Avicenna,
You are correct, scope clauses are negotiated on a separate basis and they do lead to “distortions” in competitiveness. In terms of market forces, the effect of a pilots union (in general) has been to reduce the effect of those market forces on pilots. In terms of management, a union always reduces a company’s flexibility (all changes in the status quo must be negotiated). I’ve never understood why some airlines (or other companies for that matter) virtually guarantee the formation of unions through the treatment of their employees. Sure they achieve some short-term gain, but in the long run their costs will be higher and their flexibility lessened. Better to have happy non-union employees and thus the ability to react quickly to changes in the market place/operating environment. I guess most modern corporations are mostly geared towards the short term anyway (“we’ll deal with any long term problems when they arise”
. In many cases, the original scope clauses were negotiated while the management had no immediate plans to do anything like transfer flying/assets etc. Hence, the pilots traded something the company wanted for their scope clause (a freebie as far as management was concerned). It has only been very recently with the success of the regional jets that the scope clauses have begun to have importance to management.
In terms of asset/business transfers, as in the case of New York Air, it’s not just a case of pilot costs, but rather of overall labor costs since most unionized airlines have unions all across the board. I believe that at unionized airlines in the United States, labor costs make up between 30-45% of total operating costs. Imagine yourself the CEO of a unionized airline with high labor costs and historically low margins (compared with other industries, profit margins of airlines have always been low). Now consider the possibility of taking a sizable chunk out of those labor costs. The impact on the bottom line would be huge. Factor in the impediment to flexibility that union contracts represent and the fact that someone who aspires to run a multi-billion dollar corporation is most likely going to be an aggressive, hard charging individual who doesn’t like being told what he “can’t do” and it’s certainly going to be an attractive option. The trade off is going to be the obvious enmity of your unionized employees and the possible service disruptions that they may cause to your established airline. You are correct in stating that you have to be able to find motivated pilots willing to work for less money but historically, they have always been around. The possibility of flying “big jets” with relatively quick advancement has always been enough enticement. It has only been recently that the market for pilots (at least experienced pilots) has become tight with that scenario yet to fully play out.
Mainline pilots have feared losing jobs (or chances of advancement) to the regionals because at some airlines, that is exactly what has happened. The labor cost of operating a B737 versus a regional jet does impact the profitability of a route (how much I really don’t know and I do suspect a certain amount of rhetoric being employed by both sides) so the calculation is going to be which plane makes us the most money. In some cases, pilots from the mainline have been furloughed while routes were transferred to the regional airlines. The negative impact has been on the mainline pilots, they have the clout to negotiate these scope clauses and have done so. Obviously, the negative impact of the scope clauses has been on the growth of regional airlines and the advancement of their pilots as well as the flexibility of the airlines to deploy the aircraft that makes the most economic sense. While I’m sure that ironbutts (and many regional airline pilots) would disagree, this is not a morality issue. It’s a money issue, pure and simple. Historically pilots have not understood that the airline does not exist for them. It is a corporation that exists to make profits. When the tradeoff is such that the airlines are willing to pay the price (cost of a labor dispute vs. the potential savings) to eliminate scope clauses, they will do so. The first shot may have been fired by the airlines last year when they (through some shell organization of “smaller communities” but obviously with ATA backing) petitioned the U.S. Congress for the outlawing of these scope clauses because they were affecting the economic growth of these communities by denying them the service of regional jets. I think that the pilots have long understood the value of these scope clauses to them. I think that it has only been recently that the airlines themselves have begun to see the scope clauses as relatively expensive for them. As far as the future is concerned, they won’t be given up without a fight.