Airline Labor Relations: Information on Trends and Impact of Labor Actions
Published: 2003-06-13T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Labor negotiations in the airline industry fall under the Railway Labor Act. Under this act, airline labor contracts do not expire, but instead, become amendable. To help labor and management reach agreement before a strike occurs, the act also provides a process--including possible intervention by the President--that is designed to reduce the incidence of strikes. Despite these provisions, negotiations between airlines and their unions have sometimes been contentious, and strikes have occurred. Because air transportation is such a vital link in the nation's economic infrastructure, a strike at a major U.S. airline may exert a significant economic impact on affected communities. Additionally, if an airline's labor and management were to engage in contentious and prolonged negotiations, the airline's operations--and customer service--could suffer. GAO was asked to examine trends in airline labor negotiations in the 25 years since the industry was deregulated in 1978, the impact of airline strikes on communities, and the impact of lengthy contract negotiations and nonstrike work actions (such as "sickouts") on passengers.
section_title: What GAO Found
paragraphs: Since the airline industry was deregulated in 1978, the average length of negotiations has increased, strikes have declined, and nonstrike work actions (e.g., sickouts) have increased. After 1990, the median length of time needed for labor and management at U.S. major airlines to reach agreement on contracts increased from 9 to 15 months. Of the 16 strikes that occurred at those airlines since 1978, 12 occurred prior to 1990, and 4 occurred subsequently. All ten court-recognized, nonstrike work actions and all six presidential interventions occurred since 1993. Airline strikes have had obvious negative impacts on communities, including lost income for striking and laid off workers, disrupted travel plans, and decreased spending by travelers and the struck airline. However, such impacts have yet to be thoroughly and systematically analyzed. The potential net impacts of a strike on a community would depend on a number of factors, such as availability of service from competing (nonstriking) airlines and the length of the strike. For example, of two recent strikes, one lasted 15 days and one lasted 24 minutes. GAO's analysis indicates that passenger service has been affected more adversely by nonstrike work actions than by an increase in the length of negotiations. Generally, but not always, as negotiation periods increased, there has been a slight decline in on-time flights. However, the impact of these negotiations has been unclear because the decline may also have been affected by other factors such as poor weather. By comparison, the 10 court-recognized, nonstrike work actions more clearly resulted in negative impacts on passengers, as shown through such measures as a decrease in the number of on-time flights, an increase in the number of flight problem complaints, and a decrease in passenger traffic.

section_title: Letter
paragraphs: Observers of the interactions between airline management and labor have  long characterized these labor relations as contentious and adversarial.  Negotiations between unions and airlines, for example, have taken up to 4  years to complete. Unions and airlines have each prolonged negotiations  for their financial benefit. The importance of labor relations has recently  been magnified by the financial crisis facing many airlines. Since  September 11, 2001, US Airways, United Airlines, and Hawaiian Airlines  have entered Chapter 11 bankruptcy, and American Airlines is fighting to  avoid bankruptcy. US Airways, United, and American have all had to  obtain the consent of their unions for contract concessions to  substantially cut labor costs. At stake, according to industry observers and  financial officials, has been the continued existence of at least two  airlines.
The process under which labor negotiations in the airline industry take  place is substantially different than the process of most other industries.  Airline labor contracts do not expire, and their negotiations can include a  series of steps—including mediation, arbitration, and presidential  interventions—specifically designed to avoid an impasse that would  interrupt the flow of essential commerce. Since 1936, airline labor  negotiations have been conducted in accordance with the requirements of  the Railway Labor Act, which contains an established framework to  reduce the incidence of strikes. Although the act is designed to bring about  settlements without unions resorting to a strike, negotiations between the  airlines and their unions have sometimes been contentious, and strikes  have occurred. Recently, negotiations have at times been marked by  nonstrike work actions, such as sickouts and work slowdowns. These  actions are designed to place economic pressure on an airline.
Because of ongoing concerns about the scope and impact of airline labor  negotiations, you asked us to examine a number of issues concerning  airline negotiations, strikes, and nonstrike work actions. As agreed with  your staff, we examined the following three questions:    What have been the major trends of labor negotiations in the airline  industry since the industry was deregulated in 1978, including the number  and length of negotiations and the number of strikes, presidential  interventions to avoid or end strikes, and nonstrike work actions?
What has been the impact of airline strikes on communities?
What have been the impacts of the length of negotiations and the  occurrence of nonstrike work actions on passengers?
In addition to these questions, you also requested information on states  using binding and last offer arbitration for essential employees and the  number of times Congress has intervened in railroad labor negotiations in  the last 25 years. See appendix I for data on states using binding  arbitration and congressional interventions in railroad negotiations.
To determine the trends of labor negotiations, we analyzed data on  negotiations, strikes, and nonstrike work actions from airlines, labor  unions, the National Mediation Board (NMB), industry groups, and  academic experts. We also interviewed officials with major U.S. airlines,  labor unions, the NMB, industry groups, and academic experts. To  determine the impact of strikes on communities, we reviewed available  published studies from academics and other experts, and we analyzed data  on airline schedules. To determine the impact of nonstrike work actions,  we defined such actions as those in which airlines obtained either  temporary restraining orders or injunctions against unions to prevent  various actions. We then analyzed data from the U.S. Department of  Transportation (DOT) on airline operational performance and passenger  service. Except where noted, all data collected were current as of  December 2002. Because of various data limitations, our analyses are  restricted to major U.S. passenger airlines. We did not evaluate the  efficacy or effectiveness of the Railway Labor Act or the impact of any  possible changes to the act. Appendix II contains a more complete  description of our scope and methodology.
subsections: section_title: Background
paragraphs: All the major airlines have some union representation of at least part of  their labor force. The various crafts or classes that unions typically  represent include pilots, flight attendants, mechanics, and dispatchers.  Sometimes unions also represent customer service agents and clerical  workers, aircraft and baggage handling personnel, and flight instructors.  The extent of unionization among the major carriers varies significantly.  At Delta, unions represent the pilots and two small employee groups; at  Southwest, on the other hand, unions represent 10 different employee  groups. Different unions may represent a given employee craft or class at  different airlines. For example, the Air Line Pilots Association (ALPA)  represents pilots at United, but the Allied Pilots Association represents  American pilots. Table 1 summarizes the representation of different crafts  or classes at the major airlines.
