[Senate Hearing 107-1062]
[From the U.S. Government Publishing Office]
S. Hrg. 107-1062
STATUS OF LABOR ISSUES IN THE
AVIATION INDUSTRY
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
APRIL 25, 2001
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
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COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana DANIEL K. INOUYE, Hawaii
TRENT LOTT, Mississippi JOHN D. ROCKEFELLER IV, West
KAY BAILEY HUTCHISON, Texas Virginia
OLYMPIA J. SNOWE, Maine JOHN F. KERRY, Massachusetts
SAM BROWNBACK, Kansas JOHN B. BREAUX, Louisiana
GORDON SMITH, Oregon BYRON L. DORGAN, North Dakota
PETER G. FITZGERALD, Illinois RON WYDEN, Oregon
JOHN ENSIGN, Nevada MAX CLELAND, Georgia
GEORGE ALLEN, Virginia BARBARA BOXER, California
JOHN EDWARDS, North Carolina
JEAN CARNAHAN, Missouri
Mark Buse, Republican Staff Director
Ann Choiniere, Republican General Counsel
Kevin D. Kayes, Democratic Staff Director
Moses Boyd, Democratic Chief Counsel
C O N T E N T S
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Page
Hearing held on April 25, 2001................................... 1
Statement of Senator Burns....................................... 36
Statement of Senator Cleland..................................... 1
Statement of Senator Lott........................................ 17
Statement of Senator McCain...................................... 1
Statement of Senator Rockefeller................................. 28
Witnesses
Buffenbarger, R. Thomas, International President, International
Association of Machinists and Aerospace Workers................ 18
Prepared statement........................................... 20
Farrow, Linda, Master Executive Council President, United Flight
Attendants..................................................... 21
Hall, Sonny, International President, Transport Workers Union,
AFL-CIO........................................................ 6
Prepared statement........................................... 8
Hallett, Carol B., President and CEO, Air Transport Association
of America..................................................... 13
Prepared statement........................................... 14
Smith, Frederick W., Chairman and CEO, Federal Express
Corporation.................................................... 3
Prepared statement........................................... 5
Appendix
Buffenbarger, R. Thomas, letter of reply to Hon. John McCain,
June 12, 2001.................................................. 43
Kerry, Hon. John F., U.S. Senator from Massachusetts, prepared
statement...................................................... 43
Webb, Captain David, President of the FedEx Pilots Association,
prepared statement............................................. 49
STATUS OF LABOR ISSUES IN THE
AVIATION INDUSTRY
----------
WEDNESDAY, APRIL 25, 2001
U.S. Senate,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Committee met, pursuant to notice, at 9:57 a.m. in room
SR-253, Russell Senate Office Building, Hon. John McCain,
Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. JOHN McCAIN,
U.S. SENATOR FROM ARIZONA
The Chairman. Our panel of witnesses: Mr. Frederick W.
Smith, Chairman and CEO, Federal Express Corporation; Ms. Carol
Hallett, President and CEO, the Air Transport Association; Mr.
Sonny Hall, President of the Transport Workers Union; and Mr.
R. Thomas Buffenbarger, President of the International
Association of Machinists and Aerospace Workers.
I note in the back of the room there are some individuals
wearing very attractive T-shirts, and if one of you would like
to come up here to the witness table and make a remark we would
be glad to hear from you, is your leader here. This is your
chance. Hello, CHAOS. Do you have a leader?
[Laughter.]
The Chairman. Would you get a chair for the witness,
please? Ma'am, are you the leader? Please come sit down.
Senator Cleland.
STATEMENT OF HON. MAX CLELAND,
U.S. SENATOR FROM GEORGIA
Senator Cleland. Mr. Chairman, thank you very much. I would
like to recognize a fellow Vietnam veteran, Mr. Smith, and
thank you for coming.
I just want to highlight the situation in regard to
management and labor that occurred in my own home State with
Delta Airlines, one of the great airlines, and working out of
the busiest airport in the world. I just want to commend both
the pilots and Delta, for the exemplary manner in which they
conducted their business, and they did so without rancor and
without burning bridges, and they pulled off an exceptional
agreement, I think, that serves both interests well, and serves
the interest of the country.
I just wanted to make that statement. Thank you, Mr.
Chairman.
The Chairman. Thank you. We are all aware of the numerous
problems facing the aviation industry: congestion, delays and
modernization of air traffic control are all issues that seem
to rise to the forefront to be addressed again and again. This
Committee, the industry, the regulatory agencies and others
have redoubled their efforts to address these serious problems.
Recently, however, a new problem has arisen, creating
further havoc in our system. While labor negotiations in the
airline industry have been ongoing for years, things have begun
to worsen. The trend toward larger airlines has given unions
greater leverage, which appears to have contributed to a mind-
set that views any work stoppage as legitimate.
Normally, even acrimonious labor negotiations are a part of
the negotiation process, but with both sides using what
leverage is available to them to reach the best deal. However,
times have changed. These acrimonious negotiations now
adversely affect the American people.
Let me say from the outset, I have no problems with a right
to strike. Strikes are a legal remedy available under
applicable labor statutes. Recently, however, courts have found
more and more that labor unions in the airline industry have
engaged in concerted illegal job actions. These courts have
issued temporary restraining orders and injunctions prohibiting
such actions. In recent months, United, American, Northwest,
and Delta have obtained court-ordered relief from these alleged
illegal job actions. In American's case, the court fined
American's pilots over $45 million for not adhering to the
injunction. These actions have affected millions of consumers.
Middle-America has been stranded time and again as a result of
this illegal union activity.
According to published reports, last year United canceled
over 23,000 flights as a result of its pilots' refusal to fly
overtime, destroying carefully planned vacations and business
trips.
Northwest and Delta canceled thousands of flights
preemptively over the holiday season to combat alleged mechanic
slowdowns and failure to fly overtime by pilots respectively.
The pilot sick-out at American in 1999 left thousands of people
stranded, some of which have banded together to sue the pilots
for damages.
In this day and age, a job action at a major airline can
have a catastrophic effect on the aviation system and the
consumer. The rest of the system would have a difficult time
absorbing the excess passengers, and the systems could come to
a standstill.
While management and labor are affected by this, both
parties have contingencies planned in the event of a job
action. The consumer is the one most affected by this increase
in labor actions. It's the family flying cross-country for
their vacation, the daughter coming home from college, and the
son going to visit a sick parent, who cannot reach their
destinations because the unions have taken matters into their
own hands.
In the case of pilots, these are people who, according to
industry, on average make $140,000 a year working less than 80
hours a month. At the same time, according to the most recent
data, in 1999 the average per capita income in the United
States was $20,281.
The last two pilot contract negotiations, United and Delta,
both of which had alleged job actions with far-reaching effects
on the consumer, resulted in a pay scale where by the end of
the contract the senior pilots will make over $280,000 in base
scale, with the ability to make one-third more for voluntarily
flying 24 more hours a month. Not only should the consumer not
have to suffer the result of this avarice, but many analysts
are concerned, with labor costs rising so high, airlines will
not be able to survive economically, or will at least put
themselves in a hole for years to come.
Labor costs for an airline are now projected to be over 33
percent of its fixed cost. Many people argue that management
has a choice, but in reality, the choice is to give in to
higher salary demands that a company may not be able to afford,
or face a debilitating strike that may cripple an airline and
force it out of business. I don't believe that anyone would
argue this is a choice.
We have convened this hearing to look at these issues.
Although this subject is one that can be very divisive, I
received complaints from both sides of the aisle about the
current situation. I welcome the witnesses today, and look
forward to a lively and spirited debate.
We will begin with you, Mr. Smith. Welcome.
STATEMENT OF FREDERICK W. SMITH, CHAIRMAN AND CEO, FEDERAL
EXPRESS CORPORATION
Mr. Smith. Thank you, Senator McCain. As Chairman of FedEx
Corporation, I am pleased to be here representing the 170,000
employees of our largest operating company, FedEx, which is the
largest all-cargo air carrier in the world.
I would like to say for the record here that all these
folks right back here, we have no flight attendants whatsoever,
so I hope that any anger against the airline industry will not
be focused toward me. Ms. Hallett will take those arrows.
I suppose, Senator, I should also point out for the record
that I have now served as CEO of a major air carrier for over
25 years. I think I have a unique perspective in looking at
this issue, and the facts of the matter are, the Railway Labor
Act, which was designed to protect carriers, labor, and the
public, is broken, and it is broken because of the historical
dynamics of this industry.
Prior to deregulation in 1978, I think the industry was
marked by regulation and technology. As each new generation of
aircraft came into place, airline managements could give
excellent improvements in wages and benefits, and the new
airplanes would allow the production of capacity to not result
in an increase in price, and if it did, it was passed along by
the regulators, and the carriers had a mechanism to withstand
excessive wage demands in the form of the mutual assistance
pact which allowed the sharing of revenues by the other
carriers with a struck carrier.
