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Southwest Negotiations

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An interesting summary of the labor tensions at Southwest, where pilots have rejected a contract that included a big pay raise. Despite what some people think however, a union is not just about pay and there are a lot of issues that Southwest has not been willing to deal with, including an unwillingness to pay retroactive checks to the pilots for the years they were without a contract. Southwest pilots are also concerned that the airline entering into codeshare agreements will undermine their union. But a big issue is, as is often the case, work rules and working conditions:

Southwest is also seeking substantial changes in work rules. Starting around 2007, Southwest’s major competitors won far more flexibility in scheduling their pilots’ workdays, improving productivity. By contrast, Southwest was thriving while its rivals were re-working contracts in bankruptcy. So, it kept raising the pay it offered and did nothing to bring its highly restrictive work rules in line with the new freedoms aiding Delta, American, and United.

It’s not clear if the pilots’ union is opposing Southwest’s work rule proposals, or if they will eventually agree to them.

By around 2012, Southwest had gone from parity in overall costs to a 20% disadvantage compared to its competitors. As profits soared across the industry, the gap in compensation between what Southwest and its competitors offered narrowed substantially. What remained was the chasm between Southwest’s highly restrictive work rules and the flexibility offered by other carriers like American and United.

Today, the other big airlines can generally assign their pilots to a maximum of 13.5 hours of “duty” per day, which includes the duration of the flight and the time required to prepare and lock up the plane. (That duty period can be shorter if, for example, the workday begins at 11 p.m.) But under Southwest’s rules, the duty day is isn’t nearly as long. In part, that’s because the carrier traditionally specialized in short-haul routes of one to three hours. Today, though, Southwest is challenging the other major airlines in coast-to-coast and other long-haul routes from Atlanta, La Guardia in New York, Washington Reagan, and other airports catering to lucrative business travelers. It’s also entering the international market for the first time, with flights to the Caribbean and Central America. As Southwest goes long-haul and overseas, its needs a longer duty day for pilots.

The tighter cap on hours substantially raises its labor cost per mile flown. And during negotiations, the airline’s executives aimed to move the pilot schedule regulations closer to the industry norm. They were willing to boost pay to get there.

My own belief is that eventually enough pilots will accept the pay raise–or perhaps a somewhat higher one in the next round of talks–to pass this through. But regardless of whether you agree with the pilots demands, this is a useful lesson that unions are not solely or even primarily about wages. They are about workplace dignity and giving workers a voice in their own employment. There’s no good reason that the pilots should give all this back to Southwest, even if the pay raise is an incentive to do so. But for about 60% of the pilots, that’s not enough. This will be an interesting case to watch.

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  • Thirtyish

    Indeed. I for one will not fly on any airline that does not have a pilots’ union–in addition to the social justice and equitable wage issues, Idon’t feel safe flying on non-unionized airlines (especially those little commuter ones).

    • Bruce Vail

      gee, I hope your rule applies to unionization of the mechanics as well…one isn’t much good without the other…

      • Thirtyish

        I trust that the pilots in unionized airlines have a better read on that than I do. But I generally support unionization across the board, so I’m not going to object to mechanics unions.

        • Bruce Vail

          Southwest is, as I recall, one of the most highly unionized of all the major airlines.

          At one time United was the most unionized, but I believe that has changed with the acquisition by Continental.

          • NonyNony

            Southwest is actually my favorite airline to fly these days, so I’m glad to hear that I’m also supporting unions when I use their flights.

            • Bruce Vail

              Southwest runs one of its hubs out of BWI here. It’s a good service and pretty popular.

              We’ve seen some signs of labor trouble. Transport Workers Union (TWU) has had demonstrations recently, but they may have settled their differences because its seems quieter now.

            • efgoldman

              Southwest is actually my favorite airline to fly these days

              We used to fly SWA to FL when my parents were alive, but as we got older (and fatter) and their seats got smaller (6 across on a 727? Really?) we couldn’t stand it anymore. Now, to go to DC, we take Amtrak as often as not. Eight hours, true, but in big, comfy seats, ability to walk around at will, no security theater bullshit (which is only going to get worse), weather is much less of a factor. Plus SWA doesn’t fly from Providence to DC National. Either Marshall/BWI or Dulles is hugely inconvenient.
              If we do fly we use the American/Continental feeder line, which flies smaller, comfy 2×2 seating aircraft.

