
Unions and Airlines (2010) - luu
http://philip.greenspun.com/flying/unions-and-airlines.html
======
mapgrep
The last comments at the bottom of the linked article, from "Capt Kaos," bring
up some excellent points Philip missed:

-Philip says the senior pilots, the best paid, hold down wages for the junior pilots. But the contracts are decided by a simple majority vote, and the senior pilots are a small minority (and often not even the negotiators): "Senior Pilots make up the the smallest percentage of any Pilot Group, so they are not in control of what passes. Often, Contracts are passed with improvements for junior pilots that outstrip the improvements for senior pilots. I have seen this happen, and if you are in this Industry a little longer, you will, too."

(So why do junior pilots accept low entry-level wages at regional airlines?
Same as any entry level employee: Hope for training to move up to the next
rung.)

-Philip says the airlines are severely constrained in fighting strikes, but neglects to mention that the pilots are also severely constrained in when they can strike. "Getting the the NLRB to release a union to strike takes years, which benefits the Airline by keeping the Pilots working under the old Contract for as many as 5 or 6 additional years"

~~~
ekianjo
> "Getting the the NLRB to release a union to strike takes years, which
> benefits the Airline by keeping the Pilots working under the old Contract
> for as many as 5 or 6 additional years"

How do things work with the NLRB when you want to organize a strike ?

~~~
ahi
Depends on industry. I am not familiar with airline unions, but in unregulated
industries unions can strike pretty much whenever they want provided they are
willing to risk scabs or endless litigation.

------
bjourne
_Should the economy turn down during the contract period, the pilots, having
expected to collect 95 percent of the airline 's profits, will in fact be
entitled to 115 percent of the airline's profits._

That statement is tautologically false since pilots are paid salaries which
decidedly is not profit. According to this thread in 2002, the pilot's share
of all operating expenses are 3-5%: [http://www.airliners.net/aviation-
forums/general_aviation/re...](http://www.airliners.net/aviation-
forums/general_aviation/read.main/959701/)

I.e the 95% figure needs a cite otherwise it's bullshit.

~~~
danielweber
Not that this other pg doesn't play pretty loose with the facts when it suits
him, but I think it's clear he's not talking about literal bookkeeping
"profit," but what the airline has left after making all payments _besides_
pilots' salary. I.e., if you were the pilots' union, after examining the books
and holding other parties as fixed, this is the pile of money that is going to
be divided between you and the shareholders.

Airline profit margins are around 1% of revenue, BTW. (And there's always a
question of who captures the surplus from trade.)

Airlines and their unions have a very rough relationship. In a prior life I
helped a client who was managing the firewall for an airline union. They were
constantly under serious attack, and asking me how they could make their
attackers' lives miserable.

~~~
bjourne
See:
[http://www.airlinefinancials.com/uploads/2013_Network_Annual...](http://www.airlinefinancials.com/uploads/2013_Network_Annual_Summary2.pdf)

Looks to me like pilot salaries are more like 50% of revenue which is 3-8% of
operating expenses, not 1%. At least the 95% number is bogus.

------
ekianjo
Excellent extract:

> All jet pilots are held to the same stick-and-rudder standards of the FAA
> Airline Transport Pilot practical test (see faa.gov). A 70-seat jet presents
> the same flying challenge as a 150-seat jet. The captain and first officer
> trade "pilot flying" and "pilot monitoring" roles on each leg of a trip.
> When the actual jobs are so similar, how is it possible that some airline
> pilots earn $16,000 per year and others earn close to $300,000? The
> captains, of course, do have more experience and that experience has value
> to the employer, which is why non-unionized air carriers may establish a 2:1
> or 3:1 difference in pay between their most senior and most junior pilots.
> But how can we explain a 19:1 pay differential for workers with similar
> training and tasks? The answer is to look at who controls the pilot's union:
> very senior pilots. The airline management is mostly interested in what
> percentage of its revenues are paid out to pilots; the distribution of the
> money among the pilots does not affect profitability. The very senior pilots
> on the other side of the table say "We need the most senior pilots to get
> $300,000 in pay and benefits." The airline's response is "The only way that
> could work is if we pay the new pilots $16,000 per year." The group of
> senior pilots responds "We can live with that."

