The Airlines and Organized Labor

Abstract

It became apparent that labor relations became a big problem for American Airlines when the pilots executed the sick out of 1999 because of the unfair business practices that American Airlines did by acquiring another airline and had a two tier wages. The union wanted a resolution and sometimes those are hard to come by.

Companies can be very productive if they have good labor relations with their employees.

When dealing with labor problems there many questions one must answer. How did you become aware that there was a problem? What goals, objectives, and tools/techniques did you use to frame the problem? What effects does this problem have on the organization? To what extent can this problem be solved? What are the causes and forces of influence? What measurements can be made to determine when the problem is solved? What defines the criteria for measuring a successful outcome? What alternative solutions can be identified? These questions can help identify, understand and solve the problem, if there is a possible solution.

American Airlines' (AA) problems with organized labor, specifically the Allied Pilots Association (APA) in 1999, can be traced back to its actions in 1987 following the integration of Air Cal. In 1999; American Airlines pilots were involved in a sickout over the acquisition of Reno Air. The pilots had charged that American would not raise the salaries of the already lower paid Reno Air pilots and would begin to give routes to these lower paid pilots over the higher paid American pilots. Had American Airlines not already demonstrated this tactic with the Air Cal pilots, the American pilots might not have thought it would happen. It can be said that the integration of Air Cal is what brought American Airlines' labor problems to the awareness of the United States public.

In order to better understand the problems facing American Airlines and its organized labor force, one must first frame the problem. AA and the APA should first define the problem. AA saw an opportunity, in acquiring Reno Air, to expand its service.

The APA saw this as an opportunity to cut labor costs by offering flights to lower paid pilots. Although AA tried to explain that this was not the case, previous history said differently. The next step to framing the problem would be for AA and the APA to identify its stakeholders: shareholders, passengers, employees and management. After all stakeholders are identified, both sides should look at all the alternative solutions: strike, bring Reno Air pilots to same wages as APA pilots, guarantee Reno pilots stay at bottom of seniority list, etc. Finally, the company and the union should come to a consensus decision.

Whether problems are large or small, they will have an impact on an organization. The American Airlines pilot sickout is no exception. Although this problem only affected one area of American Airlines, the pilots, the entire organization went into slow-motion mode. The pilots are main factors in American airlines. Pilots cannot be replaced by any other part of the team such as the ground crew, middle or upper management, or the flight attendants. If a pilot does not show for work, the flight is either scrapped or delayed until a different pilot can arrive. At the time of the court filing on February 9, 1999, the sickout had escalated from 470 to 1200 pilots ("American Airlines Disappointed, union calls off the talks", ARM Corporate Information, Corporation and subsidiary news release, February 10, 1999). Could a problem of this magnitude be resolved?

A problem of this magnitude cannot easily be resolved. The pilots were looking for compensation, benefits, and pensions that American Airlines was not willing to give up. The acquisition, Reno Air, added more to the already strained labor relationships within American Airlines. American Airlines and the union resumed negotiations on February 9, 1999, at which time 827 flights were cancelled affecting some 73,000 passengers. American Airlines requested a temporary restraining order on February 10th 1999 to end the job action (Moorpark Star, February 9, 1999, page. A3). On February 10, 1999, US District Judge Joseph Kendall found that the underlying labor dispute was a so-called "minor dispute" and, thus, the job action was "inappropriate and has to stop" (Daily Review, February 11, 1999, page News 1).

In the case of American Airlines (AA) vs. the Allied Pilots Association (APA), the causes of influence as initiated by AMR Corporation (American Airlines) are predicated on creating an advantage over competing airlines in the industry by acquiring Reno Air and its west coast routes and increasing the bottom line profits of shareholders at the expense of both American Airlines and Reno Air pilots. It appears that American Airlines was driven by its corporate culture of being one of the industry leaders and decided to flex its corporate muscle, in other words conducting business in an adaptive mode responding to industry changes or competitor initiatives. At the time Americans' CEO Don Carty and its board members placed the value of acquiring the west coast routes of a smaller air carrier (Reno Air), a high priority to gain a competitive edge over the other major air carriers. Because of the many years of experience in the airline industry and having taken over other similar smaller carriers in the past (Air Cal in 1987), AA felt confident that the take over of Reno Air fit their profile of past decisions in these matters as before, possibly never expecting the resistance from the APA.

In determining the various measurements

...