  • brugroffil

    My mom works for Southwest in customer service. She’s less than pleased with the work rules and working conditions she has to deal with.

  • Murc

    Can we get Kong all up in this thread? I know he’s freight, not people, but I bet he has some insight.

  • Bruce Vail

    The Fortune magazine piece appears to be completely one sided: that is, it relies on data and analysis from the management side only. I’d prefer to hear from SWAPA before I draw any conclusions….

    • Brett

      This piece has a little bit more on the employees’ view on the whole affair:

      According to Southwest’s employees, over the past several years, CEO Gary Kelly and Southwest’s management team has consistently misled the Southwest team over the actual purposes and outcomes of the strategic decisions being made. One particular theme is the company’s plans for growth, which pilots and employees are of course very interested. Some of the shifts and concessions made by pilots, such as enabling the AirTran merger and allowing code sharing as a matter of scope, were apparently sold to employees as enabling growth.

      But in terms of frequency growth, the figures have fallen fall short of what the employees expected – more ASMs were produced with more seats per airplanes, but the employees don’t have more flying to bid on. Beyond growth, there is a general sense amongst Southwest employees that management is unable to strategize for and execute on critical operational matters, as evidenced by Southwest’s woeful on time performance figures and their assessment of management’s proposed remedies. Just to exacerbate matters, despite all of these issues, the contract offered to them was competitive with the industry but didn’t blow competitors (i.e. American/Delta) out of the water. All of this added up to yet another no vote.

      There’s also some stuff similar to what was mentioned in the Fortune article.

  • You called?

    Work rules are a very big deal in an airline contract. Bad work rules can ruin your quality of life as well as impact safety if they lead to fatigue.

    Pilots at our main competitor make a bit more than we do, but I wouldn’t trade contracts with them because our work rules are so much better.

    “Retro pay” is pretty common in airline contract negotiations. We just signed a new contract after 5 years of negotiations and it includes retro pay for the years that inflation was eating into our pay.

    The Southwest pilots probably fear code-sharing because that can infringe on “scope”. Scope means we want our customers (or freight in my case) being flown on our planes by our pilots.

    Right now there actually is a bit of a pilot shortage. We’ve actually had people not show up for interviews or turn down job offers because the passenger haulers are hiring big time. Five years ago we could have said “We’re only hiring former astronauts” and probably gotten enough applicants. The Southwest pilots probably feel this gives them a bit of leverage.

    • Hogan

      Next up: H1B visas for pilots.

    • Derelict

      As you point out, work rules are at least as big a deal as pay. A 13.5-hour duty day may not sound bad, but if you have four of those scheduled back-to-back with your overnights at a hotel that’s 30 minutes away from the airport, by the time you grab some food, check in, get ready for bed, etc., you may only have 6 hours worth of sleep time left before you have to get up, get ready, and head back out. That’s grueling, and it definitely impacts safety (There are studies going back 50 years showing how error rates rise with fatigue.)

      I used to work for a feeder airline for UPS. We served one gateway that was run by a UPS guy who was a real serious asshole. He once threatened to get me fired because I refused to dispatch a Cessna Caravan (a single-engine turboprop) into a hurricane. One fine evening, the UPS Airbus shows up at the gateway and this guy proceeds to get into it with the Airbus crew. After 5 minutes of him screaming at the crew, the captain said, “Well, looks like we’re outta duty time. Bye!” and walked out with his copilot.

    • Linnaeus

      I’ve linked this before, and I’m too lazy to relink it this morning, but the Frontline episode “Flying Cheap” is essential watching if people want to understand why work rules for pilots matter, especially with respect to code sharing.

