Unions and Airlines (2010)
philip.greenspun.com
philip.greenspun.com
-Philip says the senior pilots, the best paid, hold down wages for the junior pilots. But the contracts are decided by a simple majority vote, and the senior pilots are a small minority (and often not even the negotiators): "Senior Pilots make up the the smallest percentage of any Pilot Group, so they are not in control of what passes. Often, Contracts are passed with improvements for junior pilots that outstrip the improvements for senior pilots. I have seen this happen, and if you are in this Industry a little longer, you will, too."
(So why do junior pilots accept low entry-level wages at regional airlines? Same as any entry level employee: Hope for training to move up to the next rung.)
-Philip says the airlines are severely constrained in fighting strikes, but neglects to mention that the pilots are also severely constrained in when they can strike. "Getting the the NLRB to release a union to strike takes years, which benefits the Airline by keeping the Pilots working under the old Contract for as many as 5 or 6 additional years"
How do things work with the NLRB when you want to organize a strike ?
That statement is tautologically false since pilots are paid salaries which decidedly is not profit. According to this thread in 2002, the pilot's share of all operating expenses are 3-5%: http://www.airliners.net/aviation-forums/general_aviation/re...
I.e the 95% figure needs a cite otherwise it's bullshit.
Airline profit margins are around 1% of revenue, BTW. (And there's always a question of who captures the surplus from trade.)
Airlines and their unions have a very rough relationship. In a prior life I helped a client who was managing the firewall for an airline union. They were constantly under serious attack, and asking me how they could make their attackers' lives miserable.
Looks to me like pilot salaries are more like 50% of revenue which is 3-8% of operating expenses, not 1%. At least the 95% number is bogus.
> All jet pilots are held to the same stick-and-rudder standards of the FAA Airline Transport Pilot practical test (see faa.gov). A 70-seat jet presents the same flying challenge as a 150-seat jet. The captain and first officer trade "pilot flying" and "pilot monitoring" roles on each leg of a trip. When the actual jobs are so similar, how is it possible that some airline pilots earn $16,000 per year and others earn close to $300,000? The captains, of course, do have more experience and that experience has value to the employer, which is why non-unionized air carriers may establish a 2:1 or 3:1 difference in pay between their most senior and most junior pilots. But how can we explain a 19:1 pay differential for workers with similar training and tasks? The answer is to look at who controls the pilot's union: very senior pilots. The airline management is mostly interested in what percentage of its revenues are paid out to pilots; the distribution of the money among the pilots does not affect profitability. The very senior pilots on the other side of the table say "We need the most senior pilots to get $300,000 in pay and benefits." The airline's response is "The only way that could work is if we pay the new pilots $16,000 per year." The group of senior pilots responds "We can live with that."
And this is scary:
> From the point of view of safety, common sense would argue against pairing up a company's least experienced pilots with the company's least experienced captains and then driving them both to exhaustion. But that's how nearly all unionized U.S. airlines do it.
Is that
a) Better? b) The other thing?
(Yes, the current situation sucks and those unions certainly don't help it any. This is not an argument for the status quo.)
Having seen what some new pilots make and the shit routes they get all this talk about how negotiations somehow favor them over senior pilots is odd, those negotiations are refinements of existing contracts which have always benefited those with the most years. They encourage staying at your airline because when you don't you fall in rank and pay, the same when you get bought out. Hence when mergers occur the different unions have to agree to their members don't lose out.
In a highly specialized and professional trade as pilots are I am still trying to see why a union is necessary.
It's not across the board because of the top union earners that are privileged with triple salary for simply being in a place longer than the others. Their salaries will get slashed. That's always going to happen when you convert from a system that rewards people based on time served rather than merit.
This needs some clarification.
Firing people for merely belonging to a union is illegal, and ought to remain so.
However, firing people for refusing to work (ie, striking) is not illegal.
Thing is, I hear lots of stories about how American unions devastate their own industries. Why is that? Dutch unions make sure their members (including the young ones) are fairly compensated, but they are invested in the long term health of the industry, because that is also the long term livelihood of their members. Generally there are regular talks where employers, unions and government discuss this on an equal footing and reach an agreement that everybody can live with.
So why don't US unions work like that?
It reflects a juvenile, ego-centric view of the world that often gets rewarded.
Essentially it is supply and demand.
The supply of people that want to fly an airplane [1] exceeds the demand for pilots. So we have a race to the bottom in starting salaries.
There are people that love flying enough that they are willing to work for peanuts and that excess supply drives the salary down to the levels mentioned - "$16,000 per year" (I will assume that is correct.)
