FAA reauthorization is to all the stakeholders of our industry. This only reinforces how our industry is impacted by the decisions made in Washington. I know first hand the effects that the Deregulation Act of 1978 had on our industry and the battles in the early 80s to change the bankruptcy laws to prevent unilateral abrogation of labor contracts. The last 5 years of the airline bankruptcy era caused utter destruction of many collective bargaining contracts. Having five airline chapter 11s, three failed pension plans, and seven mergers between my wife and me makes us perfect symbols of the workers in our service industry.

Yet, let’s depart from the past and speak of our future. I feel profoundly optimistic today. I am more determined than ever to see this industry continue its return to financial health and for airline pilots to regain the respect and reward they earn each and every flight. The 60,000 airline pilots I represent have suffered through what were arguably the darkest economic times of the modern aviation industry, yet we have persevered. What’s more, we have endured. While we are beginning to put these times of extreme sacrifice behind us, we will not forget them.

For pilots, at least three seminal truths have characterized the years since 9/11.

The first is that we delivered when our companies needed us. After the terrorist attacks of 9/11, plummeting passenger and revenue numbers caused serious financial hardship on our airlines. That hardship was furthered by skyrocketing fuel expenses. Airline managements were forced to restructure drastically, both inside and outside bankruptcy, and part of that process included asking for massive labor concessions. Management turned first to pilots, as the leaders of their airlines. And we, in turn, rallied to help save our companies.

At managements’ request, and to avoid having them abrogated by the bankruptcy courts, we consented to open our collective bargaining agreements. Under duress, we agreed to significant reductions in our pay, gave up benefits, and in some cases we even had to witness the termination of our pension plans. Since 2001, pilots have given more than $30 billion in concessions.

And, due in no small measure to pilots’ sacrifices, our airlines survived.

The reward for this partnership through painful times should be shared prosperity after the crisis. Instead, at the first whiff of economic recovery, some airline managements immediately sprang into action. Many took exorbitant raises, bonuses, and stock grants. Meanwhile, those managements continue to maintain that the same pilots and employees whose sacrifice meant their companies’ survival should continue to work for rock-bottom wages with slashed benefits. Moreover, they feel pilots should be content with meager pay raises and profit-sharing payments that only partially return lost pay.

To illustrate my point, consider a pilot at one network carrier who endured two rounds of concessions that included a 30 percent pay cut, a second pay cut of 12 percent, harsher work rules, less job security, and a terminated pension plan. In 2007, that pilot received a 1.5 percent pay raise and a profit-sharing check worth 0.4 percent of his W-2 earnings. As harsh a reality as that is, imagine that pilot’s disbelief and anger when learning that the airline’s CEO received a compensation package last year worth $40 million dollars. Horror stories also exist among the thousands of pilots flying in the US Airways family of airlines. Managers there departed the scene leaving behind the employees who struggle to take care of their families while delivering millions of their passengers safely day after day.

Pilots will never forget their sacrifice.

The second truth is one that we have learned anew: pilots are profoundly affected by who governs our nation. Time and again, this administration has hobbled both the U.S. aviation industry in its struggle to recover and airline pilots in their quest to be treated as professional colleagues rather than as commodities. This administration conveniently forgets the importance of the air transportation system to the national economy when it does not suit its political agenda. For example:

Airline ticket taxes pose an unfair burden on our industry. On 9/11, terrorists attacked this nation, not four individual airliners. Safeguarding passengers, crews, and cargo protects the country, yet airlines are expected to fully fund this increased security. Federal taxes and fees constitute as much as 40 percent of a domestic roundtrip ticket. This is a higher tax than consumers pay in federal consumption taxes on alcohol, tobacco, guns, or gasoline. ALPA maintains that airline security is national security and should be funded from the general treasury.

This administration displayed its anti-worker character again in 2005 when the Department of Transportation introduced a notice of proposed rulemaking in an attempt to allow greater foreign control of U.S. airlines. The proposal sought to grant foreign interests control over virtually all operational and economic decisions at U.S. airlines. It failed to consider how doing so would negatively affect the wages and working conditions of airline employees, among many other issues. As we all know, with ALPA’s urging, and with support of some of our employers, members of Congress on both sides of the aisle strongly objected to the proposal and the DOT eventually withdrew it. Phase two of the U.S.-EU talks will receive our full attention. Pilots will not be left at the gate in the forthcoming international negotiations.
Pilots will never forget that politics matter.

