Unseen Product of Airline Links: Labor Solidarity [Archive]

aviator

2nd Jun 2001, 10:08

Here it is.
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June 1, 2001
U.S. Airline Pilots Are Helping
Europeans Win Fatter Contracts

By Daniel Michaels

Staff Reporter of The Wall Street Journal

Airlines like to brag about the higher revenue, lower costs and passenger benefits that come from the global alliances they've set up in the past five years. What they're not so thrilled about is the solidarity the alliances are fostering among pilots' labor unions.

It's a new take on globalization, promoted by U.S. pilots who worry about their jobs being outsourced to lower-wage foreigners. And the Americans' influence seems to be taking root in Europe: Lufthansa pilots, seeking a 24% pay hike, are in arbitration with management following almost two months of unusually acrimonious talks and three one-day walkouts.

Their counterparts across the ocean didn't force the Germans to demand fat pay raises or play hardball. But Americans who fly for UAL Corp.'s United Airlines and other U.S. carriers in the 13-member Star alliance -- established by United and Lufthansa in 1997 -- have been providing Lufthansa pilots with wage data, negotiating tips and moral support. While officials at the German union Vereinigung Cockpit decline to talk about the specifics of the foreign aid, they say it's been valuable.

Pilots, says negotiating-team member Bernd Kolender, are "becoming a much more international family because of the alliances."

That's a headache for airlines. "This is a world-wide trend, and it is very worrying," says Xabier de Irala, chairman of Spain's Iberia, a member of the eight-airline oneworld alliance that has been in bitter wage talks with its pilots since January.

Those talks were one topic at a two-day meeting of the Oneworld Cockpit Crew Coalition last month at the Miami Airport Hotel, which brought together more than 20 pilots from the alliance, which AMR Corp.'s American Airlines and British Airways formed in 1998. Host John Darrah, president of the Allied Pilots Association, American Air's union, offered tips to members from LanChile on fighting what they consider to be union busting in Latin America, and discussed with pilots from Ireland's Aer Lingus that airline's unusual requirements for flying extra short flights after long-haul trips. American Air's union is also refashioning part of its Web site so oneworld pilots can exchange contract details online.

Beginning Friday in London the International Federation of Air Line Pilots Associations, or Ifalpa, a London-based umbrella group for pilot unions, is holding a three-day negotiating seminar. Staffed by U.S. pilots, attendees will break into two role-playing groups and are pitted against each other as management versus labor.

The alliances -- and the associations the pilots have created for themselves within them -- "are really starting to show up one airline against the other," says Stan Clayton-Smith, director of professional affairs at IFALPA. "Pilots are seeing what terms and conditions they're getting for the same work."

U.S. pilots want Europeans to be well compensated, and they're not being big-hearted. The way to ensure that wage gains made in recent years aren't compromised by cheaper foreign labor is to equalize labor costs, says Duane Woerth, president of the U.S. Air Line Pilots Association, or ALPA, the world's largest pilot union, which guides Ifalpa.

After all, carriers the world over fly pretty much the same planes and buy the same jet fuel. Given that uniformity, he said at a recent industry conference, it only makes sense that pilots would be "trying to insure the highest common denominator" for their pay.

European pilots are happy for the trans-Atlantic help. It's not that they're green when it comes to contract negotiations. But they're entering an increasingly competitive environment more familiar to U.S. pilots. Four years ago, the European Union copied Washington's 1978 airline deregulation, unleashing a new wave of competition. Combine that with an ongoing sell-off of state-owned airlines to profit-minded shareholders, and Europe's aviation market is looking a lot more like America's. European pilots say they can gain profitable insights about bargaining in a deregulated market from their seasoned U.S. colleagues.

"They are showing us how they do studies and statistics" on contract terms, says Jaime La Casa, a spokesman for the Iberia wing of the Sepla union in Madrid. What Sepla members are learning via e-mail and phone calls from other pilots in oneworld, "is very good," Mr. La Casa says.

That's not how management sees it. For one thing, says Delta Air Lines Chief Executive Officer Leo Mullin, pilots in America have "no basis in fact" for their fears that carriers will import less costly labor to fill U.S. flying jobs. "Pilot alliances are formed under the presumed necessity to respond to this created idea," Mr. Mullin says.

What's more, with the economy cooling, "pilots have to realize that profitability isn't high" and that richer contracts could really squeeze airlines, says Iberia's Mr. De Irala. And analysts say that pilots' victories at the contract-negotiating table could spark similar demands from flight attendants, baggage handlers and other staff, which would spell bad news for travelers.

"If Lufthansa gives a substantial pay increase, I guarantee you every other European airline's pilots will demand it," says Ian Wild, European airline analyst at SG Securities in London. He warns that the industry could respond by limiting capacity growth. With demand for airline seats continuing to rise, he sees one conclusion: "The result will be higher pricing for passengers."

Trans-Atlantic employee camaraderie wasn't what United, Lufthansa and others had in mind when they started the alliances. Thwarted in their efforts to merge by the complex aviation treaties, airlines saw the less formal links as vehicles to achieve some of the same efficiencies they might have attained by buying each other. Through alliances, they share everything from marketing and pricing data to aircraft, while flyers get smoother ticketing and better options on frequent-flyer plans. That all helps build revenue while cutting costs.

Pilots in their own way followed suit. With all that togetherness, "we're not going to see one group of pilots exploiting another," says Mr. Clayton-Smith of the pilots association in London. Americans "have the resources, and they share them."

-- Carlta Vitzthum and Scott McCartney contributed to this article.