And this is scary:

> From the point of view of safety, common sense would argue against pairing
> up a company's least experienced pilots with the company's least experienced
> captains and then driving them both to exhaustion. But that's how nearly all
> unionized U.S. airlines do it.

~~~
handelaar
Remove the union. Now _everybody_ gets paid $16,000 and the "percentage of
revenues paid to pilots" can be slashed.

Is that

a) Better? b) The other thing?

(Yes, the current situation sucks and those unions certainly don't help it
any. This is not an argument for the status quo.)

~~~
mcv
The problem is that those unions seem to operate in a very short-sighted
selfish way with no regard for the consequences or even the interests of their
own junior members.

Thing is, I hear lots of stories about how American unions devastate their own
industries. Why is that? Dutch unions make sure their members (including the
young ones) are fairly compensated, but they are invested in the long term
health of the industry, because that is also the long term livelihood of their
members. Generally there are regular talks where employers, unions and
government discuss this on an equal footing and reach an agreement that
everybody can live with.

So why don't US unions work like that?

~~~
mattgreenrocks
Your comment applies to many US businesses as well. It's never enough to
simply do well, you're supposed to utterly dominate whatever industry you're
in (and then branch out to others), even if it means jeopardizing the industry
in the long-term.

It reflects a juvenile, ego-centric view of the world that often gets
rewarded.

------
larrys
Good points but avoids the reason why pilots actually start at such a low
salary. It's not just the senior pilots.

Essentially it is supply and demand.

The supply of people that want to fly an airplane [1] exceeds the demand for
pilots. So we have a race to the bottom in starting salaries.

There are people that love flying enough that they are willing to work for
peanuts and that excess supply drives the salary down to the levels mentioned
- "$16,000 per year" (I will assume that is correct.)

Remove that excess supply and everything changes in the equation and what the
unions and airlines can do (with an established airline as well as a startup).

This is really similar to what happens in several industries with desirable
jobs (entertainment is one of those).

[1] And will do so for the salary that is currently offered to start in other
words.

------
crdoconnor
It's simple game theory.

The issue with pay based upon subjective measures is that it can be gamed by
the employer in order to "divide and conquer" the workforce and ultimately
break the union apart.

Even if management are given a clear set of rules in order to to decide
promotions based upon merit, they can normally fudge it in some way to make
sure that workers who put fealty to management ahead of loyalty to union get
ahead quicker.

Once that gets started it gives other workers an incentive to do the same.
Gradually that will chip away at the union's strength as more and more workers
defect until eventually management can gather enough scabs, cut the union out
altogether and pay _everybody_ 14k/year.

Seniority is not an ideal measure of competence, but it is at least an
OBJECTIVE measure that will correlate with competence and (most importantly)
can't be gamed by either side.

So it's a normal compromise that makes a lot of sense that unions and
management will agree to.

If there were other, _better_ non-gameable metrics I'm sure their negotiations
would probably converge on them instead.

~~~
jpatokal
Paying everybody 14k/year might work if they were hiring people to dig
ditches. However, it's a seller's market for pilots right now: if they try to
cut the salary of a captain who's been flying widebodies for 20 years to
14k/year, he'll be off to Emirates faster than airline management can say
"Oops".

And to complete the circle, said shortage is largely caused by the fucked up
seniority system, which makes it a huge gamble to become a junior pilot:

[http://www.ainonline.com/aviation-news/aviation-
internationa...](http://www.ainonline.com/aviation-news/aviation-
international-news/2014-04-03/pilot-shortage-myth-says-alpa)

~~~
crdoconnor
>Paying everybody 14k/year might work if they were hiring people to dig
ditches. However, it's a seller's market for pilots right now

So why are pilots still earning less than bus drivers and having to apply for
food stamps?

>However, it's a seller's market for pilots right now: if they try to cut the
salary of a captain who's been flying widebodies for 20 years to 14k/year,
he'll be off to Emirates faster than airline management can say "Oops".

Where, as Greenspun points out, they'll be paid the same as the rest of the
new hires.

~~~
jpatokal
Re: why, Greenspun's article goes into that in some detail.

Also, Emirates is in the United Arab Emirates, not the US, and about as
militantly anti-union a country as you'll find -- and they're famous for
luring pilots away from other airlines. By and large, the pilot seniority
scheme is a US-only problem (although vestiges remain in Europe), most of the
rest of the world competes tooth and claw for pilots.

~~~
crdoconnor
>pilot seniority scheme is a US-only problem

This is a union thing, as I pointed out - not a problem, but a solution to an
otherwise intractable game.

The low wages is likely because lots of people have the ability to learn to
fly in the US and lots people REALLY want to. Supply and demand.