After deregulation, a transition period took place. A lot
of the traditional carriers were unable to make that
transition, went bankrupt, or were absorbed. Pan Am, National
and Western are just three names that come to mind.
As we approached the 1990s, it seems to me we came into a
period which is best marked by capacity constraints and
concentration of the industry, so that today you have a labor
system which was designed for a world that no longer exists. It
is extremely frustrating for the labor side, it is extremely
frustrating for the management side. The negotiations often
take place long after the contract is due for amendment,
because there is not an incentive on either side to settle. An
agreement then is often reached, subjected to the membership,
which, in turn, rejects it, and then it goes back for
negotiation again. That is what happened at Federal Express. We
negotiated two contracts with our pilots union. Both of them
were rejected by the membership, who really did not understand
the give-and-take at the bargaining table, and our pilots were
frustrated that they were frozen in place for 6 years because
of this process.
Now what has begun to happen is that these frustrations
have boiled over into the illegal work actions that you
describe, which have resulted in injunctions in both the
passenger industry and in the cargo industry, and the process
leads to a confrontation which the carriers, increasingly
concentrated in their hub airports, and extremely burdened with
capital obligations, simply cannot withstand.
So today you have wage settlements which are being
negotiated which are far, far beyond: (a) the rate of
inflation; and (b) far beyond the ability of any productivity-
enhancing efforts by the carriers to offset the increased
costs. I will predict to you, based on my 25 years of
experience, that in the next several quarters, with the slowing
economy, you will see a significant increase in air fares for
the unrestricted business flyer, at least, and/or a significant
loss by our major air carriers, or a combination of both,
because the pattern that has been set, first with United and
now with Delta and the pilots and some of these other
settlements, are beyond the point that people will be willing
to pay those fares in many cases. It might be the solution to
the air traffic control capacity problem, by the way.
The Chairman. And if this happens, you would see more
mergers.
Mr. Smith. That is why you are seeing the push for more
mergers today, Mr. Chairman. The management of these carriers
think that they have to get big or die. That is the only way
that they basically have pricing freedom to offset these
increases.
Now, I have always taken a great deal of pride in our
company paying great wages and benefits. I think most of us in
the air transportation business do, but I think the system has
gotten out of balance today, and I believe that the Congress is
going to have to step in and put together a mechanism at the
tail end of these negotiations that results in a fair
settlement, but one which is mindful of the public interest and
the interest of the country in having a vibrant air
transportation system.
So that would be my message for you today, and based on the
historical view that we have, the system today is not viable
any more. There is going to have to be some mechanism put in
place. The PEB is not the solution. When the PEB comes on the
horizon, it simply changes the negotiation strategy of both
parties, but it does not get to the fundamental issue that the
concentrated industry that exists today is unable to withstand
the demands of these very technically essential people to run
the system, so Congress has got to take a look at it.
It is an enormous public policy issue. I would remind you
that the Railway Labor Act was put in place because
transportation is such an important part of the economic fabric
of this country, and I do not think that it is working as it
was intended, and the Congress needs to take a look at this and
come up with a mechanism to stop a lot of the things that have
evolved over the last couple of years.
[The prepared statement of Mr. Smith follows:]
Prepared Statement of Frederick W. Smith, Chairman and CEO,
Federal Express Corporation
I am pleased and honored to have the opportunity to appear before
you to address the labor relations problems that are confronting the
airline industry today.
The special nature of the airline industry and its importance to
the economy of this country caused Congress to protect the public from
the devastating effects that labor disruptions can cause. One of the
express purposes of the Railway Labor Act is ``[t]o avoid any
interruption to commerce or to the operation of any carrier engaged
therein.'' Unfortunately, the system is not working as Congress
intended.
Collective bargaining negotiations in the airline industry tend to
be protracted and marked by frustration on both sides. Even where
management and unions are able to reach tentative agreements, employees
increasingly reject those proposed contracts, forcing the parties to
return to the bargaining table. Employees who are not participating in
the negotiations may not appreciate the give-and-take involved in the
process. When the final product does not include everything they were
after, they simply vote against it. At my own company, between 1993 and
1999, we had two tentative agreements with our pilots' unions fail
before we were finally able to reach a satisfactory settlement on a 5-
year deal. On both occasions, we had to start the bargaining process
over again with a completely new union negotiations committee, and it
was almost 6 years before we were able to get a contract in place.
During that period, our pilots' pay and benefits were locked in place.
Their frustration was perfectly understandable.
Within the past year-and-one-half, each of the largest passenger
airlines has had to go to court to get injunctive relief against some
form of unlawful union self-help. American Airlines, United Airlines,
Delta Airlines and Northwest Airlines have been granted injunctions
under the Railway Labor Act because of the illegal activities in which
their employees have engaged to influence the outcome of negotiations.
Air express companies such as Airborne Express and regional passenger
airlines such as Conair have also been awarded injunctive relief
requiring their pilots to halt unlawful work stoppages. At some
carriers, negotiations have been opened far in advance of what was
originally scheduled to try to curb employee frustration and to avoid
disruptions to service that can accompany protracted negotiations. If
anything, the experience from these early negotiations only seems
worse. At least in some cases, if the parties are unable to reach an
acceptable collective bargaining agreement by the time bargaining was
originally scheduled to begin, a flashpoint is inserted into the
process and service disruptions begin long before self-help by either
side is legally permitted. No, the labor relations situation in the
airline industry is not improving.
From labor's perspective, the bargaining process is often too
protracted. Once a contract becomes amendable under the Railway Labor
Act, the employees may have to wait for several years, until a new
collective bargaining agreement is in place, before they can receive
any pay raise or benefit enhancement. Interim pay adjustments are
sometimes negotiated while bargaining over the complete contract
continues, but even these adjustments can provide a disincentive to
reaching a final agreement. Furthermore, when an airline is in
financial distress and needs relief from contract terms negotiated in
better economic times, it is advantageous for the unions to let the
bargaining process drag on. In that situation, unions and their leaders
attempt to prolong the negotiations process to allow their members to
buy time--waiting to see if the fortunes of the airline improve, while
at the same time holding on to the higher wages which would be reduced
by making concessions that may be necessary for the carrier's economic
health or even its survival.
For the unions, there is little to lose in trying to force
management to accede to their bargaining demands. Quietly spreading the
word among the troops to slowdown or to write up imaginary maintenance
problems or to stop working overtime is not uncommon. The most that a
court is authorized to do to punish a union under the Railway Labor Act
(at least as long as the union does not disobey a court order and,
thus, end up in contempt as happened with the American Airlines pilots)
is issue an injunction telling the union and its members to cease their
illegal conduct. No monetary damages are available so the union is free
to do as it pleases unless and until the airline can gather enough
evidence to convince a Federal judge that an emergency exists and that
the extraordinary remedy of an injunction is warranted. In the
meantime, airlines are disrupted, passengers are stranded and delayed,
and the provisions of the Railway Labor Act are ignored.
In today's airline business, most carriers are too strapped with
capital obligations to be able to withstand an airline strike of any
significant duration. Indeed, just trying to establish the evidence of
workplace disruptions sufficient to pass legal muster and enlisting the
judicial process for what little help the courts are allowed to provide
while an illegal job action is underway can have devastating financial
consequences. Airlines begin losing money as soon as the threat of
disruptions is publicized. Passengers have already experienced for
themselves the havoc that unhappy employees can wreak on flight
schedules, and, with the first hint of labor problems at one airline,
many passengers choose to make alternative travel arrangements. Those
that don't often wish they had.
If the airline industry continues to consolidate, potential labor
disruptions will provide even greater risk for the public. Labor
disputes that larger airlines would create even greater threats to the
country's economic well-being. Management at these airlines would face
the dilemma of whether they should just give in to labor's demands or
accept for themselves and the Nation the turmoil that accompanies a
struggle with labor. Neither airline management nor labor should be
able to make decisions that affect the ability of the entire country to
function with no concern for the general public.
Airlines and their employees are entrusted with the nation's
welfare. Irresponsible conduct by either labor or management can
trigger enormous consequences for the traveling public, and the public
must have a voice in how labor relations issues are resolved. The
Railway Labor Act currently provides no such mechanism for the public
welfare to be considered. The increased use of Presidential Emergency
Boards under the RLA as has recently been recommended by some experts
will not solve this problem. Such Boards simply try to find some middle
ground in the parties' bargaining proposals and give something to both
sides. Instead of trying to reach some common ground in negotiations,
the parties adjust their bargaining strategies to fit the Emergency
Board process so that each of them is able to live with the solution
recommended by the Board. And, if either side can't accept the Board's
recommendations, the dispute only gets worse.
I greatly appreciate your interest in this matter and hope that
steps can be taken to solve these critical problems facing our country
today.
Thank you.
The Chairman. Thank you, Mr. Smith.
Mr. Hall, welcome.
