06 March 2008 - U.S. airline industry publication
PlaneBusiness Banter may have a better feel for the dynamics that characterize the intersection of labor and management than any other.
The Transnational this week spoke with PlaneBusiness.com "founder, CEO, publisher, juggler and chief entertainment officer" Holly Hegeman about the latest big airline moves, how they're struggling over labor relations and the implications for the global aviation market.
Unlike the situation with US Airways and America West, the management team at Delta decided they wanted to have a buy-in upfront from their pilots union before they progressed further with the deal. We had an announcement that both pilot groups had bought into the overall concept of the deal; however, everything then bogged down on the issue of seniority. I think people who are not that close to the industry find it hard to believe that one union group can put the skids on this process, but they can and they have. Listening to Delta pilots that I know, I don't see an easy solution to this. They have dug their feet in, and they don't want members of the Delta pilot group to be stapled to the bottom of a list. And on the other side, the Northwest pilots don't want to be taken advantage of, either. So, right now we have a standoff. As US Airways' Doug Parker said last week, it's probably not fair to put this to the pilots in this way because then you're saying, "Here's the deal. You guys figure it out, and you have to get it done in a very short period of time." As we have seen with US Airways and the complete mess that pilot situation has turned into [following US Airways' merger with America West Airlines], it's all over this same issue, and it's called seniority. It was kind of like Delta thought they were doing it the smart way by giving pilots the buy-in upfront and then proceeding. So now they have given their pilots the say so as to whether the deal would go forward or not.
At this point, with oil at $100 per barrel, I'd say yes. It's not the money side. There is financing available to do the deals. And there's the drop in the dollar. Lufthansa's investment in JetBlue was a drop in the bucket. It's nothing. A Lufthansa official said it invested in JetBlue because JFK [airport] is very important to Lufthansa, and United had made the decision that JFK was not very important to them. Lufthansa had been looking for an alternative because it wanted a strong presence in New York.
So if the regulatory framework were different, Lufthansa might have bought more of JetBlue. People have brought up national security concerns regarding increasing the cap on foreign investment, but if labor was on board, wouldn't U.S. Congress be more likely to change the law?
Yes, but I think the situation at US Airways is an example of how bad [labor relations] can get. It is the biggest stumbling block, and even 10 years ago the international pilots unions spoke and said they were concerned [about cross-border airline investment]. The British Airways pilots are now concerned that
BA's new OpenSkies will set a new lower tier of pay.
AA pilots stated their solidarity with BA pilots on that, right?
Well, the mainstream media picked up on it and said American Airlines pilots would go on strike ... No, they're not going to strike. The statement they put out was a very blustery type of statement, but there's not a whole lot they can do.
How international are airline industry unions in general?
They're not, really. You have the international organizations and there are union members who go overseas, but do they get together and compare notes? No, I don't think so. You have seen more cooperation in terms of safety issues, like batteries on planes. So they get together on certain issues like that.