In general, airline labor contracts include three major elements: wages,  benefits, and work rules. Work rules generally refer to those sections of a  contract that define issues such as hours to be worked and what work is  to be done by what employees.
Negotiations between airlines and their labor unions on these contracts  are conducted in accordance with the requirements of the Railway Labor  Act (RLA). This act was passed in 1926 after the railroads and their unions  agreed to set in place a legal framework that would avoid disruptions in  rail service. The act was amended in 1936, after discussions with airline  labor and management, to include the airline industry and its labor unions.  See appendix III for a summary of the history and key provisions of the  RLA.
Airline labor contracts do not expire; rather, they reach an amendable  date—the first day that the parties can be required to negotiate the terms  of a new contract. Labor negotiations may begin before or after the  amendable date, however. While a new contract is being negotiated, the  terms of the existing contract remain in effect.
Under the RLA, labor negotiations undergo a specific process that must be  followed before a union can engage in any kind of work action, including a  strike, or before a carrier can change work rules, wages, and benefits.  After exchanging proposed changes to contract provisions, the airline and  the union engage in direct bargaining. If they cannot come to an  agreement, the parties must request mediation assistance from the NMB.  By statute, if the NMB receives a properly completed application for  mediation, it must make its best effort to mediate an amicable settlement.  If negotiations are deadlocked after mediation, the NMB must then offer  arbitration to both parties. If either party declines arbitration, the NMB  releases the parties into a 30-day cooling-off period. While this process is  set by law, the decision about when the negotiations are deadlocked is left  to the NMB. If the NMB concludes that a labor dispute threatens to  interrupt essential transportation service to any part of the country, the act  directs the NMB to notify the President of this possibility. The President  then can, at his discretion, convene a Presidential Emergency Board  (PEB), which issues a nonbinding, fact-finding report. If the President  does not call a PEB, after the 30-day cooling-off period ends the union is  allowed to strike, and the airline is allowed to alter working conditions  unilaterally. These actions are known as self-help. If the President does  convene a PEB, it is given 30 days to hold hearings and recommend  contract terms for a settlement to the parties. The union and the airline  then have an additional 30-day cooling-off period, after the PEB makes its  recommendations to the President, before either can engage in self-help.  After a PEB, Congress may also intervene in the contract dispute by  legislating terms of a contract between a carrier and a union. Congress,  however, has never intervened in airline negotiations since deregulation.  Figure 2 summarizes the key steps in the negotiation process under the  RLA.
Besides negotiations on contracts that are nearing or have passed the  amendable dates, airline management and labor may also engage in other  negotiations. For example, if an airline introduces a new type of aircraft  into its fleet, management and labor will negotiate “side agreements” to  the contract that set pay rates and work rules governing the operation of  that aircraft. An example of this situation was when Delta and its pilots  settled on pay rates for flying Delta’s newly introduced Boeing 777s in  1999. This agreement was an amendment to a contract that was ratified in  1996. Conversely, during financially difficult times, an airline’s  management and labor may negotiate concessionary agreements before  contracts reach the amendable date. For example, since 2001, several  airlines have requested pay cuts from their unions due to the precarious  financial condition of the airlines. In April 2003, American employees  agreed to $1.8 billion in wage, benefit, and work rules concessions to help  the airline avoid bankruptcy. In April, United employees represented by  ALPA, Association of Flight Attendants (AFA), the International  Association of Machinists and Aerospace Workers (IAM), the Transport  Workers Union (TWU), and the Professional Airline Flight Control  Association (PAFCA) agreed to $2.2 billion in average yearly savings to  avoid liquidation or having all labor contracts abrogated by the bankruptcy  court. Through January 2003, US Airways employees, including unionized,  nonunionized, and management personnel, agreed to over $1 billion in  cuts to avoid liquidation.
section_title: Length of Negotiations and Number of Nonstrike Work Actions Have Increased, While Number of Strikes Has Declined
paragraphs: In the 25 years since deregulation, airline contract negotiation lengths  have increased while the frequency of strikes has declined, but the number  of nonstrike work actions have increased. For the 236 contracts that the  major passenger airlines negotiated since 1978, available data suggest that  the median time taken to negotiate contracts has risen substantially since  1990, although this varies among the different carriers. In addition, 75  percent of strikes occurred prior to 1990. By comparison, all presidential  interventions and all identified nonstrike work actions (such as sickouts  or refusals to work overtime) occurred after 1990.
subsections: section_title: Airline Contract Negotiation Lengths Have Increased Since 1978
paragraphs: The length of time to negotiate airline contracts has increased since  deregulation. From 1978 to 1989, the median contract negotiation was 9  months while the median negotiation length from 1990 to 2002 increased  to 15 months. In other words, from 1978 to 1989, half of the contracts  were negotiated in more than 9 months while from 1990 to 2002, half of the  contracts took more than 15 months to reach an agreement. However, in  1978–1989, 6 contracts were ratified or settled by the amendable date  where as from 1990–2002, 9 contracts were ratified or settled by the  amendable date. (In all, during the two time periods from 1978–1989 and  1990–2002, the number of negotiations that began before the amendable  date were 65 and 51, respectively.) Conversely, the number of contracts  that required more than 24 months to negotiate more than doubled  between the two periods. Figure 3 summarizes changes in the length of  time taken for airline labor negotiations from 1978 to 2002.
