The Days of the Airline Strike May Be Over
(Bloomberg) -- As the summer travel season heats up, so, too, are strike threats by pilots at Frontier Airlines Inc., the ultra-low-cost carrier known for its wild critter livery. Though it’s the last U.S. airline to hammer out a pilot contract since bankruptcy stalked the industry, Frontier’s labor fight may inform how bigger airlines react when their employee contracts come up for renewal in the next few years.
The union, the Air Line Pilots Association, has been agitating for a new agreement since March 2016. The 1,200 pilots at Frontier say they earn 40 percent less than the industry’s prevailing wage. Even with such a persuasive case, it’s unclear whether the U.S. government will allow a strike at Frontier—or any other national carrier—to proceed. The reason? The industry consolidation that followed all those bankruptcies may arguably make a single strike too much for the U.S. economy to bear.
Airline employees are governed by the Railway Labor Act, which renders work stoppages more difficult because the law essentially requires government permission. Once granted, a president can further delay a strike by convening an emergency board to assess the parties’ complaints. The last national pilot strike was eight years ago at a much-smaller Spirit Airlines Inc. That five-day job action accomplished its goal, exerting sufficient pressure on the company to land a contract.
Frontier is a national airline, having expanded in recent years from its former network, which was heavily concentrated in Denver. Industry observers are wondering whether this labor standoff is where the government will put down a marker. President Donald Trump, a former airline boss himself—thanks to the short-lived Trump Shuttle—could simply say no to Frontier’s pilots.
The union said talks with the carrier, joined by the National Mediation Board, or NMB, are at an impasse. The pilots asked the agency to release it from further talks, which would trigger a 30-day period that could lead to a walkout. That outcome is “a very real possibility until management agrees to pay pilots in line with industry peers,” Frontier pilots said Monday in a statement. But if the airline is counting on federal intervention, no such compromise from Frontier may be coming.
“We continue to be actively engaged in negotiations with our pilots for a new contract and continue to exchange proposals under the guidance of the National Mediation Board,” Frontier spokesman Jonathan Freed said in an email. “We look forward to working toward an agreement that is fair, sustainable, and provides security for our collective future.”
Airlines for America, the carriers’ trade group, declined to comment on pilot strikes.
“If you don’t have the threat of a strike, then instead of collective bargaining, you would have collective begging,” said Joe Burns, director of bargaining for the Association of Flight Attendants (AFA) and author of “Reviving the Strike,” a book. “You would be left with just trying to ask employers to do things, instead of having some leverage at the bargaining table.”
Burns said a strike authorization last year by flight attendants at Mesa Airlines Inc. helped secure a contract. After AFA successfully went on strike in the 1990’s at Alaska Airlines, Burns said, “just the threat of chaos” in the form of a new strike was enough to win subsequent contracts.
In February, pilots at Spirit, another ultra-low-cost carrier, agreed to a four-year deal with a 43 percent wage hike. Frontier, which is owned by private-equity firm Indigo Partners LLC, has offered pilots rates that are 7 percent below those at Spirit, the union said in its April 27 request to the NMB. Frontier pilots make $147 per hour of flying, $60 below those flying the same Airbus aircraft at Spirit, according to data compiled by Bloomberg Intelligence.
The Frontier rate is $108 per hour below that of Delta Air Lines Inc., the industry leader. Denver-based Frontier is also in contract talks with its flight attendants’ union.
The prospect of an airline strike can make travelers nervous about booking a particular carrier, given business meetings and conferences that can’t be skipped, or weddings and vacations no one cares to miss. But that’s not the only tool pilots have. During disputatious times, they can also use various tactics to effect a slowdown, especially given the power they wield over safety considerations. They can call in sick, decline open trips, seek additional maintenance checks or choose to work only to the letter—rather than the spirit—of an existing contract. Push too far, however, and airlines head to court for judicial relief.
U.S. carriers are keenly aware of how quickly the flying public can sour on them if reliability and on-time performance suffer, said Michael Duff, a law professor at the University of Wyoming and a former US Airways ramp worker. The airlines are in no mood to push their luck with a labor standoff. Cash-flush U.S. carriers are racing for the crown of “best employee relations” as a way to distinguish their service and win over travelers from rival carriers. The most recent round of contract talks—the first for some carriers since the end of the bankruptcy-era contracts that squeezed labor—was relatively placid, by airline terms.
Only at Spirit did strife between pilots and management spill over into marred operations and stranded passengers. The airline obtained a restraining order in May 2017 to prevent its pilots from skipping open trip assignments and leaving the carrier understaffed. Spirit pilots ratified a new deal in February. (JetBlue Airways Corp. pilots are preparing to vote this summer on their first agreement with their carrier.)
As members of a highly skilled workforce that’s extremely difficult to replace, pilots are in high demand by airlines, which already face a limited supply of new aviators. The eight largest U.S. airlines will see 35,000 pilot retirements by 2030, requiring them to hire as many as 5,000 replacements annually, Raymond James Financial Inc. said in an April research report, citing data from the Southwest Airlines Pilots Association.
How the Frontier union showdown turns out may be a sign of things to come. While Frontier is a tiny player, Delta, American Airlines Group Inc., United Continental Holdings Inc. and Southwest Airlines Co. all have pilot contracts that will be open for negotiation by September 2020. The first—at United—is subject to amendment beginning in February 2019. The United ALPA chapter has said the union and airline hope to conclude a new deal by the end of the year.
Federal officials consider the size of an airline and its importance to the economy as one factor in deciding whether to permit a strike; Frontier or Allegiant Travel Co., for example, would not be viewed the same as American, the world’s largest.
Before the Spirit strike, the last pilot walkout took place in 1998 at Northwest Airlines, which lasted 15 days after President Bill Clinton declined to intervene. In 1997, Clinton permitted pilots at American to walk off the job, too—for 24 minutes, before he halted the strike.
“The NMB is likely to approach each of these bargaining situations based on its own individual circumstances and make the kind of determinations that serve the purpose of the NMB—to have smooth labor relations, as well as prevent interruptions to interstate commerce,” said Jeffrey Wall, an attorney specializing in labor law at FordHarrison LLP in Washington.
Dennis Tajer, a spokesman for the Allied Pilots Association at American Airlines, said pilots don’t want to strike—especially given the tension that a work action would bring at a company in which they’re heavily invested. “We don’t want that to happen,” he said. “All that buildup is very disruptive to all sides.” Tajer added, however, that the airline has a vested interest in meeting pilots halfway, even if the administration ends up siding with management.
“If the government says there is no strike, that doesn’t change the toxic relationship that occurs as you build up to a strike,” he said.
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