Remove that excess supply and everything changes in the equation and what the unions and airlines can do (with an established airline as well as a startup).
This is really similar to what happens in several industries with desirable jobs (entertainment is one of those).
[1] And will do so for the salary that is currently offered to start in other words.
The issue with pay based upon subjective measures is that it can be gamed by the employer in order to "divide and conquer" the workforce and ultimately break the union apart.
Even if management are given a clear set of rules in order to to decide promotions based upon merit, they can normally fudge it in some way to make sure that workers who put fealty to management ahead of loyalty to union get ahead quicker.
Once that gets started it gives other workers an incentive to do the same. Gradually that will chip away at the union's strength as more and more workers defect until eventually management can gather enough scabs, cut the union out altogether and pay everybody 14k/year.
Seniority is not an ideal measure of competence, but it is at least an OBJECTIVE measure that will correlate with competence and (most importantly) can't be gamed by either side.
So it's a normal compromise that makes a lot of sense that unions and management will agree to.
If there were other, better non-gameable metrics I'm sure their negotiations would probably converge on them instead.
And to complete the circle, said shortage is largely caused by the fucked up seniority system, which makes it a huge gamble to become a junior pilot:
http://www.ainonline.com/aviation-news/aviation-internationa...
So why are pilots still earning less than bus drivers and having to apply for food stamps?
>However, it's a seller's market for pilots right now: if they try to cut the salary of a captain who's been flying widebodies for 20 years to 14k/year, he'll be off to Emirates faster than airline management can say "Oops".
Where, as Greenspun points out, they'll be paid the same as the rest of the new hires.
Also, Emirates is in the United Arab Emirates, not the US, and about as militantly anti-union a country as you'll find -- and they're famous for luring pilots away from other airlines. By and large, the pilot seniority scheme is a US-only problem (although vestiges remain in Europe), most of the rest of the world competes tooth and claw for pilots.
This is a union thing, as I pointed out - not a problem, but a solution to an otherwise intractable game.
The low wages is likely because lots of people have the ability to learn to fly in the US and lots people REALLY want to. Supply and demand.
Part of it has to be the fact that some people want to fly so badly that they'll put up with poor pay & conditions if it means they can fly.
Air travel is such a heavily subsidized and generally government-involved business that investor-owned, TBTF airlines are a travesty of capitalism. Why not cut through the bullshit and make airlines into competing cooperatives chartered by the government? Or some other structure that is not a charade covering what amounts to a skimming of subsidies into investors', or in this case pilots', pockets or outright rescue of investors from a situation of their own making?
The situation is inherently corrupting. The only way to win is to tilt the flow of subsidies in your direction. In this case the senior pilots win because they institutionalized their levers of power.
Many people here fantasize about a libertarian approach to problems like this. Does anyone here have a serious libertarian model for air travel? Land acquisition for airports and surrounding infrastructure? Would Boeing exist without airplanes being a superpower strategic good?
http://www.rollcall.com/news/us_carriers_wary_of_norwegian_a...
Not quite. Norwegian Air Shuttle is operating international routes to and from the US. Non-US airlines are forbidden under cabotage laws from flying domestic (i.e., from one location in the US to another location in the US) routes, and even from offering such flights with a connection in a second country -- for example, a US-based airline can fly you from New York to San Francisco, but Air Canada can't, and also can't offer New York to Toronto to San Francisco.
But another interesting fact is that speed of flying is not going to increase - it actually decreased just recently with termination of Concord service. All new planes are developed to be more economical, not faster (which is more expensive due to laws of physics). NY to London in 7 hours is considered fast enough, very few people want to pay more for faster service.
Their interests are represented. The alternative to a shitty deal compared to the senior pilots is an even worse deal.
A typical scenario is that the company wants to save money, which is achieved via concessions from labor or via layoff if nothing is forthcoming. Usually the senior people bear less pain because the impact of compensation cuts is really debilitating, as it affects long-term pension payouts.
In other cases, they screw new employees. This is common in public sector and other big industrial union shops. The newbs get a 401k, bigger health contributions and the old guard keeps the pension and free healthcare.
But the core point is that the union doesn't merely serve its most senior members; it serves all of them. And if a significant number of the members don't agree with the decisions of the union, they can leave and start their own. I believe that happened a couple of years ago with a rather big union.
In practice, no.
I know of no union which have secret ballots. Nearly all use a 'show of hands'.
I don't know which the pilots unions would use.
As for pilots - I specifically said: "I don't know which the pilots unions would use."
I make no allegations about pilots unions, merely comment on the way many unions are run. I have had experience with unions in the past, including being a member.