Carriers differed in the degree to which their median negotiation lengths  increased—if they increased at all. Negotiation lengths increased at six  carriers that were measured, in some cases more than doubling. On the  other hand, negotiation lengths decreased or remained constant at three:  Continental, United, and Trans World Airlines (TWA). Figure 4 shows the  change in median negotiation lengths at the major U.S. passenger airlines  before and after 1990.
Contract complexity may play a role in lengthening negotiations. In the  1980s, for example, scope clauses (provisions in labor contracts of the  major airlines and their unions that limit the number of routes that can be  transferred to smaller, regional jets) could be very short—sometimes only  one paragraph. Now, however, such scope clauses can be 60 or more  pages. Also, contracts negotiated during the 1980s tended to consist  mainly of wages and benefits, while those negotiated in the 1990s included  corporate governance issues such as code sharing, regionals, and  furloughs.
Another factor in the length of negotiations is the relationship between  labor and management. According to industry experts who examined  labor relations in the industry, the quality of labor relationships is defined  by the parties’ level of trust, their level of communication, and their ability  to problem solve. Those carriers that industry officials and labor- management experts regard as having positive labor relations tended to  have shorter negotiation periods than carriers with acrimonious  relationships. Industry officials noted increased tension within labor- management relationships during the 1990s, when the industry recovered  from economic hardship to enjoy the biggest boom in its history. An  industry official explained that during the recessionary economic period of  the early 1990s, unions tended to stall negotiations to avoid making  concessions. Conversely, during the peak economic period in the mid to  late 1990s, some airlines’ management tried to further improve their  profits by prolonging negotiations.
Carriers described by industry officials and labor-management experts as  having had positive labor relationships include Continental (following  1993) and Southwest. In the 1990s, their median negotiation periods were  7 and 13 months, respectively. Labor-management experts credit  Continental’s current CEO for creating relationships of trust, and re- establishing Continental as a profitable carrier after its bankruptcy in the  early 1990s. Industry officials also credit Southwest’s labor relationships to  30 years of profitability while maintaining its original leadership. Both  companies have been recognized for extended periods of low conflict in  labor negotiations, underpinned by high-trust workplace cultures.
Carriers that have been described by labor-management experts as having  had contentious relations with their unions include American, Northwest  Airlines, TWA, and US Airways. Also, all have a history of strikes and/or  court-recognized, nonstrike work actions. Furthermore, in the 1990s, many  of these airlines had negotiations that tended to take much longer than  Continental’s and Southwest’s. For example, the median length of time to  negotiate contracts at US Airways in the 1990s was 34 months. By  contrast, the length of time to negotiate contracts at Southwest was 13  months.
section_title: Strikes Have Decreased and Nonstrike Work Actions Have Increased during the 1990s
paragraphs: The incidence of strikes in the airline industry has decreased over time. Of  the 16 strikes that occurred since 1978, 12 occurred prior to 1990, and 4  occurred subsequently. These strikes ranged from as short as 24 minutes  to more than 2 years. Figure 5 summarizes the incidence of strikes,  presidential interventions, and court-recognized, nonstrike work actions  between 1978 and 2002.
Six presidential interventions have been used to prevent strikes since  deregulation. All six occurred since 1990. Not all presidential  interventions were PEBs. In 1993, the President recommended binding  interest arbitration for American’s flight attendant negotiation. In 1998,  and again in 2001, two PEB warnings occurred; one occurred during  Northwest’s pilot strike and the second for American flight attendants.  Still, PEBs have been used three times in the airline industry since 1978:  during a 1994 American pilot negotiation, a 1996 Northwest mechanic  negotiation, and a 2000 United mechanic negotiation.
Compared to strikes, the pattern for nonstrike work actions has been the  opposite: their incidence has increased over time. In all, 10 court- recognized, nonstrike work actions have occurred, each since 1998. Such  actions included various forms of slowdowns such as sickouts, work-to- rule, and refusals to work overtime.
According to a labor-management expert, carriers believe there have been  many more nonstrike work actions than the 10 recognized by the courts,  but their existence is difficult to prove. Airline management has been  unable to produce the evidence needed to prove the actions are taking  place. Those nonstrike work actions that were not identified by the court  include a number of highly publicized labor disruptions. For example, the  reported, but unconfirmed, nonstrike work action taken by United’s pilots  in the summer of 2000 was widely publicized by the media, yet the airline  never brought the issue before a court of law. Additionally, it has been  reported that the reason why these actions are difficult to detect is  because a concern for safety often masks the source of such actions.
section_title: Airline Strikes Adversely Affect Communities, but Impacts Have Not Been Fully Analyzed and Vary from Place to Place
paragraphs: Airline labor strikes have exerted adverse impacts on communities, but we  identified no published studies that systematically and comprehensively  analyzed a strike’s net impact at the community level. For some strikes, we  were able to identify evidence of individual impacts, such as reduced air  service to and from the community, lost salaries or wages by striking or  laid-off airline workers, or lower airport revenues. However, no studies  have yet synthesized such information for a thorough picture of a strike’s  impact on a community. Our analysis indicates that a strike’s potential  impacts would likely vary greatly from community to community, because  of differences in factors such as the amount of service available from other  airlines. Thus, even if the impact of a strike were to be thoroughly studied  at a particular community, it would be difficult to generalize these results  to other locations.
subsections: section_title: Airline Strikes Have Had Negative Economic Impacts on Communities
paragraphs: With the reduction of air service stemming from an airline strike,  communities have experienced economic disruptions from a number of  sources. Lost income of airline employees, fewer travelers and less  spending in travel related businesses, and less spending by the airline are  just some of the ways that local economies have been affected by a strike.  For example, canceled flights have lead to the layoff of nonstriking  employees, fewer travelers in the airport spending money in concessions,  and reduced landing fees for airports. Because passenger traffic dropped,  spending at hotels suffered.