~~~
cjrp
Yep, the cost of getting your license in the US is a lot cheaper than Europe
(well, the UK at least)

------
nickhalfasleep
A great deal of hand waving and not many numbers. Quick dismissal of the
success of Southwest with their Union. A better explanation might be that they
have a rare healthy relationship between their management and unions, and the
productivity and efficiency they create together.

~~~
toehead2000
I don't understand your comment about Southwest. He doesn't give a "quick
dismissal," he mentions things about Southwest that are unique and seem to
make them an exception to this general trend. What exactly is your critique of
his argument? Your comment is far more hand wavy than this article.

------
Zigurd
The unasked question here (and in the case of ISPs, health care, and other
domains where constructing a working market is difficult) is "Should all
enterprises be investor-owned and capitalized through private markets?"

Air travel is such a heavily subsidized and generally government-involved
business that investor-owned, TBTF airlines are a travesty of capitalism. Why
not cut through the bullshit and make airlines into competing cooperatives
chartered by the government? Or some other structure that is not a charade
covering what amounts to a skimming of subsidies into investors', or in this
case pilots', pockets or outright rescue of investors from a situation of
their own making?

The situation is inherently corrupting. The only way to win is to tilt the
flow of subsidies in your direction. In this case the senior pilots win
because they institutionalized their levers of power.

Many people here fantasize about a libertarian approach to problems like this.
Does anyone here have a serious libertarian model for air travel? Land
acquisition for airports and surrounding infrastructure? Would Boeing exist
without airplanes being a superpower strategic good?

------
prostoalex
Worth pointing out that as the speed of flying (hopefully) increases, it
brings in different level of economics - such as a Norwegian company with
Norwegian employees serving domestic routes in the United States

[http://www.rollcall.com/news/us_carriers_wary_of_norwegian_a...](http://www.rollcall.com/news/us_carriers_wary_of_norwegian_airlines_cut_rate_wages-229935-1.html)

~~~
ubernostrum
_such as a Norwegian company with Norwegian employees serving domestic routes
in the United States_

Not quite. Norwegian Air Shuttle is operating international routes to and from
the US. Non-US airlines are forbidden under cabotage laws from flying domestic
(i.e., from one location in the US to another location in the US) routes, and
even from offering such flights with a connection in a second country -- for
example, a US-based airline can fly you from New York to San Francisco, but
Air Canada can't, and also can't offer New York to Toronto to San Francisco.

------
lutorm
Aren't unions democratically organized? If the majority of pilots are junior,
as one would expect, I don't see why their interests aren't represented.

~~~
Spooky23
The core tenet of a union is seniority.

Their interests are represented. The alternative to a shitty deal compared to
the senior pilots is an even worse deal.

~~~
mcv
The core tenet of those particular unions. It's not even remotely a
requirement for unions in general. Plenty of unions in the world have a much
healthier way of operating. Are there specific laws in the US that force
unions to operate in such a destructive manner?

~~~
Spooky23
Not sure, but I've never seen a US union that didn't use seniority in layoff
situations. End of the day, that drives the contracts.

A typical scenario is that the company wants to save money, which is achieved
via concessions from labor or via layoff if nothing is forthcoming. Usually
the senior people bear less pain because the impact of compensation cuts is
really debilitating, as it affects long-term pension payouts.

In other cases, they screw new employees. This is common in public sector and
other big industrial union shops. The newbs get a 401k, bigger health
contributions and the old guard keeps the pension and free healthcare.

~~~
mcv
As far as I know, in layoff situations, Dutch unions tend to consider the
chances of the people laid off to find a new job. Not sure how that usually
turns out.

But the core point is that the union doesn't merely serve its most senior
members; it serves all of them. And if a significant number of the members
don't agree with the decisions of the union, they can leave and start their
own. I believe that happened a couple of years ago with a rather big union.

------
mabhatter
This article is painfully wrong.

The motivating factor for airline wages is experience, and availability of
airplanes to fly. Experienced pilots come primarily from the US military. For
a civilian trying to get into that market you are essentially a liability the
first five years of flying. Military guys come out with 8-20 years
experience... And thousands of hours, And Uncle Sam paid all their practice
time. As a civilian you are only worth $16k per year because that's what the
military pays junior flyers. (Which sucks because jet instruction is hundreds
of dollars per practice hour to fly the smallest little Lear, easily $20k out
of pocket) There are are only a fixed number of jets in commercial service..
There are far more entry level pilots than available jobs, several times over.