Before a major vote we'll receive dozens of emails, letters, and newsletters expressing views from both the airline and the union. Most votes are 80/20 and even 90/10 split. Rarely has there been a 51/49 split. I've never seen it since she has joined.
Intimidation could be used to move a vote from 49.9 to 50.1 but like I said, most votes aren't even that close. Based on the material I have I can say employers use intimidation. i.e. vote this way or we'll have to do layoffs.
How much choice did he/she have in joining the union? When you receive the emails and letters before a vote, how many are from union members speaking against the union? If it's always 0, then there is some level of intimidation that your spouse likely hasn't been exposed to because he/she agrees with whatever the union says.
All 3 of the unions my parents were members of always put immense pressure on members that spoke out against the union because they don't want the company to see that there is any kind of uncertainty. Even the legal/job threats when you refuse to pay your dues because you don't want to be a part of their organization is a form of intimidation.
We've never received email or letters from other members. with 10,000 members it would be ridiculous to do so. Like any club members tend to display their dissatisfaction by canceling their membership. Everyone can express their opinions anonymously on the various aviation forums. It's how I learned about the other unions being created because her some weren't satisfied with the current leadership.
I've met her union leaders while walking around the campus and I get the impression it is a thankless job. You're rarely credited with successes and any failure is your fault. As has been said before, you know a good negotiation when no one is satisfied.
The default behavior for any organization is to crush minority opinions. It takes active and continued effort to keep minority voices alive.
(This is also a problem on the shareholder side, of course. I've personally witnessed minority shareholders get completely shafted to benefit the 51%. And to be clear, the existence of the problem on one side does not ameliorate or justify the existence of the problem on the other side.)
If you assume that total pilot pay for the airline is fixed and pay goes linearly with seniority (just to keep it simple and concrete), then increasing the wages of entry-level pilots requires reducing the wages of senior pilots. If you further assume that all pilots are perfectly selfish (that is, they'll never vote themselves a pay cut), then 50% of the votes automatically go to keeping new pilot wages low.
There will also be a contingent of just-below-median pilots who have paid their dues and are looking forward to the fat paycheck that comes with being in the top 50%. Transferring pay from high-seniority to low-seniority hurts the lifetime wages of this group, so they'll vote against it, too.
Thus new pilots are paid a pittance and old pilots are paid handsomely. I'd think this still works even if the pay scale is strangely-shaped.
It would be like claiming a school teacher would be surprised at having to spend a lot of time with children, or claiming a pilot would be surprised to learn he would be expected to fly an airplane.
What you're really asking is why people outside the organization are completely frozen out because they refuse to participate in the compensation model and should big brother intervene in a conformist manner to make the compensation scheme "more normal" for a self selected group who do not want it.
Its much like "you can't be a MD without working 36 hour shifts" or "you can't be a (real) programmer without working 120 hour weeks in open plan offices" it freezes out a large segment of the population, and that's just kind of how it is. Obviously the vocational skills of doctoring and writing programs have no inherent need of abusive working conditions, but that is the industry standard and those participating like it and there's no shortage of applicants, so...
The motivating factor for airline wages is experience, and availability of airplanes to fly. Experienced pilots come primarily from the US military. For a civilian trying to get into that market you are essentially a liability the first five years of flying. Military guys come out with 8-20 years experience... And thousands of hours, And Uncle Sam paid all their practice time. As a civilian you are only worth $16k per year because that's what the military pays junior flyers. (Which sucks because jet instruction is hundreds of dollars per practice hour to fly the smallest little Lear, easily $20k out of pocket) There are are only a fixed number of jets in commercial service.. There are far more entry level pilots than available jobs, several times over.
At the Top end, the number of qualified pilots thins out dramatically... It takes thousands of flight hours and hundreds of instruction hours. So those pilots are worth $300k... Probably more except a fair number of them would be living off Military retirements.. Which forces wages below the actual cost of acquiring the skills.
Commercial piloting is an MLM scheme... Lots of people are willing to work for crap wages just to get wings and a shot at the bigger planes you can ONLY get from airlines. There is zero leverage for new employees.
Also, if airline are only paying pilots 5% of operating expenses, then pilot wages were NEVER the problem... They're just easy to blame. If you are running a business so close to the red you cannot have 5% wiggle room your business model has far bigger problems than Unions wanting slightly better wages. Blaming the employees because you cannot pay a fair wage is just being a pussy of a business owner.
It'd be interesting to dig into the history behind them. (Did pilots lobby for them, or did they make sense at some point for safety?)