Local reports illustrated some of a strike’s economic impacts on a  community during the 2001 Comair pilot strike. Comair, a regional carrier  for Delta, has its main hub at the Cincinnati/Northern Kentucky  International Airport. Over the course of the strike, which lasted 89 days,  Comair did not operate its 815 daily flights, causing the 25,000 passengers  who would normally have been on those flights in an average day to curtail  their travel or make arrangements on other airlines. The airline’s 1,350  striking pilots, many of whom are based in the area, lost an estimated $14  million in salaries, and the airline reported laying off an additional 1,600  nonstriking employees in the greater Cincinnati area as well. A concourse  at the Cincinnati/Northern Kentucky International Airport closed during  the strike. Reports stated that the concourse’s 16 stores and restaurants  lost more than $3 million in sales, and that 152 of 193 workers were laid  off. The airport also lost $1.2 million in landing fees from Comair during  the strike.
Impacts can be felt not only at hub communities like Cincinnati, but also  at smaller spoke communities that may be served only by the striking  airline. When Northwest Airlines pilots struck in 1998, for example,  Mesaba Airlines, a regional affiliate, suspended operations as well. At least  12 of the communities served by Mesaba during the Northwest strike had  no other air service. One of these locations was Houghton, Michigan.  According to local reports, travelers to and from Houghton had to drive as  far as Green Bay (213 miles from Hancock, Michigan, location of  Houghton’s airport) or Wausau, Wisconsin, (192 miles away) to find  alternative flights. DOT also recognized the possible impacts of halting all  airline service. The department ordered Mesaba to return service to 12  communities served from Minneapolis under the terms of Mesaba’s  Essential Air Service contract. However, before the order was  implemented, the strike ended, and service was restored to these  communities.
section_title: Full Impacts at the Community Level Are Largely Unknown
paragraphs: While the available information indicates that airline strikes can and do  have adverse impacts on communities, we identified no published studies  that attempt to comprehensively measure these impacts at the community  level. The kinds of impacts cited above, for example, may have mitigating  factors that need to be taken into account. In the Comair strike, for  example, union strike funds replaced some of the lost income of strikers.  ALPA approved payments of $1,400 per month to striking Comair pilots  during the strike period, allowing them to spend at a reduced rate in the  community. A study that reliably estimated the impact of a strike at the  community level would need to take factors such as these into account.  No such study has been done.
Another reason for uncertainty about the full impacts of a strike on a  community is that the impact of a strike on passengers’ travel decisions is  often unknown. For example, while more than 100 communities lost  Comair service to and from Cincinnati during the strike, all of these  communities had service to Cincinnati from another airline. Thus,  although hotel occupancy reportedly fell by more than 18 percent in  Northern Kentucky in the strike’s first month, the degree to which this  drop was attributable solely to the strike is unknown.
Apart from community-level analysis of strikes, some studies have  examined the overall economic impacts of aviation on regions or states.  For example, the Campbell-Hill Aviation Group, on behalf of an industry  interest group, published a report examining the state-level impact of a  potential loss of aviation service, but this study did not evaluate the impact  of any particular strikes on local or regional economies. For example, the  study stated that, in the year ending in March 2002, Delta had 10 percent of  the passenger traffic in Texas and projected that a 10 percent reduction in  aviation benefits would cause a daily reduction of $17.7 million in one  measure of the Texas economy, its gross domestic product (GDP).
DOT also has on occasion produced wide-ranging assessments of the  impacts of potential airline strikes, but these studies have never addressed  the impacts of strikes that actually occurred. These studies are conducted  at the request of the NMB, which uses them in evaluating whether the  labor dispute threatens to interrupt essential transportation services in any  part of the country. Once the NMB makes this assessment, it notifies the  President, who may, at his discretion, empanel a PEB. If the NMB believes  an airline strike is probable, it may request the department to examine the  possible economic consequences of that strike. The department reports  the extent of potentially lost air service to hub and spoke cities of the  affected carrier, the number of passengers that would have no service if a  strike were to occur, possible financial impacts on the carrier, indirect  impacts on the national economy, and the mitigating and aggravating  factors on the impacts of a strike. While DOT’s reviews may examine many  areas that could be affected by a strike, they examine only potential  strikes and are not conducted after actual strikes.
section_title: Community-Level Impact of Any Future Strike Would Depend Partly on Service Available from Other Airlines
paragraphs: While comprehensive studies of community-level impacts of past strikes  are not available, one thing that emerges from our analysis is that any  future strike’s impact on a given community is likely to be affected by the  level of service available from other airlines. If alternative service is  greatly limited, travelers may have to take alternative—and less direct— routes offered by other airlines, or, in extreme cases, travel great distances  to other airports in order to fly at all. Those impacts on travelers and  businesses will vary depending on whether the community is a hub or  spoke destination and even among an airline’s hubs and spoke  destinations.
