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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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