This link http://www.pilotscafe.com/new-first-officer-atp-rules-explai... explains it in pretty simple terms.
Sure they can. They're called scabs or strikebreakers.
Airlines are a bit like football clubs or Formula 1 teams - the way to make millions at it is to start with billions. Airlines are also like railways a century or more ago - big wage bill, big fuel bill, lots of infrastructure spread out over a geographically large area, a constant need to keep everything maintained and the ever present danger that some disaster might happen. Compare that with your 'Instagram' companies that have similar sized stock market valuations.
Did anyone make money out of the boom in railways? Or were all railways some type of speculative bubble where mergers, state bailouts and bankruptcy were all par for the course?
In Europe the airlines don't pay tax on their fuel. If they did then there probably would not be many airlines.
Whether it is trains or planes the key to making money out of it is to have some kind of trick. When you see a train or a plane packed to the gills it is impossible to imagine that the venture as a whole is anything but profitable, but, big picture, take away the tax-payer provided subsidies, the tax-payer provided infrastructure, the tax-payer provided loans and other incentives and, unless there is that trick, then it is a mug's game.
The future of airlines is already here with some of the European low-cost carriers. Essentially the staff no longer have jobs that are any more glamorous than that of a coach tour driver's. In the turn around it is the cabin crew that hoover the plane, pick up the sweet wrappers and make things good for the next horde of passengers. There are no specific cleaners to do the job whilst the cabin crew waltz off to enjoy a well earned break. I quite like this new reality, I also liked travel in the days of Pan Am and TWA when planes had a jet-set feel to them. However, regardless of the staff and what they have to do, running an airline is no easy way to make money and you cannot blame the unions when it doesn't work out.
Then there is the footnote of Southwest Airlines. He mentions how the unions are happy to negotiate unfavorable terms for junior pilots/airlines, and then contradicts himself by saying, well maybe Southwest's pilot union isn't doing that. I fly southwest quite frequently(in the past 6 months I have been on at least one round trip per week 60% of the time) and I certainly notice that the culture of the airline is very different than say, United. Southwest, while not perfect, are pretty cheap to fly most US domestic locations I frequent. They don't nickel and dime you with fees(checked bags, changes, etc). I flew united a couple of months ago and ended up having to change my ticket. I lost 200 dollars, had to pay 60 dollars to check a bag and generally had a poor experience at the "luxury" of getting to choose my seat ahead of time(which ended up being a "premium" seat for an extra charge.)
My point is this, most carriers have a management style that pits pilots against both themselves(junior vs senior) and the airline. As long as this continues, the cycle of boom/bust for most airlines will continue. I believe southwest is different in several ways:
- only fly one plane type(737) simplifying maintenance, making pilots more interchangeable on routes and probably improving safety in general.
- customer focused service, and from what I have read about the airline, a culture of taking care of employees.(a good example being when Southwest sold a plane instead of laying off workers in their early days)
- not following the "regional" model of air travel yet still serving many of those "regional" destinations. From what I have seen its mostly these regional airlines that have deplorable pay and flight schedules.
I personally am pretty anti union, but I cant point the finger at them in this case as being at fault. I think that unions may have some effect on how pilots are paid and treated, but they are by no means the only reason.
Alternatively, you might get onto a plane with a junior crew. Your pilots are exhausted from being on the last day of a four-day trip. Each night they've gotten a 9-11-hour "rest period", but that includes waiting for a shuttle to the hotel, riding the shuttle to and from the hotel, showering, eating, and possibly trying to sleep at an unusual hour. Perhaps they've slept 5 hours each night. The first officer joined the airline a few months ago. He or she has some simulator training, but is struggling to stay ahead, mentally, of the airplane.
Get rid of the unions and every crew would be exhausted, underpaid, and undersupported. You can't trust corporate management. Source: centuries of observation.
Pilot salaries aren't that expensive. A pilot logs about 40-45 flight hours per month (the guideline is 40, but that doesn't include takeoff and landing) for a total around 500 per year. Since length of flight and passenger count are correlated, and since we're talking about the highest-paid pilots, we can assume an average passenger count of 150. That's 75,000 passenger-hours per year. For a $300k pilot, we're talking $4 per passenger-hour. That's nothing, compared to the price of a ticket.
The reason airlines are so brittle, and suffer when business cycles go against them, is that they have enormous fixed costs while being in a commodity business. Also, the bulk of their profit doesn't come from leisure travel but semi-discretionary business travel (hence the premium paid for airline tickets less than 14 days in advance, and for business class) and that goes away quickly in a downturn, now that videoconferencing is an option.