When it comes to negotiating labor contracts, we’ve got several goals. The one that receives the most focus is reaching agreement on each contract.
Too often, all the focus is on that end goal: a ratified contract. Sign it, seal it and get back to work.
But I see the negotiations process as more than that. For one, it’s an opportunity for management and union negotiators to sit down and talk, issue by issue, about the hundreds of decisions and determinations that go into crafting a labor contract. That alone is critical to developing a working relationship. And that obligation – necessary to getting a thoughtful and workable contract – is one of the reasons airline labor negotiations take as long as they do.
Second, and perhaps more importantly, it’s an opportunity to correct course where necessary. In this economic environment, that involves some tough bargaining, particularly on pay and benefits. After all, one of a company’s most important mandates is to keep its costs competitive in the industry. But that often conflicts with the role of labor unions that demand rich deals for their members.
Course corrections, however, could and should involve much more than pay to the full range of issues a labor contract covers, from work rules to job protections.
And in my view, we’d be irresponsible if we failed to use negotiations to discuss where and how the airline industry has changed, and the role labor plays in helping the company we all rely upon succeed for the long term.
We can’t turn a blind eye, ignore new realities and keep signing new contracts with provisions that don’t take into account changes in play since the old contracts were inked.
One of those new realities is pay. It’s not a popular thing to say around here, but American already pays union employees at or near the top of the market across the company. Now there was a time when unions demanded, and airlines granted, major pay gains with every contract. But that’s not the case today, when shrinking revenues and restructuring have depressed wage rates across the industry.
Another of those realities is the importance of productivity. For years U.S. airlines kept fat payrolls, usually employing more people than necessary to do the work – a factor accelerated by union clauses that put arbitrary, artificially low limits on how many hours members would work. That is structural inefficiency when the reality today is that we compete with leaner and more productive airlines on every route, every day.
So one of our goals for these negotiations is to use this process to get everyone thinking about the business we operate and the market we operate in.
We’ve done a few things differently this time around. We built this website, for one, to make it easier for us to be open and transparent about the thinking behind our proposals. And right now we are in the process of updating and improving each section to include the tentative agreements reached with each union, as well as the proposals the company has put on the table. Over the course of the next few days, we will have added all the latest information to the Association of Professional Flight Attendants negotiations section – where we now have TAs on 28 of the 39 contract articles– along with new data and information about key issues in our talks with the flight attendants’ union.
Some of these proposals are controversial. Contract negotiations always are. But we should be talking about these issues because each affects the success of this airline.
Consider, for example, that our pilots and flight attendants fly, on average, 10-15 fewer hours per month than those at other airlines. That to me highlights an area where we are not as competitive as we should be. And if we put it out there for discussion, maybe we can figure out a way to improve productivity.
Maybe the answer is in a better scheduling system, as we’ve proposed in our talks with the Allied Pilots Association. Our idea is to create a new bidding process that will give pilots more control over their schedules and reduce our reliance on the inefficient (and widely despised) reserve system. It will be a big change, yes, but one that would replace a current system developed before computer software was sophisticated enough to give pilots the ability to custom tailor their monthly flying schedule.
Maybe another answer is in incentives that encourage flight attendants who now fly fewer than 40 hours a month (which is true of about a quarter of all our flight attendants) to take on more flight time. So not only are we seeking higher monthly scheduled max times (at 77 hours domestic, we are the lowest in the entire industry), we also are proposing providing additional paid vacation days to flight attendants who simply fly their monthly scheduled maximum . . . in other words, those who come to work and do the job they were hired to do.
Consider, for example, that American outsources only 12 percent of our maintenance work, compared to an industry average of more than 50 percent. The fact that many of our competitors already use lower-cost, overseas labor gives us a competitive cost disadvantage from go. American is committed to keeping the majority of our maintenance work in-house. But to do so maybe we need to rethink the rigid rules and job classifications in the current contract for maintenance and related employees that limit our flexibility and ability to tap this workforce in the most strategic, efficient way.
And consider, for just one more example, that American is one of only two major airlines that provides a defined benefit pension plan for employees, even as companies in nearly every American industry have shifted to 401(k)-style plans that are more sustainable over the long run. And that’s if they provide retirement benefits at all. We’re committed to keeping this program for our current employees, but have proposed giving our current employees choices and putting new employees into 401(k) plans that will allow us to be more competitive in the market. All the while keeping our retirement commitments to all the employees vested in the current pension plans.
Here’s the reality: There is no pot of gold out there that’s going to fund the sizeable pay increases, benefit enhancements and job protections the unions are seeking. We can’t look back ten years to structure a contract that will take us into the next decade. And we can’t agree to proposals that ramp up costs without finding ways to pay those bills.
But we can use the negotiations process to identify ways to improve productivity and run a better operation so that we can raise or maintain pay and benefits for American’s employees.
Bottom line, a contract is in place for several years. Negotiating a new contract gives us all a chance to think about changes that will help us compete better, protect jobs and create new ones for the next several years.
In my mind, negotiating a smart contract means finding ways that truly serve the interests of both sides by recognizing new realities and coming up with better ways to do business focused on what should be the real end goal: helping American succeed.