The impact of a future strike at an airline’s hub locations would depend in  part on which airline is involved in the strike and its market share at the  hub. Some airlines dominate air traffic at their hubs to a much greater  extent than other airlines do, and a strike involving an airline with a  dominant position at most of its hubs would likely have more impact than  a strike involving an airline that is hubbing out of locations where  competition is greater. In 2001, the airlines with the most and least  dominated hubs (based on the percentage of total available seats  controlled by the hubbing airline) were US Airways and America West.  (See fig. 6.) US Airways averaged 81 percent of the seats offered at its  hubs, while America West averaged 32 percent. Thus, based on the loss of  seating capacity at its hubs, a strike at US Airways that halted service  would likely have substantially more impact on its hub communities than a  strike at America West that halted service.
Among a single airline’s hub cities, the impact of a strike would also likely  vary depending on service available from alternate carriers at those cities.  Again, the impact of a strike at the hubbing carrier or its regional partners  would be more substantial at more highly dominated hubs. For example,  in 2001, Delta and its regional partners accounted for 91 percent of the  seats available in Cincinnati, but only 19 percent of available seats at the  Dallas/Fort Worth International Airport, which has the lowest market  share among Delta’s hubs. Consequently, a strike against Delta would  likely have caused much greater disruption in Cincinnati than in Dallas. In  contrast to the differences among Delta’s hubs, the impact of a strike at  Northwest would likely be felt equally at its Minneapolis/St. Paul, Detroit,  and Memphis hubs. At each of its hubs, Northwest offered between 77 and  80 percent of available seats.
As at hubs, the impacts of strikes on available air service at spoke cities  would also depend on the amount and type of available alternative service.  Those communities with air service from other carriers have a greater  opportunity to mitigate the potential impact of a strike by enabling  travelers to access the national air system using competing airlines. For  example, figure 7 shows available air service, as of April 2003, at spoke  communities served by Delta’s regional partner, Comair, from Cincinnati,  and by Northwest’s regional carrier, Mesaba, from Minneapolis-St. Paul.  Comair provided nonstop service to a total of 101 U.S. communities from  Cincinnati. All but one of these communities had alternative service to  Cincinnati from another airline—64 with nonstop service, 36 with one-stop  service. Thus, if Comair’s operations were to be disrupted by a strike,  passengers at these communities would still have the opportunity for  service to and from Cincinnati. The picture at Minneapolis-St. Paul is  somewhat different. There, 10 of the 47 spoke cities served by Mesaba  would have no alternative service to Minneapolis-St. Paul.
section_title: Other Factors Also Influence the Total Impact of Airline Strikes
paragraphs: Several other factors could also influence the impact of a future strike on a  community. The length of the strike is one such factor; longer strikes are  more likely to have an adverse impact. Since deregulation, strikes have  varied from 24 minutes for an American pilot strike in 1997 to almost 2  years for a Continental mechanics strike (1983–1985). Another likely factor  is financial preparation; as already mentioned, the local impact of the  Comair strike was likely mitigated somewhat by the union’s payments to  striking pilots. Similarly, the ability of airlines to operate through a  strike—whether by hiring replacement workers or having union members  cross picket lines—could also influence a strike’s impact. For example,  during a strike by Continental mechanics lasting almost 2 years, some  Continental workers crossed the picket line and continued working. This  allowed Continental to continue operation after a shutdown of only 3 days.  Tactics used by the striking union can also reduce the overall impact.  Alaska flight attendants used a technique called “CHAOS” (Creating Havoc  Around Our System) that involved intermittent walkouts of certain crews  on certain days. This tactic kept certain flights from operating, but did  not shut down the entire airline.
section_title: Nonstrike Work Actions Have Greater Impacts on Passengers than Lengthy Negotiations
paragraphs: Our analysis indicates that passenger service has been affected more  adversely by nonstrike work actions than by an increase in the length of  negotiations. Generally, but not always, as negotiation periods increased,  there has been a slight decline in on-time flights. However, the impact of  these negotiations has been unclear, because the decline may also have  been affected by other factors such as poor weather, aircraft maintenance,  runway closures, air traffic control system decisions, or equipment  failures. By comparison, the 10 court-recognized, nonstrike work actions  more clearly resulted in negative impacts on passengers, as shown through  such measures as a decrease in the number of on-time flights, an increase  in the number of flight problem complaints, and a decrease in passenger  traffic.
subsections: section_title: Impact of Negotiation Lengths on Passengers Is Unclear
paragraphs: Our analyses found a slight correlation between the length of negotiations  and adverse impacts on passengers. We analyzed 23 negotiations between  airlines and pilot unions from 1987 to 2002. As negotiations lengthened,  the frequency of on-time arrivals declined slightly. However, it is not clear  if the change in on-time flights is attributable solely to negotiation lengths,  or if other factors may also have contributed to the on-time performance.  DOT’s data on flight arrival and departure timeliness indicate whether a  flight is delayed, but not what caused the delay. Common factors for  delays include severe weather, aircraft maintenance, runway closures,  customer service issues (e.g., baggage and accommodating passengers  with special needs, such as those in wheelchairs or youths requiring  escorts), air traffic control system decisions, and equipment failures. Thus,  despite the apparent relation between lengthening negotiations and a  deterioration of service quality, other exogenous factors may explain the  change in flight delays.
section_title: Nonstrike Work Actions Have Clearer Adverse Impacts on Passengers
paragraphs: Available data indicates that nonstrike work actions have had adverse  impacts on passengers. While DOT data do not specifically identify these  actions as the causes for the delays or the reasons for the complaints,  increases in the number of late flights, passenger complaints, and  decreases in passenger traffic during the period of the actions suggest a  clearer relationship than is apparent with these same measures and  lengthy negotiations. The periods in which nonstrike work actions occur  show decreases in on-time flights, increases in passenger complaints, and  decreases in passenger traffic. Two examples of such actions, the  American pilot sickout and the Delta pilot slowdown, are described in the  next two sections.