STATEMENT OF SONNY HALL, INTERNATIONAL
PRESIDENT, TRANSPORT WORKERS UNION, AFL-CIO
Mr. Hall. Thank you, Mr. Chairman. My name is Sonny Hall. I
am the International President of the Transport Workers Union,
AFL-CIO, which represents 120,000 workers across America,
including 57,000 airline workers and a number of the major air
carriers, as well as several regional airlines.
I note that I speak also today, and we are in negotiations
on behalf of some 31,000 workers at American and 6,000 at
Southwest. I also serve as the President of the Transportation
Trades Department, AFL-CIO, whose 33 member unions represent
several million workers in aviation, rail transit, trucking,
highway, longshore, and maritime and related industries.
At the outset, let me say on behalf of TWU's hardworking
members, in our judgment, the decision by the President and
some in Congress to involve themselves in the collective
bargaining process has been harmful. In several instances,
Washington politics has made it that much more difficult for
unions and airline companies to achieve what I am sure this
Committee wants, voluntary collective bargaining agreements at
the table without government involvement.
We understand that policy leaders and the traveling public
become frustrated and voice concerns about the possibility of
air service disruptions. While these concerns are
understandable, any attempt by our government to interfere in
private negotiations or to impose settlements on the parties
will only serve to further destabilize labor-management
relations and to make service disruptions more likely in the
future.
It is no secret that the airline industry is at a
crossroads as it struggles to meet soaring demand for air
service, airline employees, like travelers, businesses, and
Members of Congress share the same frustration with the
capacity crisis strangling our airports and air space system,
and unfortunately, this crisis is fueling anger and disgust
over too many flight delays and cancellations, poor service to
the many communities, angry customers, and unfortunately too
much finger-pointing.
Speaking of finger-pointing, I found Ms. Hallett's comments
about wages to be disturbing. If the carriers think to question
of workers' rights to earn decent wages, maybe we should be
looking into the excessive executive pay. The major CEOs of Ms.
Hallett's members pocket millions annually, like the $40
million paid to the two top officers of US Airways. These are
the same officers who this week warned of US Airways' financial
demise without a merger.
By contrast, the working men and women we represent have
not enjoyed pay increases equivalent to their increased
productivity, much less the level of the enhancements enjoyed
by corporate executives themselves.
Our members expect us to address this inequity at the
bargaining table, and we fully intend to do so. We suspect the
industry's focus on employee wages is nothing more than a
hollow attempt to deflect attention away from the public's
outcry about service and congressional calls for legislative
remedies. We believe this Committee must delve into the issues
of safety, passenger service, air traffic control
modernization, and runway capacity, but we urge you to avoid
focusing on what are private bargaining matters. Such
involvement may poison the process, and disrupt the delicate
balance needed to produce voluntary agreements.
Negotiations are difficult, but they work to produce
voluntary agreements when the heavy hand of government stays
out of the process. Despite our serious concerns with certain
aspects of RLA procedures, this industry has a history of
resolving its labor-management issues at the bargaining table.
Only three times in 33 years, has our government intervened
and appointed a Presidential Emergency Board, better known as
PEB, and 97 percent of airline management disputes are resolved
without strikes or lockouts, 97 percent resolved without
interference of the federal government.
This is not to say the process is perfect, far from that.
Mediation is dragged out too long, often for years, and worst
of all, the airlines have come to count on delay and then fight
us over retroactive pay, a real paycheck issue for our members.
But in the end, there needs to be shared risks at the
bargaining table if there is any hope that the parties will
engage in good faith give-and-take and reach voluntary
agreements. It is that simple. It is that fundamental.
I also state my grave concern with President Bush's recent
statement that he intends to use his authority to stop all
strikes. We were puzzled by the President's statements, because
it's not clear whether he intends to intervene without regard
to the fact, or to labor law processes that govern our
decisions.
The President's decision to warn airline passengers about
strikes was not only inappropriate, it poisoned several
negotiations at major airlines that were in delicate stages,
and still are. These actions are perceived, with justification
by our members, as President Bush intervening in labor-
management negotiations on the side of the airline
corporations. That stance exposes the bias of the White House
against the hardworking crafts we represent at carriers, such
as American and Southwest, when negotiations are ongoing and at
a critical stage.
We are not naive about the politics of the airline industry
collective bargaining, but I urge this Committee and the entire
Congress to use its power with care, and to urge the President
to do so as well. Please consider the power of your words, and
some I heard here this morning, and the actions as the various
negotiations move forward through American, United, Southwest,
and other air carriers. Even-handed application of the law
combined with calm from our elected political leaders gives
negotiations the best chance to reach voluntary agreements.
Unfortunately, when the bargaining process is contaminated
by undue political interference, we fear the worst outcome.
Both sides posture, and what should be candid problem-solving
turns into a purely political process played out in the news
media and in the political arena.
To sum it up, we do not and will not apologize for
exercising our right under the law to seek new collective
bargaining agreements that will ensure secure jobs and top
wages and benefits for our members. Keep in mind that more
often than not it is the conduct of employers and their paid
lobbyists, such as their typical pursuit of government and
congressional involvement, that injects destructive political
forces into the collective bargaining process. If Congress
wants to play any role in this process, a simple message must
be sent to all parties, settle your disputes at the bargaining
table and do not rely on politics and government intervention
to replace serious collective bargaining.
[The prepared statement of Mr. Hall follows:]
Prepared Statement of Sonny Hall, International President,
Transport Workers Union, AFL-CIO
My name is Sonny Hall and I am International President of the
Transport Workers Union (TWU), AFL-CIO, which represents 120,000
workers across America including 57,000 airline workers at a number of
the major air carriers as well as at several regional airlines. I also
serve as president of the Transportation Trades Department, AFL-CIO
(TTD), whose 33 member unions, including all the major aviation unions,
represent several million workers in the aviation, rail, transit,
trucking, highway, longshore, maritime and related industries. Attached
is a list of TTD's affiliated unions.
The working men and women who we are privileged to represent form
the backbone of America's freight and passenger transportation system.
Without these highly skilled and dedicated employees our transportation
network and, in fact, our economy, would not be the world's finest and
would fall short in meeting the expectations of the American people,
communities and businesses of all sizes.
Mr. Chairman, Ranking Member Senator Hollings and Members of this
Committee, let me first say on behalf of TWU's hard working members
that in our judgment the decision by the President and some in Congress
to involve themselves in the collective bargaining process has not been
helpful. In fact, in several instances Washington politics as usual has
made it that much more difficult for unions and airline companies to
achieve what I'm sure this Committee ultimately wants--voluntary
collective bargaining agreements at the table without government
intervention.
We understand that as the process of collective bargaining
advances, policy leaders and the traveling public become frustrated and
voice concerns about the possibility of air service disruptions. We at
TWU negotiate to make agreements, not to prepare for strikes. The
strike is a tool of last resort and we take our responsibilities at the
bargaining table seriously because our duty is to advance the economic
interests of our members through the processes dictated by the Railway
Labor Act (RLA) which, if applied fairly, has proven successful in
producing negotiated settlements. While the concerns of Congress and
the public are understandable, any attempt by our government to
interfere in private negotiations or to impose settlements on the
parties, will only serve to further destabilize labor-management
relations and to make service disruptions more likely in the future.
Let me place the subject of today's hearing in a proper context.
The airline industry, for its part, is at a cross-roads, as it
struggles to meet soaring demand in the passenger and cargo sectors.
Airline employees, like travelers, businesses and Members of Congress,
share the same frustrations--the nation's airports and airways system
is in the midst of an unprecedented capacity crisis. And unfortunately
this crisis is fueling anger and disgust over unacceptably high numbers
of flight delays and cancellations, poor service to many communities,
angry customers accompanied by often shocking instances of air rage,
and, unfortunately, too much finger pointing.
We fear that high profile, politically volatile venues such as
today's hearing only contribute to these problems and offer little in
the way of solutions to the airline industry's real problems that we
all agree must not be left unchecked.
If this Committee wants to play a leadership role--as it has--in
addressing these chronic problems, then perhaps it should accelerate
its effort in dealing with and looking into these facts:
Passenger and freight air transportation volume is
projected to continue soaring in the next two decades well beyond U.S.
airport capacity;
Far too many major airports are incapable of handling any
more volume, resulting in historically poor operational performance by
carriers that in turn is inspiring rage and dissatisfaction among
passengers;
Air traffic control modernization must be accelerated; and
America has virtually stopped building new airport
capacity and has allowed much needed runway expansion to come to a
screeching halt due to excessive project delays.
We believe this Committee must delve into these issues and many
others affecting the state of the airline industry. But spending the
time and resources of this Committee on what Congress and Presidents
from both parties have long recognized as private collective bargaining
matters, is counterproductive and ultimately damaging to the delicate
balance needed to produce voluntary agreements such as the most recent
Delta-Air Line Pilots Association (ALPA) tentative deal as well as the
settlements reached in 1999 between US Airways and the Association of
Flight Attendants and Northwest and ALPA in 1998. While all three of
these negotiations were difficult and often acrimonious, they all
resulted in voluntary agreements without the heavy hand of government
intervention.