The third truth is that this nation’s bankruptcy laws have been hijacked and require urgent reform… again. Since 9/11, airline managements have exploited the bankruptcy process to invite compliant judges to abrogate collective bargaining agreements with impunity.

Managements tried to use the bankruptcy process where it wasn’t justified at airlines like Hawaiian. They refused to bargain in good faith at Mesaba and argued against our right to refuse to perform services after they rejected our contract, a right that every other party to a rejected contract has under the current bankruptcy code.

Congress needs to reform bankruptcy laws well before the next fiscal crisis to ensure that the process cannot be abused. Some of us here might remember that Congress went so far as to bar an individual from ever from running an airline again after dragging two airlines into bankruptcy.

Pilots will never forget the need to reform the bankruptcy code… again.

These three truths frame our industry today. As we survey the horizon, we know…

We need to modernize. It’s not news to anyone in this room. The federal government anticipates that the number of large U.S. airports handling more than 500,000 flights per year will triple by 2025. The U.S. is already reaching the limits of our aviation system capacity in New York, Chicago, Atlanta, Boston, and Los Angeles. What’s more, we do not need to relearn the long hard lessons of the 1980s, which demonstrated the impact that an FAA at war with their ATC controllers can have on our lives.

We know that a huge storm is looming on the horizon. The question is not if, but when, we will hit turbulence. We need to be ready with a modern air transportation system that is positioned to succeed in safely moving more passengers and cargo than ever before, if we are going to maintain our global standing.

In 1970, Congress established the Airport and Airway Trust Fund “to provide for the expansion and improvement of the nation’s airport and airway system.” The Trust Fund initially aimed to address capital needs, such as runways and taxiways at airports and new computers and radar equipment for the ATC system.

Unfortunately, Congress has long turned to Trust Fund revenues to cover much of the FAA operating budget. The Trust Fund is in no position to make the capital investments needed for the future. The FAA must have a reliable, long-term funding source that will allow it to modernize control of our country’s airspace. All involved must pay their fair share for funding it. We believe that the provisions of S.1300, the Aviation Investment and Modernization Act of 2007, as reported by the Senate Commerce Committee, go a long way towards accomplishing that goal.

We also need to do more to safeguard our airliners. Our current aviation security system does not appropriately use its resources and, as a result, fails to adequately secure us. While our security net is stronger than before 9/11, the people who develop aviation security strategy remain focused on objects, not the intent of individuals.

Further, airline pilots and flight attendants, who pass extensive background and personal history checks as a condition of their employment, should be considered part of the security solution. Yet, our current system doesn’t do that. It still treats flight crews as though they pose the same threat as terrorists traveling as passengers. Consider the money and staffing that could be used more efficiently by taking thousands of airline pilots and flight attendants, about whom much is known, out of the full screening process and focusing our limited resources on the real threat.

Screeners, the individuals who are on the front lines of our security system, need to have a voice in the way that the system is run. They don’t now, and this administration is aggressively working to stop their attempts to win the right to bargain collectively—a right that all other employees, including public safety officers, have under the law.

And the yawning gap in air cargo security, which lags dangerously behind that of passenger airlines, means that we have failed to acknowledge an obvious hole in our safety and security net. Cargo airliners must be operated under the same standards as passenger operations.

My main point today is that to take on these significant challenges, the airline industry needs a new model of cooperation. We know that when pilots have partnered with airline management, aircraft designers and manufacturers, and the federal government, those partnerships have produced success. Let me give you a few examples.

ExpressJet has come a long way from the turboprop carrier that Continental created from several commuter airlines in the early 1990s. Following a difficult transition from being a wholly owned carrier of Continental, ExpressJet’s management now treats its 3,000 pilots as partners. Management agreed to a negotiating protocol to promote efficient and successful collective bargaining. ExpressJet management met with ALPA leaders and forged creative solutions.

Management has been wise enough to plan strategically for the future and to consult and discuss these plans with pilots first, instead of relying on the worn out method of acting and then trying to fix what they’ve done. The result is a financially stable company, serving more than 152 destinations. A stability and partnership increased by more than a thousand ExpressJet pilots moving into Continental cockpits in the past decade. An agreement based on a handshake and a contract between labor and management. Trust is always a valuable tool for profitability. Broken promises shatter any hope for trust and profits disappear… sometimes permanently.

