Airline Labor Relations More than half of airline industry workers are members of unions. Airline unions have a relatively long history in the United States. They differ from unions in some industries in that that are craft unions; there are separate unions for pilots, flight attendants, mechanics, and the like. This has led to a multitude of recognize airline unions, making labor relations for airlines a particularly complicated endeavor that may require dozens of separate labor contracts.
Airline Unions and Collective Bargaining: A Brief History In 1934, the National Labor Relations Board introduced industry-wide bargaining to the airline industry. The most significant development, though, came in 1936 when the airline industry was included under the Railway Labor Act. The Act put in place standardized procedures for collective bargaining, including procedures for developing labor contracts and mediating grievances. Under the Railway Labor Act, collective bargaining in the airline industry was placed under the oversight of the federal government through the National Mediation Board (Wensveen, 2011). From 1936 to 1978, labor relations in the airline industry ranged from initial hostility to occasional accommodation or even cooperation, but the arms-length dealing approach eventually became most common. Government regulation of the airline industry during this period imposed constraints on the bargaining process that made it fairly orderly, as compared with labor relations in other industries at the time. After 1978, with the deregulation of the airline industry and increased competition between carriers and from new carriers, airlines were somewhat more effective in gaining concession that cut labor costs as the threat of furloughs and bankruptcies loomed. The 1980s and early 1990s saw some bitter labor battles and strikes, through labor relations have mostly calmed since then (Orenic, 2009).
Labor Relations, Trends, and Impact of Labor Actions
Since deregulation, airline management and unions have embarked upon different strategies for dealing with the high level of competition within the industry. Management has pushed for averaging down wages, an approach that incorporates two-tier wage systems, as well as the increasing reliance on outsourcing. Unions have continued efforts to protect workers’ interests through higher wages and better benefits, though they have also taken the approach of profit-sharing: securing partial control of airlines through stock ownership for employees (Wensveen, 2011). These trends, particularly the strategy of profit-sharing, seems to have benefited both airlines and unions by helping to sustain airline profitability in order to protect the skills and jobs of union members.
Impact on Management and the Industry’s Bottom Line
Labors costs represent a sizable portion of airline expenditures. In the 1980s, many carriers spent one-third or more of their overall operating costs on labor. This high cost had a direct link to labor unions: between 1969 and 1979, airline unions secured an average 9.9 percent increase in employee pay, representing $1.5 billion in increased airline labor costs per year (Wensveen, 2011, p. 425). In the post-deregulation period, many airlines were struggling to survive (and some did not), which made it essential to secure concessions from unions to cut costs. Management efforts in this regard were generally successful at bringing down labor costs to around one-fifth of overall operating costs for national carriers, though the cost of labor and influence of labor unions still has a significant effect on the industry’s bottom line (Bamber, Gittell, Kochan, & von Nordenflycht, 2013).
Conclusion
The airline industry is highly dependent on skilled labor, which gives significant bargaining power to unions. There is also a high potential for volatility since airline unions are craft unions, meaning that airlines have to negotiate many different labor contracts while being subject to the risk that a strike of any single union might halt all operations. While there was some disorderliness in airline labor relations in post-deregulation period, the growing popularity of profit sharing may indicate that airline management and unions are beginning to find more productive ways to promote their mutual interests.