Mr. Chairman, that is the way the process works. Despite our
misgivings about certain aspects of RLA procedures, the law has worked
for many decades in producing voluntary agreements and, in fact, only
three times in 33 years has our government chosen to intervene and
appoint a Presidential Emergency Board (PEB). Attached please find a
chart illustrating the history of PEBs in the airline industry. Recent
analyses show that 97 percent of airline labor-management disputes are
resolved without strikes or lock-outs.
That is not to say that the process is perfect. Every union that
negotiates under the RLA, with the assistance of the National Mediation
Board (NMB), is frustrated with its operation. Agreements do not expire
and instead become amendable 60 days prior to their termination.
Unfortunately, because drawn out mediation, often measured in years,
has become an all too common component of the RLA, the termination date
of contracts is almost meaningless. And worst of all, the airlines have
come to count on tacking extra years into agreements and then fighting
its unions over retroactivity.
Many mediations last so long that a particular group of workers may
go through several economic cycles, and even significant changes in
operation, in the course of a single negotiation. But in the end, there
needs to be a credible possibility that both sides will be able to
avail themselves of their self-help options if there is any hope that
the parties will engage in good-faith give and take at the bargaining
table and reach voluntary agreements. It is that simple and
fundamental.
Indeed, the process is imperfect but I do not appear before this
Committee asking for your assistance in dealing with these problems. In
fact, if you draw anything from my testimony it is that we want
Congress and the Administration to avoid injecting itself into the
bargaining process and let this time honored, albeit imperfect, system
run its course.
I must also state my grave concern with President Bush's recent
statements that he intends to use his authority to ``stop strikes'' any
time a union at a major carrier is released from mediation. We were
puzzled by the President's statements because it is not clear whether
he intends to intervene without regard to whether he is in receipt of
the appropriate recommendation from the NMB or whether there is
actually a national transportation emergency.
The fact that the President and his spokespersons have chosen to
warn airline passengers about ``strikes'' is not only highly
inappropriate, but came at a time when several negotiations at major
airlines were reaching delicate stages. These actions are perceived--
with justification--by our members as President Bush intervening in
bargaining and labor-management relations on the side of airline
companies. That stance was harmful and exposed the bias of President
Bush and his Administration against the hard working crafts we
represent at American Airlines and the other air carriers where
sensitive negotiations are ongoing.
Our members also understand something else: for some politicians,
government intervention is a proper tool--only when airline companies
and their force of hired guns swarm on the West Wing and Congress to
ask for it. But in the Eastern Air Lines tragedy more than a decade
ago, one of the darkest chapters in the history of aviation, suddenly
intervention was a bad idea despite the fact that Eastern boss Frank
Lorenzo had steered the process on a blatantly orchestrated collision
course that assured Eastern's destruction.
The unions, including TWU, chose as a last resort to ask former
President Bush to empanel a PEB, thereby halting the strike and
stopping Lorenzo's clear plan to destroy this airline and 45,000 jobs.
Despite the fact that the Chairman of the NMB recommended a cooling off
period and PEB, then President Bush refused to step in because he
believed to do so would be unwarranted intervention in the bargaining
process. It should come as no surprise that since that time in the very
few times when PEBs were appointed during airline disputes, all were
supported by airline management and opposed by unions.
I hope this Committee understands the damage this sort of uneven
application of the process does to the confidence of working people in
the government's role as a neutral facilitator of the collective
bargaining process. To the extent this Committee feels it is necessary
to involve itself in airline labor-management relations--which I
strongly urge against--I hope you will consider a role that restores
this confidence.
We are not naive about the politics of airline industry collective
bargaining. We understand how the volatility of negotiations can
translate into heightened public concerns about air service
disruptions. We also understand that elected leaders must answer and
respond to public outcry whatever form it takes.
But I urge this Committee and the entire Congress to use its powers
with care and to urge the President to do so as well. For the President
of the United States to urge unions and airlines to redouble their
efforts at the bargaining table and settle their difference outside of
the government is both an appropriate and responsible use of the
enormous powers of the Oval Office.
Similarly, the decision by a Member of Congress to reason with
labor and management and urge them to resolve their differences at the
bargaining table without inconveniencing the public is also
appropriate.
Unfortunately, some want to do much more. Our members are simply
exercising their right to bargain collectively, just as airlines are
exercising their right to protect their economic interests at the
bargaining table. There is nothing new or unique about the current
round of collective bargaining.
The fact is that we are again seeing voluntary agreements like the
Delta-ALPA tentative deal despite the inappropriate interference of
Washington in the bargaining process. Please consider the power of your
words and actions as the various negotiations move forward at American,
United, Southwest and other air carriers.
Just one inflammatory comment about strikes and disruptions from
powerful elected leaders can set back negotiations weeks, if not
months. The bargaining process is very much dictated by leverage and
the relative strength of two parties. An even handed application of the
law, combined with calm from our elected leaders in the White House and
Congress, gives negotiators the best chance to reach voluntary
agreements.
Unfortunately, when the bargaining process is contaminated by undue
political interference we fear the worst outcome--both sides posture at
the bargaining table and permit a closed door process to play out in
the news media, the West Wing and in the halls of Congress. This has
never been a recipe for productive collective bargaining and, we fear,
makes the threat of service disruptions, strikes and lockouts self-
fulfilling.
To sum up, we do not and will not apologize for exercising our
rights under the law to seek new collective bargaining agreements that
ensure secure jobs and top wages and benefits for our members. Private
airline businesses do so everyday as they use whatever tools they have
at their disposal to achieve a desired outcome. And more often than not
it is the conduct of employers and their paid lobbyists--such as their
typical pursuit of government and congressional involvement--that
poisons the process and injects divisive forces into collective
bargaining.
TWU cannot dictate the actions of our elected leaders, nor can we
control the conduct of airline management at the bargaining table. We
can, however, advance the interests of our members and I assure this
Committee that we intend to do just that on behalf of the tens of
thousands of airline workers we are proud to represent.
If Congress wants to play any role in this process, a simple
message must be sent to all parties: settle your disputes at the
negotiating table and don't rely on politics and government
intervention to replace serious bargaining. It is only in this
environment that airlines, employees and customers will be able to
enjoy long-term stability and certainty in the safe delivery of
aviation services.
Thank you.
ATTACHMENT--TTD AFFILIATES
The following labor organizations are members of and represented by
the TTD: Air Line Pilots Association; Amalgamated Transit Union;
American Federation of State, County and Municipal Employees; American
Federation of Teachers; Association of Flight Attendants; American
Train Dispatchers Department; Brotherhood of Locomotive Engineers;
Brotherhood of Maintenance of Way Employes; Brotherhood of Railroad
Signalmen; Communications Workers of America; Hotel Employees and
Restaurant Employees Union; International Association of Fire Fighters;
International Association of Machinists and Aerospace Workers;
International Brotherhood of Boilermakers, Blacksmiths, Forgers and
Helpers; International Brotherhood of Electrical Workers; International
Brotherhood of Teamsters; International Longshoremen's Association;
International Longshoremen's and Warehousemen's Union; International
Organization of Masters, Mates & Pilots, ILA; International Union of
Operating Engineers; Marine Engineers Beneficial Association; National
Air Traffic Controllers Association; National Association of Letter
Carriers; National Federation of Public and Private Employees; Office
and Professional Employees International Union; Professional Airways
Systems Specialists; Retail, Wholesale and Department Store Union;
Service Employees International Union; Sheet Metal Workers
International Association; Transportation Communications International
Union; Transport Workers Union of America; United Mine Workers of
America; United Steelworkers of America.
[GRAPHIC] [TIFF OMITTED] T7256.001
The Chairman. Thank you, Mr. Hall.
Ms. Hallett.
STATEMENT OF CAROL B. HALLETT, PRESIDENT AND CEO,
AIR TRANSPORT ASSOCIATION OF AMERICA
Ms. Hallett. Good morning, Mr. Chairman, members of the
Committee. I am Carol Hallett, President and CEO of the Air
Transport Association, and on behalf of our members, as well as
all aviation consumers, we appreciate your holding this
important hearing this morning.
We at ATA are deviating from our normal practice of not
commenting on industry-labor relations, as it is evident that
the airline industry's labor and management negotiating process
is not working. We have seen too many examples of aviation
consumers being victimized by the process. In multiple
instances, carriers have been compelled to bring legal actions
against labor organizations to halt both intentional as well as
illegal disruptions of service that have forced both delays as
well as cancellations.
Let me be clear. Our members are acutely aware that they
exist because of the hard work of their employees. These
employees are the airlines' single greatest asset, and they
deserve to be fully and fairly compensated. Determining the
appropriate level of pay and benefits requires a balancing of
industry economics, what consumers are willing to pay, what the
investors are willing to invest, and what the employees
produce.