At the Top end, the number of qualified pilots thins out dramatically... It
takes thousands of flight hours and hundreds of instruction hours. So those
pilots are worth $300k... Probably more except a fair number of them would be
living off Military retirements.. Which forces wages below the actual cost of
acquiring the skills.

Commercial piloting is an MLM scheme... Lots of people are willing to work for
crap wages just to get wings and a shot at the bigger planes you can ONLY get
from airlines. There is zero leverage for new employees.

Also, if airline are only paying pilots 5% of operating expenses, then pilot
wages were NEVER the problem... They're just easy to blame. If you are running
a business so close to the red you cannot have 5% wiggle room your business
model has far bigger problems than Unions wanting slightly better wages.
Blaming the employees because you cannot pay a fair wage is just being a pussy
of a business owner.

------
drob
Does anyone know the specific rules or statutes that underpin this argument?
What are the actual rules designating how much experience a pilot/team needs
with a particular airline before they're allowed to fly?

It'd be interesting to dig into the history behind them. (Did pilots lobby for
them, or did they make sense at some point for safety?)

~~~
btgeekboy
It used to be that the captain had to have an ATP (Airline Transport
Certificate), which implies 1500 hours of experience. The first officer could
have a standard Commercial certificate, which requires only 250 hours. This
changed just recently, so now that both pilots must have an ATP. By 2016, both
will be required to have a type rating as well.

This link [http://www.pilotscafe.com/new-first-officer-atp-rules-
explai...](http://www.pilotscafe.com/new-first-officer-atp-rules-explained/)
explains it in pretty simple terms.

------
tgb
I don't understand the basic premise here. It seems to be that the unions have
very effective strikes. Okay, but that just turns negotiations into playing
the "ultimatum game" which isn't great but shouldn't consistently give one
side almost all of the winnings.

~~~
cperciva
Workers can find work with other employers. Employers can't hire replacement
workers.

~~~
dublinben
>Employers can't hire replacement workers.

Sure they can. They're called scabs or strikebreakers.

~~~
JackFr
The article points out that airlines are unique, in that FAA regulations make
the hiring of replacements effectively impossible.

~~~
mcv
I don't quite understand how those FAA regulations would work for new
airlines. If pilots need a certain amount of experience flying with that
specific airline, and the airline only just came into existence, how can they
possibly hire pilots?

------
Theodores
From the article I was getting the impression that everything wrong with the
airlines could be blamed on the unions. I guess the author would have said the
same about trains had he been travelling a century ago.

Airlines are a bit like football clubs or Formula 1 teams - the way to make
millions at it is to start with billions. Airlines are also like railways a
century or more ago - big wage bill, big fuel bill, lots of infrastructure
spread out over a geographically large area, a constant need to keep
everything maintained and the ever present danger that some disaster might
happen. Compare that with your 'Instagram' companies that have similar sized
stock market valuations.

Did anyone make money out of the boom in railways? Or were all railways some
type of speculative bubble where mergers, state bailouts and bankruptcy were
all par for the course?

In Europe the airlines don't pay tax on their fuel. If they did then there
probably would not be many airlines.

Whether it is trains or planes the key to making money out of it is to have
some kind of trick. When you see a train or a plane packed to the gills it is
impossible to imagine that the venture as a whole is anything but profitable,
but, big picture, take away the tax-payer provided subsidies, the tax-payer
provided infrastructure, the tax-payer provided loans and other incentives
and, unless there is that trick, then it is a mug's game.

The future of airlines is already here with some of the European low-cost
carriers. Essentially the staff no longer have jobs that are any more
glamorous than that of a coach tour driver's. In the turn around it is the
cabin crew that hoover the plane, pick up the sweet wrappers and make things
good for the next horde of passengers. There are no specific cleaners to do
the job whilst the cabin crew waltz off to enjoy a well earned break. I quite
like this new reality, I also liked travel in the days of Pan Am and TWA when
planes had a jet-set feel to them. However, regardless of the staff and what
they have to do, running an airline is no easy way to make money and you
cannot blame the unions when it doesn't work out.

------
mcv
If this story is correct, then the source of the problem is that the junior
pilots accept the senior pilots as union leaders. If the junior pilots started
their own union, the senior pilots would have less leverage, because if they
go on strike, there's a replacement batch of pilots that can take over the
most important operations, so the airline won't immediately vanish. So the
unions need to come to an agreement where the junior pilots get better
treatment.

------
S_A_P
So the Capt Sully incident is mentioned in this article, and the article
implies that he landed in the Hudson because he had flown across the US the
day prior. So he hit a flock of birds at take off- is that because he was
tired or sleep deprived? I think its because a flock of birds where in a bad
spot during take off. And by all accounts Capt Sully did a fantastic job of
saving lives in this case.

Then there is the footnote of Southwest Airlines. He mentions how the unions
are happy to negotiate unfavorable terms for junior pilots/airlines, and then
contradicts himself by saying, well maybe Southwest's pilot union isn't doing
that. I fly southwest quite frequently(in the past 6 months I have been on at
least one round trip per week 60% of the time) and I certainly notice that the
culture of the airline is very different than say, United. Southwest, while
not perfect, are pretty cheap to fly most US domestic locations I frequent.
They don't nickel and dime you with fees(checked bags, changes, etc). I flew
united a couple of months ago and ended up having to change my ticket. I lost
200 dollars, had to pay 60 dollars to check a bag and generally had a poor
experience at the "luxury" of getting to choose my seat ahead of time(which
ended up being a "premium" seat for an extra charge.)

My point is this, most carriers have a management style that pits pilots
against both themselves(junior vs senior) and the airline. As long as this
continues, the cycle of boom/bust for most airlines will continue. I believe
southwest is different in several ways:

\- only fly one plane type(737) simplifying maintenance, making pilots more
interchangeable on routes and probably improving safety in general.

\- customer focused service, and from what I have read about the airline, a
culture of taking care of employees.(a good example being when Southwest sold
a plane instead of laying off workers in their early days)

\- not following the "regional" model of air travel yet still serving many of
those "regional" destinations. From what I have seen its mostly these regional
airlines that have deplorable pay and flight schedules.

I personally am pretty anti union, but I cant point the finger at them in this
case as being at fault. I think that unions may have some effect on how pilots
are paid and treated, but they are by no means the only reason.

------
ahi
I wonder if some of the disparity in junior vs senior pay is elated to
deregulation. When the airlines were tightly regulated 6 figure pilot salaries
were very common. Pilots from that era are all retired by now, but many of the
senior pilots today likely flew alongside people making huge salaries so it
will take long time for the contracts to adjust.

------
notatoad
have i missed a bunch of airline news today? first the boeing article and now
this, what's the context?

