Organized Labor in U S Commercial Thesis

Excerpt from Thesis :

43 in 2009. Yet current airframe and power plant mechanics are inclined to move to the computer and automotive sector for better work environment. Analysts advised the creation and use of informational recruiting tools to attract these potential workers. in-house training programs on long-term career growth and a sense of commitment to the company would be one form. Another could be employee-retention programs on leadership, technical, and management training courses. Other tools and strategies could be flexi-time, relocation benefits and an improved work environment. Recent mergers and consolidations within the industry are meant to retain employees and serve a wide range of customers. The technology-driven industry requires mechanics with the necessary technological competence in order to provide the wide range of services required by customers. A resourceful information management system could integrate e-business tools and advanced technology into standard business practices. This integration would bring about more efficient and cost-effective solutions to current problems (Business Writers).

The Advantages of Technology

The world's airlines should take advantage of innovative technologies to connect with their customers, achieve desired revenues and solve industry problems (USA Today, 2003). Chairman Nawal Taneja of the Department of Aerospace Engineering and Aviation at the Ohio State University emphasized the role of technology in generating large profits for the airline industry. He noted that air travel earns billions of dollars every year but makes a profit margin of only 1%. He attributes the situation to the reality of different problems in the industry, such as high labor costs, different seasonal demands and weather conditions. Taneja suggested focusing on one unique service, avoiding destructive competition, the use of technology and check-in automated machines, sharing an interface with competitors, and establishing a brand identity. Airlines can and should choose their customers and come after them - again through technology (USA Today).

Baggage Meltdown"

Mishandled baggage or "baggage meltdown" is a major consequence of increased air traffic when accompanied by a shortage in security screeners (Levin, 2006). Statistics showed that loss or mishandling of baggage from 2004 to 2005 went up by 23% because of manpower and financial shortages in big carriers, such as U.S. Airways. Stricter security measures made the situation worse. Airport managers had to hire laborers to assist TSA screeners with non-security tasks. Policy director Stephen Van Beek of the Airports Council International said that tight staffing delayed baggage handling, especially during peak seasons. TSA reported a 24% turnover workforce rate and 10% of its workers received compensation. It planned to hire more part-time screeners for peak hours. The Department of Transportation said that 3.6 million mishandled bags in 2005 or 6.04 per 1,000 passengers. This represented a 4.91% per 1,000 in 2004. The figures tend to increase as flights fill up or as the airline undergoes financial straits (Levin).

Cost-Cutting Mostly in Labor set of unexpected and unprecedented problem situations since 1998 has been reshaping the aviation industry and the demand for air travel (U.S. GAO, 2004). The decrease in business travel and the New York attacks chopped off substantial operating revenues for many airlines. Since its deregulation 30 years ago, these problem situations and challenges developed from internal restructuring within the industry and from external factors, which today influence the demand for air travel. Internally, the internet has been a powerful market force. Tickets are now viewed and sold online. Other challenges were the New York attacks, the war in Iraq and the national security issue, SARS, economic brunt and the substantial decrease in business travel (U.S. GAO).

Bankruptcies and Optimism

The Aviation Committee reported that the airline industry was losing its "last dime" with the bankruptcy of United Airlines and the U.S. Airways (American Bar Association, 2003). The companies registered a combined loss of $11.2 billion in 2002. Many other major airlines were also thinking of filing for bankruptcy protection. The trend led to a loss of jobs for 100,000 airline employees and many others in aviation-related industries. A second Gulf War also loomed and added to the distresses. However, some sectors have remained optimistic that the industry would survive. One reason was that air transportation has not been thoroughly overtaken by technology or other modes of travel. It has remained a significant part of the national infrastructure. Optimists also believed there would be survivors in this catastrophe. These survivors would eventually reap and enjoy the benefits of the present situation. And as a blessing in disguise, it would bring about the much-needed fundamental reform of the labor cost structure of the industry. Optimism lies in this turn of events, which is the major source of hope in the future of the industry (American Bar Association).

The president and chief executive officer of the Air Transport Association shared the optimism of these observers. James May predicted a "reasonably positive fourth quarter" in 2008 when the economic picture would improve and even operate "in the black" in 2009 (CNN 2008). Measures undertaken by severely afflicted commercial airlines appeared capable of withstanding the pangs of the current economic troubles. He saw the companies as rising from the travails of high cost of jet fuel with the decrease of oil prices. These measures would include charging passengers for checked bags and other services previously extended for free and cutbacks on scheduled flights. The ATA president attributed the capability to industry preparedness. He, however, saw the industry as wading through the red in the third quarter. The worst hit was U.S. Airways with a loss of $865 million to high fuel cost, higher than that of United Airlines' $779 million drain. He also foresaw continued and substantial consolidations among European airlines. He could likewise see more alliances between American and European airlines, such as that between AMR Corporation's American Airlines and British Airways (CNN).

The History of Organized Labor in the Industry

It began during World War I when commissioning pilots was repulsive to senior career officers (American Bar Association, 2003). But it soon took after the practice of British allies and the airline industry was born. The flying public started to appreciate and trust pilot professionalism. By 1930, the four basic airlines were carrying as many passengers as mail. The first labor union of professionals was the Air Line Pilots Association or ALPA in 1931. It was organized to reduce costs and to effect a change in the basic pay from miles to hours. The small union had only 600 pilots as members but they enjoyed much prestige and reputation. The salaries of airline pilots were the highest at approximately $1,000 a month that year. When the number and speed of aircraft multiplied, employees struggled for an hourly-based scale for their increased effort and productivity. It formed an alliance with the American Federation of Labor in 1933. With the federation's strong links with the Roosevelt administration, it moved the National Labor Board to produce Decision 83, which increased hourly pay with an increase in aircraft speed. This gave ALPA political strength, expressed in the Air Mail Act of 1934 and the Civil Aeronautics Act of 1938. In 1935, it influenced the amendment of the Railway Labor Act to include airline employees. Growing airlines paid their employees well. Deregulation of the Mutual Aid Pact was started in 1978 in created a business-like environment. Fares went down but labor costs continued to increase in major airline companies. There was no clear explanation to this trend except a hunch that no airline wanted to shut down when competition was high (American Bar Association).

Highest Paid

At present, employees at airlines are paid almost twice the average of all industries in America (American Bar Association, 2003). Findings of a survey conducted by the Department of Labor's Bureau of Labor Statistics on 437 professions, the two highest paid professionals were the airline pilot and the doctor whose earnings were comparable. But doctors worked at an average of 41 hours while the pilots put in an average of 22 hours per week. Both management and employees conceded to create a labor cost structure, which could no longer sustain itself at present. Labor costs now account for 36% of major airline budgets, with fuel representing only 13% of costs. It is clear that the aviation industry must rationalize its business structure and operations in order to survive. It should start with labor costs (American Bar Association).


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2003). More "personnel friendly" programs needed…

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