This is not an easy process, but it is one that works when
approached in good faith, and at the bargaining table. Let me
give you a general overview of the economic and practical
issues that we are talking about.
Labor costs in the airline industry by far are the single
largest expense. They account for over 36 percent of total
airline operating cost. This figure is roughly 3 times the size
of the next largest expense, which is fuel. The jobs these
labor costs represent are among the most highly compensated in
the world. The average airline employee's wages and benefits
topped $67,000 last year. Pilot wages and benefits exceed
$169,000 on average for 48 hours of flying per month, and
senior pilots make $250,000 or more.
Over the least 20 years, those wages and benefits, with
rare exception, have continued to trend upward at a rate in
excess of the rate of inflation. The aggregate number suggests
that in the long run, airline employees have not suffered from
temporary wage losses, give-backs, or other concessions that
may have occurred during difficult economic times.
Why are airline wages so high? Well, at risk of
oversimplification, there are two basic reasons. First, the
industry has a highly professional, skilled workforce in which
some 60 to 70 percent of employees of major airlines are
represented by a labor organization and, incidentally, that
oftentimes is what leads to pattern bargaining. Our 60 to 70
percent compares to the national average for all industries of
roughly 8 percent that is unionized.
The second reason has to do with the fundamental structure
of the industry. Airlines are retail service businesses that
are highly cash-flow dependent with no ability to stockpile
inventory. They simply cannot afford to take an extended
strike, and both labor and management know that and act
accordingly.
A rough calculation will demonstrate this point. Together,
the airlines currently have access to slightly over $10 billion
in cash and cash equivalents. Every day, they incur fixed
expenses on the order of $280 million for fleets, facilities,
personnel and supplies. While wages certainly--and other
portions of those expenses would be reduced somewhat in the
event of a strike, the fact remains that a one-month strike
would effectively put the industry into bankruptcy. Obviously,
at the individual carrier levels, the effect of a strike will
vary, but the devastating economic reality remains.
Further complicating this dynamic, as I mentioned, is the
disturbing trend toward illegal work slowdowns that are aimed
at pressuring management, but have the unfortunate effect of
making the consumers the victim. The disproportionate impact
that such activities can have on a particular geographic area
create tremendously complex and economically catastrophic
circumstances.
In concluding, Mr. Chairman, let me say what should be
obvious, but too often goes unobserved. The ATA member airlines
want a labor-management negotiating process that works fairly
for employees, for managers, for investors and, most
importantly, for the consumers. Our members are committed to
getting the process fixed, and pledge to work with the
Committee, the Congress, and the Administration and all
interested parties to get the job done.
Mr. Chairman and members of the Committee, I appreciate the
opportunity to be here. I will be looking forward to responding
to your questions.
[The prepared statement of Ms. Hallett follows:]
Prepared Statement of Carol B. Hallett, President and CEO,
Air Transport Association of America
Mr. Chairman, members of the Committee, I am Carol Hallett,
President and Chief Executive Officer of the Air Transport Association
of America, Inc. On behalf of our member airlines \1\ and, indeed, I
would venture to say on behalf of all aviation consumers, thank you for
holding today's important hearing looking into the labor problems
confronting the airline industry.
---------------------------------------------------------------------------
\1\ Airborne Express, Alaska Airlines, Inc., Aloha Airlines, Inc.,
America West Airlines, Inc., American Airlines, Inc., American Trans
Air, Atlas Air, Inc., Continental Airlines, Inc., Delta Air Lines,
Inc., DHL Airways, Inc., Emery Worldwide, Evergreen International
Airlines, Inc., FedEx Corporation, Hawaiian Airlines, Inc., Midwest
Express Airlines, Inc., Northwest Airlines, Inc., Polar Air Cargo,
Southwest Airlines Co., Trans World Airlines, Inc., United Airlines,
United Parcel Service Airlines, US Airways, Inc.
---------------------------------------------------------------------------
At the outset, I should note that, as a matter of general policy,
ATA has traditionally not commented on labor relations in the industry.
This is an area which we believe is best left to the unique
circumstances of each airline and its labor organizations. These are
matters of great sensitivity to our members, each of whom seeks strong,
positive relationships with their various labor groups. The airlines
well recognize that their employees are the backbone of the industry--
as well as its public face to the consumer--and they know that the
quality of these relationships are central to the success of their
companies.
It has become evident in the past few years, however, that too
often the labor and management negotiating process, under which the
airlines operate, is under stress. We have seen far too many examples
of process breakdown and of aviation consumers being made the victim of
this negotiating process:
In multiple instances, carriers have been compelled to
bring legal actions against labor organizations to halt what courts
have found to be intentional and illegal disruptions of service;
Millions of passengers have experienced massive delays and
cancellations of flights due to work slow downs, sick-outs and other
workforce actions; and
Air cargo operations, critical to our ``just in time
delivery'' based economy, have been threatened as well.
Because of the seriousness of these problems, and because our
member airlines are desperately seeking appropriate, fair solutions, I
have been asked by the Committee to deviate from our general policy of
not commenting on labor relations issues, in order to provide you with
a quick overview of the economic and practical issues with which we are
dealing.
Labor costs in the airline industry, by far, comprise the single
largest area of expense. These expenses account for over 36 percent of
total airline operating costs. This figure is roughly three times the
size of the next largest, discrete expense, which is fuel.
[GRAPHIC] [TIFF OMITTED] T7256.002
The jobs that these labor costs represent are among the most highly
compensated in the nation. The average airline employee's wages and
benefits topped $67,000 last year.
[GRAPHIC] [TIFF OMITTED] T7256.003
Over the last 20 years, those wages and benefits, with rare
exception, have continued to trend consistently upward at a rate in
excess of the rate of inflation. Average pilot wages and benefits for
our members are estimated for 2000 to exceed $169,000.
[GRAPHIC] [TIFF OMITTED] T7256.004
The aggregate numbers suggest that, in the long run, airline
employees have not suffered from temporary wage losses, give backs, or
other concessions that may have occurred during difficult economic
times.
Why are airline wages so high? At risk of oversimplification there
are two basic reasons. First, the industry has a highly professional,
skilled, and unionized workforce in which some 60 to 70 percent of
employees of major airlines are represented by a labor organization.
This compares to a national average for all industries of roughly 8
percent.
The second reason has to do with the fundamental structure of the
industry. Airlines are retail service businesses that are highly cash-
flow dependent, with no ability to stockpile inventory. That is a
complicated way of saying that they simply cannot afford to take an
extended strike--and both labor and management know that and act
accordingly.
Let me give a rough calculation to demonstrate this point.
Together, major and national carriers currently have access to slightly
over $10 billion in cash and cash equivalents. They experience daily,
largely fixed, expenses on the order of $280 million. While the wage
portion of those expenses would be reduced somewhat in the event of a
strike, the fact remains that a 1-month's strike would effectively put
the industry into a negative cash position. Obviously, at the
individual carrier level, the effect of a strike will vary but the
devastating economic reality remains.
One important point, which is sometimes overlooked, is the long-
term impact of a strike on a given carrier. The threat of a strike, and
its actualization, typically result in a long-term loss of business by
the carrier involved. Business customers, in particular, once moved to
alternative carriers, can be very slow to return. In one recent
situation, a fourteen-day strike was reflected in a continuing loss of
business by that carrier almost 1 year later.
Further complicating this dynamic, as I mentioned at the outset, is
the disturbing trend toward illegal work slowdowns aimed at pressuring
management, which have the effect of making consumers victims in the
process. These actions are, in many respects, more vexing than a strike
itself because they create a level of service disruption intentionally
designed to cause consumers to book reservations away from the affected
carrier, without a direct or immediate means of resolution. They are a
form of anti-consumer, guerrilla warfare against management, intended
to win concessions outside of the proper bargaining process. Worse
still, because proving that these illegal activities are occurring
requires substantial documentation, it is a virtual certainty that
major service disruptions and substantial economic losses will be
experienced before any action can be taken to begin to deal with the
situation.
Because of the disproportionate impact such activities can have on
particular geographic areas, and the inability of other carriers to
``back fill'' service--due to the high level of demand they are all
experiencing--we are confronted by a tremendously complex and
potentially catastrophic set of circumstances.
To be candid, because labor issues are not in the normal course of
things, the business of ATA, I have no concrete recommendations to
present to the Committee today. However, should the Committee want us
to review any specific proposal, I would be pleased to take that matter
to our Board for its review.
I will conclude by stating what I think is obvious but, too often,
lost sight of: The ATA member airlines exist because of the hard work
of their employees. Those employees are the airlines' single greatest
asset, and they deserve to be fairly and fully compensated for the work
they do. Determining the appropriate level of pay and benefits requires
a balancing, as well, of industry economics--what consumers are willing
to pay, investors are willing to invest, and employees produce.