~~~
qq66
When one person posts something, it reminds other people of other things
they've read on similar topics.

------
jtolle
Not directly related to the piece (from 2010, although still interesting), but
the first comment has a link to Brad Templeton's website, which was nice to
discover!

~~~
krrrh
His older posts on self-driving cars were a revelation to me at the time.
Google eventually hired him. His post on the BSG finale is also a classic.

------
michaelochurch
_As a passenger, you might get on a plane with a senior crew. Your pilots have
slept a full 8 hours every night for the last week and are fresh from spending
a four-day weekend with their families. The captain has been with the airline
for 20 years. The first officer has been flying this type of airplane for 10
years and could do the entire flight by him or herself if necessary._

 _Alternatively, you might get onto a plane with a junior crew. Your pilots
are exhausted from being on the last day of a four-day trip. Each night they
've gotten a 9-11-hour "rest period", but that includes waiting for a shuttle
to the hotel, riding the shuttle to and from the hotel, showering, eating, and
possibly trying to sleep at an unusual hour. Perhaps they've slept 5 hours
each night. The first officer joined the airline a few months ago. He or she
has some simulator training, but is struggling to stay ahead, mentally, of the
airplane._

Get rid of the unions and every crew would be exhausted, underpaid, and
undersupported. You can't trust corporate management. Source: centuries of
observation.

Pilot salaries aren't that expensive. A pilot logs about 40-45 flight hours
per month (the guideline is 40, but that doesn't include takeoff and landing)
for a total around 500 per year. Since length of flight and passenger count
are correlated, and since we're talking about the highest-paid pilots, we can
assume an average passenger count of 150. That's 75,000 passenger-hours per
year. For a $300k pilot, we're talking $4 per passenger-hour. That's nothing,
compared to the price of a ticket.

The reason airlines are so brittle, and suffer when business cycles go against
them, is that they have enormous fixed costs while being in a commodity
business. Also, the bulk of their profit doesn't come from leisure travel but
semi-discretionary business travel (hence the premium paid for airline tickets
less than 14 days in advance, and for business class) and that goes away
quickly in a downturn, now that videoconferencing is an option.

