In order to learn more about the airline industry, it is essential to read Gary Chaison’s article “Airline Negotiations and the New Concessionary Bargaining” (2007), in which the author investigates the conflicts and negotiations in airline labor relations, which are considered to be extremely contentious, intense, and complex. The article discussion is based on labor relations between employers and workers’ unions of big airline carriers, among which one can find Delta Airlines, Northwest Airlines, and United Airlines.
It is essential to note that in “Airline Negotiations and the New Concessionary Bargaining” (2007), Chaison identified a new extreme form of concessionary bargaining, which was accepted after the bankruptcy declaration and was used by the above mentioned carriers in the second half of 2005. The airline carriers provided a confrontational cost-cutting. Due to the jet fuel increase by 50%, the workers who organized the strike agreed to pay the cut with the amount of 14-24%. In contrast to the traditional concessionary bargaining, the new one means that the carriers give the workers no assurance that they will not lose their jobs, and that there will be no need in further cuts. Nevertheless, the workers may accept the conditions offered by the employers if they believe this will help to save their jobs and such concessions will reverse greater economic misfortunes.
Another important point is that the employers pressure the union members, and this makes them agree to get their payments reduced and pension plans frozen in order not to lose the collective agreements. Nevertheless, Chaison states that the aim of bargaining always stays the same – “reducing labor costs by increasing productivity and moderating wage increases” (Chaison, 2007). The reasons for the industry restructuring during the last three decades have been lengthy contract negotiations, work stoppages, intense competition, highly fragmented bargaining structures, union-management relations, bankruptcies, labor relations and employment volatility, and external shocks. Finally, the unions have received equity ownership in return for negotiated concessions.
The article contributes to the airline industry studies and can help the professionals of the industry choose the best and the most appropriate ways of handling the negotiations. It is possible to state that the new concessionary bargaining, which is described in the article, brings positive results to both parties, as the workers are interested in saving their jobs and avoiding the risk of litigation or loss of contract, and the employers are not interested in massive layoffs.
Nevertheless, the benefits for the carriers are much bigger. The objective of the carrier as an employer is to maximize the profit. Consequently, it is more beneficial for them to reduce wages and other payments to workers. Therefore, it is obvious that reducing the payments “drain” without losing specialists is the most profitable way out, especially if the excess of expenses is inevitable because of external economic problems.
The workers do not benefit much from the traditional concessionary bargaining, as well as from the new concessionary bargaining. First of all, they do not get any guarantees that the concessions are intended for one time; on the contrary, it is likely that the employers will demand similar concessions again. Secondly, the wage cuts or freezes, loss of paid holidays, and suspension of cost-of living wage adjustments, which are regarded as a temporary sacrifice, result only in preserving jobs.
In case of intense competition on the market, it is likely that good specialists in the industry are demanded and the workers could probably find another job at the competitive carrier. Consequently, it is possible to agree with Chaison’s conclusion that providing concessionary bargaining in the airline industry is short-sited. The future stability and profitability of a company and the service quality can be based on trusting labor relations which do not include financial pressures on workers, as such a policy can only reduce the attractiveness of the company.