[GRAPHIC] [TIFF OMITTED] T7256.005
This is not an easy process, but it is one that can and does work
when approached in good faith at the bargaining table. The ATA member
airlines are committed to making that process work.
The Chairman. Thank you very much.
Senator Lott.
STATEMENT OF HON. TRENT LOTT,
U.S. SENATOR FROM MISSISSIPPI
Mr. Chairman, if I could speak before you go to the next
witness, I am going to have to leave and go to the floor. I
want to thank you for holding this hearing and the
participation of Senators, and I thank the panel for being
here, all of them. I wish I could stay and hear all the
testimony.
I do have some questions, because I think this is an
important area. Just one thing I want to remind everybody. Our
constituents all fly, and it is one of the few areas where we
actually endure the same indignities of our constituents, as
passengers. I think together the Congress, the government,
management, and labor, need to all be aware that when our
constituents suffer, or when passengers suffer and are
inconvenienced, then we all have a problem, and rather than
trying to point fingers or try to assess blame, we need to try
to find ways to make sure that service is provided in an
appropriate way.
I do think as we assess what is going on in the industry,
the need for more airport funds, more runways, obviously I am
for that. I think clearly there are many things we can do to
improve the situation. We cannot change the weather, but I do
think labor problems are a part of this problem also, part of
the cause of the delays and the inconveniences that we need to
address, and I thank you for being willing to come here and
testify on the labor side and on the management side.
I notice Mr. Smith is the only one from the management side
that is here, other than Ms. Hallett, and I know there is a
reason for that, and I thank you for your courage and also the
willingness of you all to be here.
Thanks for letting me go out of order, Mr. Chairman.
The Chairman. Well, I thank the Majority Leader and his
involvement in this issue. As we have discussed, this could be
a very difficult summer, and I think the American people and
Mr. Hall and Mr. Buffenbarger and I will have a discussion
about this.
Expect us to do whatever we can in a broad range of issues
that affect the problems in the airline industry today, not
just the labor issues, but air traffic control, and the lack of
runways, the continued failure of new entrants into the
business to succeed. So we will be, as a Committee, addressing
this broad range of issues, and we appreciate the involvement
of the Majority Leader, since we may at some point need to
bring up legislation for consideration on the part of the
Senate. I thank you.
Mr. Buffenbarger, welcome, sir.
STATEMENT OF R. THOMAS BUFFENBARGER, INTERNATIONAL PRESIDENT,
INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS
Mr. Buffenbarger. Thank you, Mr. Chairman. I am Tom
Buffenbarger, International President of the International
Association of Machinists and Aerospace Workers.
The IAM represents 730,000 members, 130,000 of whom are
employed in the air transportation system. We provide first-
class service not only in the United States, but also
throughout the world. We are the largest union in air
transportation in the world. As always, our number one priority
is safety. All of our members in the air transport industry are
subject to the Railway Labor Act, an Act that is misused and
abused by the employer.
I am here to express to you today, Mr. Chairman, that we
object to this Administration and to Congress interfering with
our collective bargaining process. In the past, our members
shouldered the risk and made sacrifices so that their carriers
could compete. They saved their jobs, and they saved their
carriers. That is as true for TWA and US Air as it is for
United Airlines. At that time, there were no hearings and no
congressional queries regarding our welfare or our job
security.
There are many critics of the air transportation system in
the United States. However, they all ignore facts. Airport
construction and expansions are almost frozen today. Airports
are operating at full capacity, and subject to weather delays
that have a lingering ripple effect on travel. There are more
business travelers and more families that choose air travel
because of affordable fares. This has proven to be good for the
American economy.
The IAM has always sought to have our carriers maintain a
competitive edge. Successful carriers have grown and expanded.
Successful carriers also buy Boeing airplanes our members
manufacture.
Within the airline industry, the collective bargaining
process is virtually ongoing and never-ending. The same
carriers that asked us for help in the past manipulate the
Railway Labor Act to their advantage and deny us our right to
share in the profits of our work, our risk, and our sacrifices.
The Railway Labor Act is managed and enforced by the National
Mediation Board. It delays negotiations. It strings them out
for 2, 3, 4, and even 5 years.
When the carriers exhaust the time limits and procedures as
set forth by the board, they then turn to the court system to
seek injunctions against our members. Repeatedly, they have
chosen to do whatever they can to avoid accountability at the
bargaining table. They have found it more cost-effective to
delay and prolong negotiations than to reach an agreement. The
immediate and direct result is that the employees, our members,
have no faith in a system that is broken.
However, I must stress that these same carriers broke the
system by their own design. This is particularly true at United
Airlines, where we are currently involved in negotiations. I am
not going to comment on the instant issues at the negotiating
table. In past years, United Airlines told us that if changes
were not made in our agreements, then the airline would fold.
We listened, and we acted responsibly. We saved the airline
when we bought the company.
Today, this company has a sudden lapse in memory. We
continue to demand that they meet with us and bargain in good
faith, but they choose to avoid the bargaining table with the
help of the National Mediation Board. Seven years ago, if we
had acted the same way as they do now, United Airlines would
not exist today.
Mr. Chairman, I can never forget our members and their
families and the sacrifices they have made over the years. They
gave up buying new homes, tuition for their children to go to a
better school. They gave up having their medical insurance and
pensions upgraded, and many other items that maintain a quality
of life for working people that others take for granted.
My hope, Mr. Chairman, is that you and your colleagues on
the Committee on Labor and Human Resources find a way to insert
a drop-dead date into the Railway Labor Act, give both sides
fair notice that negotiations will end, give both sides an
incentive to reach a fair agreement.
It is interesting to note that I can sit down with the
Chairman and leadership of the Boeing Corporation and negotiate
a contract for 55,000 employees across the United States and do
it in 6 weeks, and it takes 5 years to have a similar-sized
airline meet us at the bargaining table. Something is wrong
with this picture.
The Chairman. What is the difference?
Mr. Buffenbarger. The Railway Labor Act and the National
Labor Relations Act. The National Labor Relations Act gives us
a drop-dead date.
I cannot stress enough the fact that our members are not
responsible for travel delays in the air transportation
industry. Weather, capacity, equipment availability, and a
safety record that is second to none in the world must be
included in this discussion. I am prepared to discuss these
matters, as well as proposed airline mergers and other problems
within the industry today, and look forward to doing so,
Senator.
Thank you very much.
[The prepared statement of Mr. Buffenbarger follows:]
Prepared Statement of R. Thomas Buffenbarger, International President,
International Association of Machinists and Aerospace Workers
I am Tom Buffenbarger, International President of the International
Association of Machinists and Aerospace Workers. The IAM represents
130,000 employees in the air transportation system. We provide first-
class service not only in the United States, but also throughout the
world. We are the largest union in air transportation in the world. As
always, our No. 1 priority is safety. All of our members are subject to
the Railway Labor Act, an Act that is misused and abused by the
employer.
I am here to tell you today, Mr. Chairman, that we object to this
Administration and Congress interfering with our collective bargaining
process. In the past our members shouldered the risks and made
sacrifices so that their carriers could compete. They saved their jobs
and they saved their carriers. That is as true for TWA and US Air as it
is for United Airlines. At that time, there were no hearings and no
Congressional queries regarding our welfare or our job security.
There are many critics of the air transportation system in the
United States. However, they all ignore the facts. Airport construction
and expansions are almost frozen today. Airports are operating at full
capacity and subject to weather delays that have a lingering ripple
effect on travel. There are more business travelers and more families
that choose air travel because of affordable fares. This has proven to
be good for the American economy.
The IAM has always sought to have our carriers maintain a
competitive edge. Successful carriers have grown and expanded.
Successful carriers also buy Boeing airplanes that we manufacture.
Within the airline industry, the collective bargaining process is
virtually ongoing and never ending. The same carriers that asked us for
help in the past manipulate the Railway Labor Act to their advantage
and deny us our right to share in the profits of our work, risk, and
sacrifice.
The Railway Act is managed and enforced by the National Mediation
Board. It delays negotiations. It strings them out for 2, 3, 4 and even
5 years. When the carriers exhaust the time limits and procedures as
set forth by the Board they then turn to the court system to seek
injunctions against our members.
Repeatedly, they have chosen to do whatever they can to avoid
accountability at the bargaining table. They have found it is more
cost-effective to delay and prolong negotiations than to reach an
agreement. The immediate and direct result is that the employees, our
members, have no faith in a system that is broken.
However, I must stress that these same carriers broke the system by
their own design.
This is particularly true at United Airlines, where we are
currently involved in negotiations. I am not going to comment on the
instant issues at the negotiating table. In years past, United Airlines
told us that if changes weren't made in our agreements then the airline
would fold. We listened and acted responsibly. We saved the airline
when we bought the company.