  • hubert horan

    There’s lots of critical industry background missing here.
    1. The “workrule changes” achieved by the Legacy Carriers after 1997 did not result from Collective bargaining or “market forces” but from a judicial re-write of the bankruptcy laws (by bankruptcy judges in the Southern District of New York). Companies in chapter 11 had always been able to reject union contracts, but historically they could not unilaterally impose new contract terms unless they could be shown to be absolutely required for successful reorganization. When UA, DL, NW, US and AA went bankrupt that had been effectively been changed to allow them to impose terms equivalent to the least employee favorable contract in the industry without the need to show the company would face liquidation unless it got all those onerous terms. Southwest was never bankrupt, so within a decade it went from having lower pilot pay than the Legacy carriers to having higher pilot pay than any of them. Despite higher pay, Southwest still has somewhat lower pilot unit costs (per ASM) because of Southwest’s simpler business model which allows better aircraft and staff utilization.
    2. Similarly “codesharing” developed (in the 60s for regional feeders like United Express, and in the 90s for intercontinental alliances) as an efficient way to achieve marginal revenue growth in ways that did not threaten (and actually helped) the security of existing employees but through this string of bankruptcies and the antitrust immunity grants that occurred after 2004, became a primary tool for undermining existing employees and union agreements. The historic major airline “scope clause” limits (i.e majors could only codeshare with feeder airlines (which had much lower wages) on aircraft of 50 seats or less) were gutted and thousands of Legacy pilot jobs were shifted to low wage companies, and restrictions on offshoring has vanished. This was always a non-issue at Southwest, which did not fly internationally or have regional feeders (and did not have computer systems capable of handling them), but the Southwest pilots have rational reason to fear that “scope clause” liberalization could be used to eliminate jobs.
    3. In addition to getting courts to hand them draconian cuts in labor costs, the Legacy airlines also got DOT/DOJ to eliminate meaningful competition, primarily via those post 2004 antritrust agreements which reduced the transatlantic and transpacific markets (where all the profits are made) into a permanent 3-player Cartel, where there is no possibility of (meaningful) competitive entry. This forced the consolidation of the Legacy sector from 6 to 3 (the DL/NW, UA/CO and AA/US mergers) and gave Southwest the political cover to buy out its main LCC competitor (Airtran). But this allowed UA/AA/DL to financially outperform Southwest, and eliminated everyone’s motivation to pursue serious growth (much more profitable for oligopolists to just keep raising prices). Again, everything here was due to back room discussions between the big airlines and DOT on eliminating competition; nothing was due to “market forces”
    4. Under Herb Kelleher, Southwest had been the best run airline in America, with a competitive strategy focused on serving markets where it had a strong cost advantage versus the Legacy carriers. That strength collapsed as management became totally inbred, overly focused on reading press clippings about things they’d done in the distant past, and they exhausted the markets where they’d have a big cost and pricing advantage. So when the Legacies leaped past them, they had no idea what to do (and apparently still don’t). Commendably, Kelleher had insisted that the benefits of Southwest’s strong growth be fully shared with employees, but when structural growth stopped the entire basis for collegial labor relations collapsed.
    5. Unions at airlines (as in a number of other industries) attend to be highly unstable as internal debates are easily overwhelmed by the most militant, adversarial factions, often demonizing anyone that tries to point out practical limits, and promising the moon and the stars if only we get rid of those guys willing to compromise (kinda like the Republican Party, now that I think about it). During the recent American bankruptcy, their unions achieved the most remarkable success in industry history, getting rid of the disasterous management that had run the company into the toilet, saving the pensions that were about to be destroyed, and enacting a merger that transformed future competitiveness. Since then, most of the union leaders responsible for that were kicked out of office by challengers who insisted they could have done a lot more, and that no one who cooperated with management can be trusted. The Southwest pilots have some legitimate reasons to be pissed (they understand current management isn’t very good) but a lot of the no vote seemed to come from people demanding that the rapid growth of the 90s be magically restored and do not want anyone telling the world has changed.
    Interesting stuff, but it would be a mistake to see the Southwest pilots as heroic defenders of the rights of workers, or to see airline unions as the vanguard of a general resurgence of union power.

  • rmhitchens

    In my long-ago Air Force days we had 12 hours of crew rest between shutdown & reporting to brief. Or so I recall. Crew duty hours for MAC (airlift) crews could be as long as 16 hours, but you had those 12 hours to rest before starting your next crew duty period. Not sure what the rules are now, but they made sense back in the day, for us blue-suiters. I would hope our airline brethren get at least as much consideration.

    • 8 hours is min crew rest I believe.

      That doesn’t include time getting to and from the airport.

  • Gwen

    Speaking of flying the friendly skies (oh wait, that’s United — and United lies)…

    http://www.slate.com/blogs/future_tense/2015/11/20/chicago_enacts_drone_regulations_that_are_really_good.html

    I know this is OT, and if I seem like I’m trolling Loomis, well, a little.

    But I actually think these Chicago drone rules are pretty good, pretty fair, should be a model for balancing privacy rights, individual liberty, and public safety.

    /trolling

  • MaureenDowdsLudes
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