subsections: section_title: American Pilot Sickout
paragraphs: American experienced decreases in on-time flights, increases in customer  complaints, and drops in passenger traffic during a pilot sickout. (Under  FAA regulations, any airline pilot can take himself out of the cockpit if he  is sick, overly stressed, or does not feel “fit to fly.” During a sickout, pilots  utilize these regulations to excuse themselves from work in order to put  economic pressure on the airline during the negotiation.) In December  1998, AMR Corp, the parent company of American, purchased Reno Air,  whose pilots were then to be integrated into a single workforce. In early  1999, American pilots began a sickout over a dispute involving a side  agreement that would integrate Reno Air operations. On February 10,  1999, a federal judge ordered the pilots to return to work. Subsequently,  the number of flights cancelled increased. On February 13, 1999, the judge  found the pilots’ union in contempt of court. By February 16, the airline  reported a return to its normal schedule but, reportedly, pilots were still  refusing to work overtime and were adhering to work-to-rule practices,  meaning that they would follow every regulation stipulated by the FAA in  order to slow the airline.
Figure 8 illustrates on-time arrival and departure rates at Dallas/Fort  Worth International Airport for the period of August 1998 through  December 1999 for American and Delta, which also operates a hub at that  airport. The on-time flight statistics for the two airlines are relatively equal  prior to the sickout period. During the next several months, American’s  on-time record fell below that of Delta. Both carrier’s on-time rates  declined somewhat, suggesting that other factors such as weather might  also influence flight operations. However, the difference between the two  airlines during this period is greater than in other periods. In August 1999,  when Reno Air’s operations were officially integrated—even though no  agreement was made—the two airlines’ records resumed a more closely  parallel path.
The American sickout also caused increases in passenger flight problem  complaints. Figure 9 compares the change in complaints against American  and Delta. The complaints began to rise in February of 1999 and, generally,  continued to increase into the summer, when American reached an  agreement with its pilots.
A comparison of passenger traffic between American and Delta at  Dallas/Fort Worth International Airport indicates that passenger traffic  declined either to avoid the carrier experiencing the nonstrike work action  or due to grounded flights. (American grounded up to 2,250 flights per day  during the sickout period.) (See fig. 10.) During the American pilot sickout  in February 1999, there was a drop in American’s passenger traffic.  Compared to the year before, American’s passenger traffic declined by 15  percent while Delta’s passenger traffic rose by 5 percent.
Another example of the impact of nonstrike work actions on passengers is  the Delta slowdown in 2000–2001. In September 1999, Delta began  negotiations with its pilots and submitted a contract proposal, which  sought to tie future raises to the company’s financial performance. As a  result, Delta pilots began refusing to fly overtime in the winter of 2000.  When compared to Continental’s operations at Atlanta Hartsfield  International Airport, Delta experienced substantial declines in on-time  flights and increases in flight problem complaints while also experiencing  declines in passenger traffic. Delta first went to court on December 5,  2000, and was denied an injunction. The airline then took the suit to the  Eleventh Circuit on January 18, 2001, and the denial was overturned and  remanded for injunction.
Figure 11 shows the percent of on-time flights for both Delta and  Continental at Atlanta’s Hartsfield International Airport for the period of  August 2000 to August 2001. During the slowdown period from December  to January, there is a decline in Delta’s on-time flights relative to  Continental’s. Once the court issued an injunction against the union, the  two airlines resumed a more similar pattern.
Delta’s pilot slowdown also showed an increase in passenger complaints  during this period. Figure 12 compares the change in passenger flight  problem complaints about Delta and Continental during Delta’s slowdown.  Flight complaints rose sharply in December and January, peaking at 185 in  January 2001, and immediately declining after the union was enjoined on  January 18, 2001.
Finally, Delta’s passenger traffic at Atlanta Hartsfield International Airport  also declined during the slowdown, but the pattern was less pronounced  than for the American sickout discussed earlier. (See fig. 13.) In December  2000, when Delta first pursued an injunction in court, Delta’s and  Continental’s passenger traffic dropped by 9 and 4 percent, respectively.  Unlike the American sickout (when up to 2,250 flights were grounded per  day), Delta pilots’ refusal to fly overtime grounded far fewer flights—about  100 to 125 per day—which means less passengers were affected by  cancelled flights as compared to American.
section_title: Agency Comments
paragraphs: We provided copies of a draft of this report to NMB for review and  comment. NMB indicated it generally agreed with the accuracy of our  report, and it provided technical clarifications, which were incorporated  into the report as appropriate. The NMB also provided an additional  statement, which is included in appendix VIII. We also provided selected  portions of a draft of this report to the major airlines and unions to verify  the presentation of factual material. We incorporated their technical  clarifications as appropriate.
As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will provide copies to the Honorable Francis  J. Duggan, Chairman of the National Mediation Board; the Honorable  Norman Y. Mineta, Secretary of Transportation; and other interested  parties. We also will make copies available to others upon request. In  addition, the report will be available at no charge on the GAO Web site at  http://www.gao.gov.
If you or your staff have any questions about this report, please call me at  (202) 512-2834, HeckerJ@gao.gov or Steve Martin at (202) 512-2834,  MartinS@gao.gov. Appendix VIII lists key contacts and key contributors to  this report.
section_title: Appendix I: Additional Questions
paragraphs: In addition to the three primary questions, you asked us how many states  use a system of binding arbitration and last offer arbitration with their  essential service personnel. You also asked how many times in the last 25  years has Congress had to intervene in a dispute with railroads and what  were the outcomes.