Today, this company has a sudden lapse in memory. We continue to
demand that they meet with us and bargain in good faith but they choose
to avoid the bargaining table with the help of the National Mediation
Board. Seven years ago if we had acted that same way when they came to
us, United Airlines would not exist today.
Mr. Chairman, I can never forget our members and their families and
the sacrifices they have made over the years. They gave up buying new
homes, tuition for their children to attend better schools, having
their medical insurance and pensions upgraded and many other items that
maintain a quality of life for working people that others take for
granted.
My hope, Mr. Chairman, is that you and your colleagues on the
Committee on Labor and Human Resources can find a way to insert a drop-
dead date into the Railway Labor Act. Give both sides fair notice that
negotiations will end. Give both sides an incentive to reach a fair
agreement.
I cannot stress enough the fact that our members are not
responsible for travel delays in the air transportation industry.
Weather, capacity, equipment availability, and a safety record that is
second to none in the world must be included in this discussion. I am
prepared to discuss these matters as well as proposed airline mergers
and other problems within the industry today.
The Chairman. Thank you very much, Mr. Buffenbarger.
We have a guest witness here. Ms. Farrow, would you
identify yourself and your organization for the record?
STATEMENT OF LINDA FARROW, MASTER EXECUTIVE COUNCIL PRESIDENT,
UNITED FLIGHT ATTENDANTS
Ms. Farrow. Good morning. My name is Linda Farrow. I am the
Master Executive Council President for the United Flight
Attendants. We are members of the Association of Flight
Attendants.
The Chairman. Welcome before the Committee, Ms. Farrow.
Ms. Farrow. Thank you. I would like to thank you, Senator
McCain and the panel, for giving me an opportunity to speak.
Those of us that you see around the room in the green
shirts are United Airlines' flight attendants. We are here to
observe the proceedings because we are extremely interested in
the subject matter. The position of the association mirrors
that which has already been presented by Mr. Hall, and I thank
you for the opportunity to be here.
The Chairman. Would you like to make any additional
comments?
Ms. Farrow. I would like to say that we at United Airlines,
the flight attendants, will ensure everything we do will be
within the law to resolve our disputes with United management.
The Chairman. Thank you, Ms. Farrow. I would like to
express our appreciation to you and your fellow members coming
here and exercising your Constitutional privilege, and some of
you have an obligation to meet with your elected
representatives to influence the legislative process, and we
are pleased. We wish more Americans would be involved as you
all are today.
We may have some questions for you, if you would be
agreeable.
Mr. Smith, Mr. Hall makes a point about executive salaries.
Mr. Hall alluded to a $40-million compensation package for
executives of an airline that these same executives are
claiming is going to fail. How do you respond to Mr. Hall's
comment?
Mr. Smith. Well, he certainly has a point, and any
organization obviously, that the natural tendency is for the
majority of folks who do not make the high executive salaries
and so forth to feel that the sacrifices ought to be
proportionate and shared.
However, I would point out two or three facts here. First
of all, in the air transportation industry, not counting gains
from stock and things of that nature, or these payments as a
result of mergers, the executive compensation is significantly
less than it is in almost every other major industry in the
country, and I think the reason for that is the managements of
the carriers and the board of directors of the carriers are
quite mindful of the dynamics that he brings up.
Secondarily, the facts of the matter are that there are
relatively few top executives at any of these carriers, and so
whatever their compensation is, it is almost irrelevant to the
cost structure, which is much more determined by the thousands
of pilots and maintenance technicians and flight attendants and
so forth, so it may be an irritant, it may be something people
have a legitimate gripe about, but in terms of the overall
price of the product, it is not very significant.
The Chairman. But you would agree, it is not exactly,
perception-wise, beneficial.
Mr. Smith. Yes, I agree with his point, and I think that
boards of directors and managements of the carriers are
generally very mindful of that.
The third thing about executive compensation, unlike other
parts of the organization, I know The Wall Street Journal said
pilots do not think this, but based on my experience on being
on the boards of, I think, seven New York Stock Exchange
companies, top executive talent is very, very hard to find,
that is effective. Top executives are subject to dismissal, and
the turnover of CEOs in corporate America is many, many times
greater than the rate of terminations for pilots, mechanics,
this, that and the other thing.
As part of that, also I would point out that executive
compensation is much more variable. I am not saying this is a
complaint, because I am well-compensated, but for instance,
this year our revenues are down. My compensation will be down
about 50 percent, because my incentive compensation is not
there, so I understand the point. It is a good one, but it is
really apples to oranges, and in terms of the cost structure of
the carrier, it is not a significant issue.
The Chairman. Mr. Buffenbarger and you seem to be in
agreement that the Railway Labor Act is no longer effective, or
should not be operable in the view of Mr. Buffenbarger. He
makes the point that without the Railway Labor Act, he could
make a settlement with Boeing in 6 weeks, and take 5 years to
reach an agreement with an airline. What is your response to
Mr. Buffenbarger's comment, Mr. Smith?
Mr. Smith. I am sorry, excuse me again?
The Chairman. You and Mr. Buffenbarger are in agreement
that the Railway Labor Act is no longer effective, and I am
correct from your statement, right, Mr. Buffenbarger?
Mr. Buffenbarger. Part of it is not effective, but proceed.
Mr. Smith. I am sorry, go ahead, sir.
Mr. Buffenbarger. You are correct in my point.
The Chairman. So Mr. Buffenbarger's point is, the Railway
Labor Act actually prevented, or hindered the ability to reach
a settlement, is that true, Mr. Buffenbarger?
Mr. Buffenbarger. That is correct.
The Chairman. What is your view as to how the Railway Labor
Act needs to be fixed? Mr. Buffenbarger, I would like to know
how you think it needs to be fixed, or discarded.
Mr. Smith. Well, the first thing, Mr. Chairman, both of my
friends to the left here made the comment that the Congress and
the Administration ought to stay out of labor-management
negotiations. If I am sitting in their chair, I am sure I would
say the same thing.
But the problem with that point of view is that the
Congress decided 75 years ago, and then modified it during the
1930s, that these essential transportation systems were so
vital to the public interest that Congress would involve itself
in the process and, in fact, as you know, the end result of
this process can be and has been on numerous occasions in the
rail industry decided by the Congress. The Railway Labor Act
provides for the Congress to force a settlement, so Congress
and the Administration are involved in the process.
The issue becomes one of the lack of the public interest
being represented at the bargaining table. The industry is
highly competitive, so managements do, I think, tend to try to
force settlements which are roughly in line with inflation and
without getting them into a competitive jam vis-a-vis their
competitors.
But as Ms. Hallett so correctly pointed out, at the end of
the day, if there is a strike on the horizon, management will
acquiesce to the demands because, even with these very high
wage settlements, the costs to them prospectively are less than
the costs of a strike, so the fundamental problem is the
expectations of labor are very, very high, the management is
trying to hold it back, and they do tend to rock along
understanding that the government will become involved at
either the Presidential or the congressional level.
It is that final process, in my opinion, which has to be
fixed. There needs to be a mechanism at the point of impasse
which settles the issue. Now, there are a number of ways to do
that, but that is what I would urge the Congress to do, and
that mechanism should also force the parties to bargain in good
faith, and responsibly, and I do think there are mechanisms
that can be put in place that can do just that, that are fair
to the labor side, that are fair to the carriers and, most
importantly, as I mentioned, that are fair to the public, whose
presence is not at that bargaining table, and was supposed to
be represented in the process that involves the Government.
The Chairman. Mr. Buffenbarger.
Mr. Buffenbarger. Senator, I would propose very quickly the
fix is change the rules. It is not required to fix the Railway
Labor Act by congressional or other action, simply a change in
the rules that the NMB has bastardized over the years, that has
built in this system of continuing delay, and it is simply to
go back to what the Act was intended to do, to foster and
promote relationship and negotiations, the ability to bargain
between labor and management, to level the playing field, to
keep us on the same plain.
That has failed because, as recently as the large airline
settlement was concluded, it became public knowledge that the
reason we were coming down to the wire in this large airlines
case was because the companies told the NMB it is OK to release
them for their 30-day countdown. That is not a level playing
field when the company can dominate the process that is
supposed to protect the sanctity of bargaining.
Now, I would propose the NMB simply impose a drop-dead
date. We negotiate a contract, in my case with United or with
US Air or Southwest, whoever, that we have an expiration date
on that contract. We know, just like we do in the rest of the
private sector, we had better have a new contract in place by
that termination date, or we have to make our plans to withhold
our labor, strike, if you will.
If everybody knows date-certain, we have got that drop-dead
date, people tend to get more serious about the art of
bargaining, and we come to a conclusion, usually, in my union's
case, 99 percent of the time, on about 10,000 collective
bargaining agreements, without a day lost of work stoppage. Why
can we not do that under the Railway Labor Act?
The Chairman. Well, I would like to engage you in a little
dialog here. My study of history shows the reason why the
Railway Labor Act was enacted by Congress was because there
were work stoppages which paralyzed the railways in America.
