Airline Labor Relations: Information on Trends and Impact of Labor Actions
Released: 2003-07-15T00:00:00

Letter

Background

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.

Length of Negotiations and Number of Nonstrike Work Actions Have Increased, While Number of Strikes Has Declined

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.

Airline Contract Negotiation Lengths Have Increased Since 1978

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.

Strikes Have Decreased and Nonstrike Work Actions Have Increased during the 1990s

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.

Airline Strikes Adversely Affect Communities, but Impacts Have Not Been Fully Analyzed and Vary from Place to Place

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.

Airline Strikes Have Had Negative Economic Impacts on Communities

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.

Full Impacts at the Community Level Are Largely Unknown

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.

Community-Level Impact of Any Future Strike Would Depend Partly on Service Available from Other Airlines

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.

Other Factors Also Influence the Total Impact of Airline Strikes

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.

Nonstrike Work Actions Have Greater Impacts on Passengers than Lengthy Negotiations

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.

Impact of Negotiation Lengths on Passengers Is Unclear

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.

Nonstrike Work Actions Have Clearer Adverse Impacts on Passengers

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.

American Pilot Sickout

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.

Agency Comments

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.

Appendix I: Additional Questions

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.

Appendix II: Objectives, Scope, and Methodology

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.

Appendix III: Additional Background Information on the Railway Labor Act

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.

Key Provisions of the RLA

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.”

Collective Bargaining Process under the RLA

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.

Appendix IV: Contracts Negotiated and Ratified or Settled by the Amendable Date

Appendix V: Airline Strikes That Have Occurred Since Deregulation

Appendix VI: Court-recognized, Nonstrike Work Actions Since Deregulation

Appendix VII: Number of Presidential Interventions Since Deregulation

Union Craft Pilots APA APFA Flight attendants

Appendix VIII: Comments from the National Mediation Board

Appendix IX: GAO Contacts and Staff Acknowledgments

GAO Contacts

Staff Acknowledgments

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.