The development of Boeing’s Dreamliner is also proof positive of the power of working with pilots, the ultimate stakeholders in operating airliners. For decades, ALPA’s aircraft development team has worked closely with Boeing to identify the means and mechanisms for improving aircraft safety, security, efficiency, and comfort. Whether through designing a pilot-friendly flight deck, adopting a quiet crew rest bunk, or responding to concerns about the use of composites, Boeing listened and learned from line pilots. As Boeing’s 787 program manager and vice-president told the ALPA delegation at the unveiling of the Dreamliner flight deck in August 2006, “One of the reasons that the 777 is a world-class airplane is the involvement, knowledge, and experience of pilots like you.”

The Federal Flight Deck Officer program stands tall as an example of ALPA’s working with government to enhance aviation security. We were the first organization to call for the creation of the program because we knew that our workplace—the flight deck—was a primary point of protection to safeguard passengers and crews. From the outset, we emphasized that the program must select, train, and deputize qualified volunteers. The foundation of the FFDO program is the quality and dedication of the pilots who serve. It provides a clear deterrent to those who seek to harm. While ALPA still sees opportunities to improve the program, its value to the security of the air transportation system is unquestioned. Today, we call upon our carriers to follow the lead of United Airlines and voluntarily install a secondary barrier to the cockpit door. It is the single cheapest and most effective way to prevent another flight deck from being taken over by a terrorist or a deranged passenger.

As we look ahead, the demand of one billion U.S. airline passengers and an equally formidable demand for cargo transport present challenges and opportunities of unprecedented proportions.

One emerging challenge is pilot training. The current regional and cargo airline expansion conflicts with the availability of pilots. Reduced pay and benefits have exacerbated the shortage. The industry is responding the wrong way, by slashing hiring standards and trying to reduce the costs of pilot training.

When I was first hired as a pilot at Continental, I had more than 5,000 hours of flight time; that’s hands-on experience. I then received two months of training as a new hire. Today, some regional airlines require as few as 200 hours of flight time for a pilot to land a job. This sends up a red flag fast for ALPA. Adding to the mix is the increasing international acceptance of multi-crew pilot licenses that seek to push real-time experience levels even lower.

The first step in addressing this shortage is to attract the best and brightest to our industry by offering appropriate wages and benefits. The 60,000 pilots of ALPA are also ready to help the FAA and airline managements refine and update training programs to position the next generation of airline pilots to carry on our union’s motto of “Schedule with Safety.”

Seventy-six years ago, ALPA was founded as part of a fight for a safer system. No other organization holds the depth and breadth of safety and security knowledge or line pilot experience. As our industry seeks to transform today’s system to meet new demands, ALPA and our pilots will be front and center. Airline pilots are the foundation of a safe, secure, and stable U.S. air transportation system. We expect and will demand at the bargaining table to be treated as such.

Now, let me tell you the truths that airline managements, aircraft developers and manufacturers, and government agencies need to know when dealing with pilots: the standards of our profession must be rebuilt.

These standards include: a level of respect for and willingness to consult with pilots; a quality of work life that contributes to safety and security; pay and benefits that recognize pilot contributions to the health and survival of our companies and industry – and ensure that the industry can attract qualified candidates to our profession.

Pilots expect a standard of pay and benefits that recognizes our role in the industry and the contribution we make to our companies. Industry financial performance has been better than predicted during our days in bankruptcy and balance sheets have been repaired faster. CEOs and upper management are readily taking their piece of the pie.

Pilot collective bargaining agreement standards likewise must be rebuilt and maintained – both for the employees who saved our companies and to ensure that standards of pay and benefits for the pilot profession will continue to attract the best job candidates. ALPA will not back away from reestablishing the contract standards that reward employees, provide you with safe and non fatigued pilots, and attract new men and women to join our ranks.

While the challenges we face as we prepare for a billion passengers are formidable, so is the power of the partnership that will result from rebuilding the standards of our profession. I am here to tell you that our industry’s pilots are ready to work with you. Now I ask each and every one of you… are you ready to work with us?

Thank you.