Economist says Labor Unions Face Uphill Battle
According to Aviation Week:
Labor unions have been advised that a looming recession and rising fuel costs could tip the scales in favor of management at the bargaining table this year, and managements will want to drag out negotiations on new contracts as long as possible.
The Association of Flight Attendants (AFA-CWA) is hosting a bargaining summit in Washington this week in conjunction with the Association of Professional Flight Attendants, International Association of Machinists and Aerospace Workers and the Transport Workers Union in hopes of unifying their negotiating strategies. The unions realize that as soon as one airline lowers wages or reduces benefits in a contract, the others tend to follow (DAILY, Jan. 9).
Dan Akins, transportation economist, told the unions the bad news is that even though labor costs have fallen in the past few years, unit costs at U.S. airlines are up about 20%-30% and fuel prices continue to set records. Many airlines also have more cash on hand than they are worth, so they are acquisition targets, he said.
This comes at a time when flight attendants are working longer hours for less pay due to past concessions. However, he informed attendees, which included some pilot representatives and perhaps other labor groups, that he believes the cost reductions sought during the past two years of restructuring are complete and will not reduce labor costs further.
One thing labor can demand is that airlines hike their fares to cover raises for employees. He notes that a 1% increase in revenues for an airline covers a 4%-5% increase in fuel costs. "At Southwest, a 1% increase is $100 million. That covers about a 10% increase in fuel," Akins said. Labor, therefore, should not be daunted by management's cry over fuel costs, all of which have been covered by passing the costs on to the consumer, he added...click to continue.
