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The bargaining environment in which Magic Carpet Airlines (MCA) found itself was a hostile one. The flight attendants' union (LFA - League of Flight Attendants) wanted much more than MCA wanted to give, but it was also clear that the LFA had legitimate concerns with the way they were treated by MCA and what they were offered financially. LFA was very committed to the idea that concessions needed to be made by MCA, and MCA was committed to the idea that concessions were not necessary. Because that was the case, proposals were drawn up and negotiations were begun. What made the bargaining environment more difficult was that MCA was technically a national carrier, but it was very small so it was seen more as a regional carrier, even by its management. It was also often referred to as a large regional carrier. While this might not seem significant to some people, the differences in rules and regulations between national and regional carriers were large and important. Depending on how MCA was classified, it could be required to do more or less for its flight attendants, pilots, mechanics, and other employees.
Given that information, the LFA knew that it had an uphill battle on its hands. Not all airlines respond the same way to requests for more money and better treatment from their employees, but the LFA knew it had the opportunity to negotiate. It did not matter, ultimately, what MCA called itself. What mattered was that it was clearly designated as a national carrier based on its activities and its income level. With that in mind, the LFA knew that it could force MCA's hand on the regulations a national carrier must follow. Not all concessions requested would be agreed upon, of course, but there was the opportunity to get the flight attendants much more than the currently had available to them.
If it were not for the deregulation of the airline industry in the 1970s, the negotiations faced by MCA and LFA would not have been necessary. When the airlines were still regulated, they had to follow strict rules for what routes they could fly, how much they could charge passengers for those routes, and what they were to pay their employees. Because the airlines were bound to specific things there were no union contract negotiations, and there were very few airlines even in existence. Once deregulation happened, there were more airlines popping up seemingly overnight. They made different routes and started flying to different places. They also focused on the adjustment of the rates they charged to their passengers. They could raise them however they liked, and they could also consider what they wanted to pay their employees. Often, one airline would raise its rates and the others would follow suit. Many smaller, regional airlines operated as "feeder" airlines for the larger companies, and not all employees knew the difference.
Without any regulation of the airlines, the bargaining power of both sides (the airlines and the flight attendants) has shifted. While MCA has the opportunity to continue to deny any concessions desired by the LFA, the LFA can also continue to avoid acceptance of the proposal made by MCA. That could eventually lead to a strike by the LFA because their demands are not being met. In that case, the LFA would have a lot of bargaining power because MCA needs its flight attendants if it is to operate. It could hire new ones, but at what cost and in what time frame? The cost of getting new flight attendants could be significantly higher than the cost of simply acquiescing to some of the demands that are being made by the LFA during the negotiations. Ultimately, both sides have bargaining power (Budd, 2009). The LFA wants better conditions and more money, and MCA knows the flight attendants need their jobs. Both sides have something the other desires.
The company's goals were to keep costs as low as possible while providing good service. In order to achieve those goals, the company focused on lower pay for employees and avoided many of the perks and benefits that were given to employees at other airlines. The actions by the management in this case were not the best, because they actually caused more harm than good when it came to the negotiations. The desire to keep costs low made the company look cheap, which indicated to the flight attendants that they were not important and that they did not need to be paid any more money than they were currently receiving, nor did they need or deserve any benefits. Naturally, when people are made to feel unimportant or insignificant they are going to be less likely to perform at their best (Budd, 2009). Because MCA was aware of that, it was surprising that they did not take proactive steps to bring what they were offering to their employees more into line with what others airlines were providing. It seemed as though they had done this with pilots and mechanics, but that they were overlooking flight attendants as people who were completely expendable.
It is understandable that the company would have a goal of keeping costs down. The less something costs to operate, the more money it has the potential to make, all other things being equal (Budd, 2009). Even with that in mind, however, there is a limit to how inexpensively something can be operated and still be acceptable to the people who use it and who are employed by it (Budd, 2009). With MCA, the balance eventually shifted and the people who would generally have been fine with the working conditions saw that they were far below what was being seen in other airlines. The discrepancies were large enough to be an issue, not just something small that could be overlooked by the flight attendants or made up for in other ways. When discrepancies in pay and benefits reach that level, serious tensions can arise (Budd, 2009). That was the case with MCA and the LFA, because it was clear that the needs of the flight attendants were not being appropriately met by the airline.
Overall, the company's goal was a sound one. It just employed the wrong strategy to meet the goal. There are other ways to increase revenue and cut costs that are not related to overworking or underpaying people who are crucial to the comfort of passengers on a flight. Where MCA failed was in the area of realizing the true importance of the flight attendants and how much value they brought to the airline. Without having a clear understanding of that issue, the company determined that it could pay them less than its competitors were paying, and it could provide fewer benefits because it was a small airline. Granted, it was smaller than many national airlines. However, by purchasing another airline and merging its assets it found itself in the national airline category instead of the regional airline category a difference based on yearly revenue.
Once that had shifted it was clear that the flight attendants were working for a national airline but being paid and treated as though they were working for a regional airline. This was the basis for many of their complaints, because they realized that the value they were receiving for what they were offering to MCA was actually less than they would be getting at other airlines in the same category. While it was not dishonest to say that MCA was a smaller airline, the company continued to market itself as a regional airline - and use that status and size as a determining factor in why it could not raise the value of the benefit package to the flight attendants, along with raising their pay rates. Fortunately, the flight attendants say through that and began to question the discrepancy in pay and benefits between MCA and other national airlines. Negotiations were still complex, but they offered the opportunity for real change within the company.
It has been argued that the United States should ban permanent strike replacements. Many agree with this theory, while others state that it is unfair to "get rid" of people simply because they strike when they are not receiving equal treatment (Budd, 2009). This is one of those areas where it is difficult to completely agree or completely disagree, because there are often circumstances which do not come to light right away or that are not portrayed or discussed in the news when they are reporting on a strike or potential strike. The idea that strike replacements are never acceptable is a difficult one for this researcher to accept, mostly because there are some circumstances where employees are simply being unreasonable in their demands. If they are asking for much more than what would be reasonably expected of the company for which they work, that company will not agree to their demands. At that point, they may strike. It would seem logical that the company…[continue]
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