Research Paper on Collective Bargaining in Airline Industry

The foundation, for collective bargaining in the industry, was laid in 1936, when the industry was included under Title II of the Railway Labor Act. Accordingly, with the enactment of the CAA two years later, one of the functions of the CAB was the enforcement of the RLA in labor relations issues.

A significant provision of the RLA stipulated that bargaining units be based on distinguishable occupations or crafts. In addition, unions representing airline occupations tend to negotiate with each carrier individually. Together, these factors preempted the existing decentralized structure of collective bargaining that is pervasive in the industry today. Another factor that shaped collective bargaining in the industry prior to the ADA of 1978 was the route and fare regulation of CAB.

Without competitive pressures in its product market, carriers had little incentive to cut labor costs, because cost reduction could not be turned into lower fares and competitive advantage. Actually, fare structures tended to rise with cost increases. Thus employers had less resistance to wage increases than their counterparts in competitive industries because their costs could more easily be passed on to consumers. Consequently, unions in the industry did not face the usual tradeoff between higher wages or increased employment, since carriers were not forced to limit labor costs to generate greater profit.

An additional factor that shaped collective bargaining in the pre-deregulation era was the strike insurance plans or Mutual Aid Pacts (MAP). In the event of a strike, carriers agreed to divide revenues between the nonstruck carriers (who would receive windfall gains from the strike) and the struck carrier. This weakened the strike threat as a possible tool of unions in collective bargaining in the regulated era. In the post-deregulation era, concession bargaining has become the norm. Carriers use strategies from the threat of bankruptcy to two-tier wage structures to achieve substantial labor-cost concessions. However, the form and the extent of these concessions vary by occupation and carrier. In general, pilots and flight attendants have made many of their concessions in the form of increases in monthly work hours.

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