As of November 2002, according to information from officials of Harvard  University, 23 states—including the District of Columbia—use binding  arbitration and/or last offer arbitration as arbitration options. (See table  2.) Of those, none use last offer arbitration as their sole arbitration option.
According to information from the National Mediation Board, in the last 25  years Congress intervened in railroad negotiations eight times. These  interventions occurred between 1982 and 1992. (See table 3.)  Congressional interventions do not involve the airlines.
section_title: Appendix II: Objectives, Scope, and Methodology
paragraphs: This report examines the following three questions:    What have been the major trends of labor negotiations in the airline  industry since the industry was deregulated in 1978, including the number  and length of negotiations and the number of strikes, presidential  interventions to avoid or end strikes, and nonstrike work actions?
What has been the impact of airline strikes on communities?
What have been the impacts of the length of negotiations and the  occurrence of nonstrike work actions on passengers?
To determine the trends of airline labor negotiations, including the length  of negotiations, the number of strikes, the number of presidential  interventions, and the number of nonstrike work actions, we analyzed data  from multiple sources. We obtained our data from major U.S. airlines and  various labor organizations. The labor groups included the Air Line Pilots  Association (ALPA), the Coalition of Airline Pilots Associations (CAPA),  the Association of Flight Attendants (AFA), the International Association  of Machinists and Aerospace Workers (IAM), and the International  Brotherhood of Teamsters (IBT). We also received substantial negotiation  and contract data from the U.S. National Mediation Board (NMB) and the  Airline Industrial Relations Conference (AIRCon), a group funded by  major U.S. airlines to facilitate the exchange of contract negotiation  information and other labor relations matters among carriers. Because  data were not available for commuter (regional) and all-cargo carriers, we  originally limited our analysis to passenger airlines that are considered  majors by the U.S. Department of Transportation (DOT) that were in  operation during 2001. These airlines were Alaska, America West,  American, American Eagle, American Trans Air (recently renamed as ATA  Airlines), Continental, Delta, Northwest, Southwest, TWA, United, and US  Airways. We later were not able to include American Eagle or American  Trans Air, which met the DOT criteria, in our analysis because we were  not able to obtain information on these airlines.
Dates listed as negotiation start dates differ between the airlines, AIRCon,  and NMB, therefore, limiting the accuracy of the data collected. A  negotiation’s “start date” can be when the carrier’s management or union  exchange a written notice stating that one of the parties desires a change  in rates of pay, work rules, or working conditions or when face-to-face  negotiations actually begin (i.e., when the two parties sit at a table and  verbally negotiate the contract). By contrast, the NMB defines a “start  date” only when it is called for mediation. For the purposes of our data  collection, we first used dates provided by the airlines to AIRCon at the  time the contract was being negotiated. If those were not available, we  turned to the dates provided directly to us by the airlines from their files  when available. We were supplied different dates, including ratification  dates and settlement dates, for the end point of negotiations. We know of  at least one union that did not have its members vote to ratify contract  changes until after 1982. Again, we first used AIRCon provided ratification  or settlement dates, if possible, and, in cases where these were not  available, we used airline provided dates, or dates provided by NMB. We  were unable to calculate a negotiation length for 83 of the 236 contracts  because we could not identify either a start date or a ratification or  settlement date for them. In addition, we did not calculate negotiation  lengths for 6 initial contracts, the first contract a union signs after a craft  or class becomes recognized at an airline.
To obtain information on nonstrike work actions, we also examined media  sources and also reviewed federal court records. Based on the information  we were able to review, we defined court-recognized, nonstrike work  actions as those work actions for which airlines obtained either temporary  restraining orders or injunctions against unions. Officials from the airlines  we spoke with stated that there have been many more nonstrike work  actions than the 10 judged by the courts. Even some union officials stated  that union members have taken actions that they considered legal under  their contract or Federal Aviation Administration (FAA) regulations. These  same actions, on other occasions, have been found to be violations of the  status quo by the courts. Additional cases of nonstrike work actions,  however, have been difficult to prove. Airline management has either been  unable to produce the needed evidence in court or airlines never took  unions to court. Union officials also strenuously deny illegal activity on the  part of their unions.
We interviewed officials from airlines, labor unions, the NMB, and industry  groups. The airlines we spoke with included American, American Trans  Air, Continental, Delta, Northwest, Southwest, Comair, Atlantic Coast  Airlines, Federal Express, United Parcel Service, and Airborne Express.  We only analyzed data from airlines where we could obtain full data. The  labor groups we interviewed included ALPA, CAPA, AFA, IAM, and IBT.  We also held discussions with officials from NMB, the Air Transport  Association (ATA), Communities for Economic Strength Through Aviation  (CESTA), and AIRCon.
To determine the impact of airline strikes on communities, we searched  for studies of these impacts from airlines, industry groups, and academic  institutions. Specifically, we talked with United, Delta, Comair, ATA, and  CESTA. Based on suggestions from airlines, unions, interest groups, and  our own research we also talked with faculty at Harvard, the  Massachusetts Institute of Technology, the University of Cincinnati, and  the University of Kentucky. None of these sources knew of any published  studies on specific impacts of past strikes on any community. In  discussions with NMB, we learned that DOT produces studies, solely at  the request of NMB, on the likely impacts of probable airline strikes on the  airline and local and national economies. We obtained a copy of one of  these studies from DOT. We also analyzed data on airline schedules and  market share from Sabre, Inc.; BACK Aviation Solutions; and the  Campbell-Hill Aviation Group. We also reviewed local media reports from  communities affected by strikes. Due to the lack of published studies or  generally accepted methodology to determine the impact of strikes, we  cannot discount other possible causes for these impacts.
To determine the impact of the length of negotiations and court- recognized, nonstrike work actions on passengers, we analyzed data on  airline operational performance from DOT’s Air Travel Consumer Report  and passenger traffic information from BACK Aviation Solutions. To  determine the impact of negotiation lengths, we compared on-time  performance throughout the course of 23 negotiations between airlines  and pilot unions. To determine the impact of nonstrike work actions, we  compared airlines’ on-time performance and flight complaints between  airlines before, during, and after the 10 court-recognized, nonstrike work  actions. We also analyzed changes in passenger traffic among airlines  during these actions. Though our analysis included performing a  correlation between on-time arrivals and the length of airline labor  contract negotiations, we did not perform any multivariate analysis, and  thus, cannot rule out possible alternative causes.
We conducted our review between August 2002 and May 2003 in  accordance with generally acceptable government accounting principles.
section_title: Appendix III: Additional Background Information on the Railway Labor Act
paragraphs: The Railway Labor Act, 45 U.S.C. § 151, et. seq., (RLA) was passed by  Congress in May 1926 to improve labor-management relations in the  railroad industry. In January 1926, a committee of railway executives and  union representatives jointly presented a draft bill to Congress that was  universally supported by those in the industry. Congress did not make any  changes of substance to the bill, and the RLA was signed by the President  on May 20, 1926. Congress has not altered the basic structure of the act  that labor and management use to resolve what are known as “major  disputes,” i.e., disputes over the creation of, or change of, agreements  concerning rates of pay, rules, or working conditions. After discussions  with airline management and labor the act was applied to air carriers in  1936.
As a method to keep labor disputes from interrupting commerce, the new  law represented a significant departure from past labor practices by  requiring both sides to preserve the status quo during collective bargaining  and preventing either side from taking unilateral action. When labor and  management representatives drafted the legislation, they agreed that both  sides of a labor dispute should negotiate the dispute and not make any  change in the working conditions in dispute until all issues were worked  out under the deliberate process outlined in the act.
subsections: section_title: Key Provisions of the RLA
paragraphs: The RLA is not a detailed statute. The main purposes of the act are  threefold. First, Congress intended to establish a system that resolves  labor disputes without interrupting commerce in the airline and railroad  industries. The statute requires both labor and management “to exert  every reasonable effort to make and maintain agreements ... and to settle  all disputes ....” The Supreme Court has described that duty as being the  “heart” of the act.
Second, the act imposes on the parties an obligation to preserve and to  maintain unchanged during the collective bargaining process “those  actual, objective working conditions and practices, broadly conceived,  which were in effect prior to the time the pending dispute arose and which  are involved in or related to that dispute.” This is generally known as  “maintaining the status quo.”
Finally, the act requires that: “Representatives, for the purposes of this  Act, shall be designated by the respective parties ... without interference,  influence, or coercion exercised by either party over the self-organization  or designation of representatives by the other.” That obligation was  strengthened in 1934 so as to prohibit either party from interfering with,  influencing, or coercing “the other in its choice of representatives.”
section_title: Collective Bargaining Process under the RLA
paragraphs: The collective bargaining process established by the RLA is designed to  preserve labor relations peace. The carrier is required to maintain the  status quo before, during, and for some time after the period of formal  negotiations. The union and the employees have the reciprocal obligation  to refrain from engaging in actions that are designed to economically harm  the company, such as strikes during the same period. These actions are  termed economic self-help in the act.
Airline labor and management periodically engage in negotiations to reach  a comprehensive collective bargaining agreement that will remain in effect  for a defined period, usually 2 or 3 years. The parties are required to  submit written notices (“Section 6 notices”) of proposed changes in rates  of pay, rules, and working conditions. In some cases, parties may agree  that collective bargaining is required to proceed according to a particular  time schedule. If those direct discussions do not result in an agreement  resolving a dispute, either party or the National Mediation Board (NMB)  can initiate mediation.
The RLA requires both parties to maintain collectively bargained rates of  pay, rules, and working conditions while they negotiate amendments to  the agreement. This requirement extends the status quo after an existing  agreement becomes amendable if no agreement is reached by that time. If  mediation proves unsuccessful, the NMB appeals to the parties to submit  the dispute to binding interest arbitration. If that is unsuccessful, the  statute provides for a 30-day cooling-off period. There can be no lawful  self-help by either side during this period. Even after the termination of the  30-day period, the self-help option is contingent. If a dispute threatens  “substantially to interrupt interstate commerce to a degree such as to  deprive any section of the country of essential transportation services,”  the President, upon notification by the NMB, is empowered to create an  emergency board to investigate the dispute and issue a report that is  followed by an additional 30-day period for final negotiations.
After this process, the parties are left to self-help and further negotiation  to reach a settlement. The only alternative is congressional action, which  has never been used in an airline labor dispute.
section_title: Appendix IV: Contracts Negotiated and Ratified or Settled by the Amendable Date
section_title: Appendix V: Airline Strikes That Have Occurred Since Deregulation
section_title: Appendix VI: Court-recognized, Nonstrike Work Actions Since Deregulation
section_title: Appendix VII: Number of Presidential Interventions Since Deregulation
subsections: section_title: Union Craft Pilots APA APFA Flight attendants
section_title: Appendix VIII: Comments from the National Mediation Board
section_title: Appendix IX: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: In addition to those individuals named above, Jonathan Bachman,  Brandon Haller, David Hooper, Terence Lam, Dawn Locke, Sara Ann  Moessbauer, Stan Stenersen, and Stacey Thompson made key  contributions to this report.