Now, I will admit that Act is very old, but suppose we reach
that drop-dead date, Mr. Buffenbarger, and your union is fully
aware that you can shut down at least a significant part of
airline travel in America. It seems to me that gives you
enormous leverage--and I am not trying to say you should not
have that leverage--but if you did away with the Railway Labor
Act, you have this leverage of shutting down a significant part
of air transportation in America, and suppose we do have that
hundredth case. You talk about 99. Suppose we have the
hundredth case. What is the mechanism then?
Mr. Buffenbarger. Well, you know, Senator, we can shut down
the manufacture of all commercial aircraft in the United
States.
The Chairman. And that has no short-term effect on the
American flying public. It has a long-term effect, but not a
short-term effect. These airlines can also buy airplanes from
Airbus and others. Go ahead.
Mr. Buffenbarger. Of whom we also represent a significant
number of that production capability. However, Senator what
happens is, both sides--remember this, no labor union in
America goes out to negotiate a strike. Idiots go out to
negotiate a strike. We go out to negotiate a settlement.
The Chairman. Please interrupt me, if I can interrupt you.
Is it not an idiot that shuts down an airline and calls in sick
when they are not sick, and deprives people of their ability to
go on their vacation that they had planned for a year? Is that
not idiotic also?
Mr. Buffenbarger. My members do not engage in that type
of----
The Chairman. But it has happened. It happened with
American Airlines.
Mr. Buffenbarger. I would have to defer, Senator.
The Chairman. Would you view that as idiotic?
Mr. Buffenbarger. No. I don't know if the individual was
sick. These are semantics.
The Chairman. Well, a federal judge found out they were not
sick and fined them $45 million, so you have no response to
that. Please continue, then.
Mr. Buffenbarger. I can only speak for my union, Senator.
That is not my union that was involved, and I do not want to
prejudice anything they have got going in their processes, but
you know, I cannot understand what is wrong, why it works so
well in the rest of America and not in this industry. I cannot
understand it.
Remember, this is still a private industry. It is private
sector. It is not public sector, and yes, we could shut down a
company like UPS. We could shut down and affect delivery of--
and it is the world's largest package delivery service. We do
not do that. We try to negotiate a settlement, understanding
where we are in the world. We have been very successful at
doing that.
The problem is this, Senator. Nobody wants to make that
final decision, offer that final package, come to final terms.
We need something that gives us a decision day, and either the
package is on the table and it is acceptable, and we will work
under those terms and conditions, or we do strike, making
management realize they need to do better with that package. I
do not think--I mean, I look at the last Presidential election.
It took us weeks, almost months, to find out who the President
of the United States was going to be. The American people did
not like that very much.
Well, put yourself in the shoes of a mechanic on United
Airlines that has waited for years now to get a contract, or
recently at Northwest Airlines, 5 years to get the right to
make a decision on the contract. That is not acceptable,
either. The Railway Labor Act can work. Tweak it. Go back to
the way it used to be managed--gentlemen, we are on the
countdown. Get ready, get set, go. You have date-certain to
reach agreement, or the public knows they are going to be
inconvenienced. My bet is we will reach agreement.
The Chairman. Would you do me a favor and provide me in
writing with your specific recommendations how to fix the Act?
Mr. Buffenbarger. Sure.
[Refer to reply in the Appendix.]
The Chairman. And you too, Mr. Smith.
Mr. Smith. Sure.
Mr. Hall. I just want to make a quick comment on the whole
scenario here, is that the conversations we are having now are
much needed, but the timing of this hearing, I have to tell you
frankly, is offensive to me. We are sitting at a very critical
stage of collective bargaining at American Airlines. This is
the wrong time for this kind of hearing. We could spend hours
debating between each other.
I have heard from Mr. Smith and others that talk about how
labor and management together overall should take a look with
the political structure about what we can do to make a better
system that is less crisis-oriented and more productive for
both the employee and for the passenger, and that is a subject
we should be talking about. But to be talking about these
things takes away the focus that we need to do with collective
bargaining.
I would just suggest, knowing how to bargain--and I am sure
you do, too, in many other ways, as an American, that you have
done some pretty good bargaining in many others areas.
The fact of the matter is, is that American Airlines now,
who may have been this close to a decision, could see out of
this kind of conversation that it is going on here now, you
know, we can delay the system. We can delay the ability to say
yes or no at the bargaining table because there will be other
subjects talked about, and then maybe even other legislative
remedies.
So I will just tell you my personal feeling, as a
representative of the Transport Workers Union, that the hearing
at this time is inappropriate. The subject is very appropriate,
but it is very offensive to me.
The Chairman. Well, thank you. In light of your discontent
with this hearing, we do especially appreciate your willingness
to appear here today, Mr. Hall.
Could I ask Ms. Farrow a question, please, and Mr.
Buffenbarger, I will let you speak. I have long overused my
time, so I would like to have the others come, but Ms. Farrow,
how long has your union been in negotiation with United
Airlines?
Ms. Farrow. The current round of bargaining, we began that
in October. This is outside of our Section 6 negotiations. It
is special pay negotiations. We have been in it for a brief
period of time.
The Chairman. And apparently, from the depth of your
concern, you are some distance away from reaching an agreement.
Ms. Farrow. Yes, at this point we are.
The Chairman. What is the major----
Ms. Farrow. It hinges regarding the proposed merger and
acquisition of US Airways and United. It is a contractual
dispute as it relates to our job security, and United's
statement that they are going to blatantly, unilaterally change
our working conditions by operating US Airways as a separate
entity.
The Chairman. And you are prepared to enter into a work
stoppage at some point?
Ms. Farrow. We are prepared to do whatever is necessary,
which would include CHAOS strikes. We did take a strike vote.
Courts have ruled in our favor that it is a major dispute, at
which point we will engage in CHAOS strikes.
The Chairman. Thank you.
Mr. Buffenbarger. You wanted to make an additional comment.
Mr. Buffenbarger. Yes, thank you, Senator. You may not be
aware, but approximately in the timeframe of 18 months to 2
years ago now, at the request of this union--the IAM--working
in consort with the pilots, the ALPA, with the TWU, approached
the ATA, represented by Ms. Hallett, after discussions with the
CEOs of most major airlines in the United States, when we were
not under the duress we are today about the state of collective
bargaining.
Without fail, on the major IAM-represented carriers, the
CEOs were in total agreement we have got to do something to
bring this process to a time line.
We used the ATA as a convening body to bring labor and
management together at the highest levels to begin this
process, so maybe this hearing--we would not be reading about
it, hearing about it.
That meeting was convened for 30 seconds, then the ATA took
everybody to the White House so they could witness a signing of
voluntary passenger guideline rules--I think you remember that
very well, Senator--and the ATA never reconvened that body.
With such agreement that existed at that time with United, with
Northwest, with Southwest, with US Air, with TWA, with foreign
flag carriers that we deal with here in the United States, that
was an opportunity for the parties to act responsibly and
resolve this before it became a national issue.
I would suggest, Senator, that maybe trying to convene that
type of a meeting again, under the jurisdiction of this
Committee, even, might be an appropriate start to finding a
solution to this without any deeper activity.
The Chairman. Well, I thank you, sir, and obviously all
members of this Committee would be more than eager to be of
whatever assistance we can be.
Ms. Hallett, would you care to respond? Before you do, I
would like to say, you come to this Committee with no specific
recommendation. I think you--and I am talking to you--ATA
should come to the Congress and the American people with some
specific recommendations. Whether I happen to agree or disagree
with the others, at least they are making some proposals.
Please respond.
Ms. Hallett. Mr. Chairman, first to respond to your
question, and as I mentioned in my testimony, the issues of
labor have not been a part of the ATA work that we have become
involved in. These have been held separately.
The Chairman. Why not?
Ms. Hallett. There is actually another organization, that
is AIR CON (Airline Industrial Relations Conference). That is
an organization that deals with all of the labor issues. As a
result, it has remained outside of the Air Transport
Association, and that, as a matter of fact, Mr. Rob De Lucia,
who runs the organization on behalf of the airlines, is here
today. Mr. De Lucia is in the front row here.
The Chairman. Perhaps he should have been the witness. Go
ahead.
Ms. Hallett. Mr. Chairman, let me also just respond more to
set the record straight than anything else. The board of the
ATA did, in fact, meet with three labor leaders together, Mr.
Buffenbarger, Duane Woerth, and Patricia Friend. The purpose
for the meeting was to discuss a number of issues. This was
approximately 2 years ago, and at that time the major issue for
discussion was the Department of Transportation pricing
guidelines. As it happened, all three of the labor
organizations, as well as the ATA members, were opposed to
those particular guidelines.
The purpose of the meeting was to discuss that. That was
long before the customer service issue came to the front row,
but in the meantime, that meeting was then followed--Mr.
Buffenbarger and I did have discussions about his proposal, and
he did have an opportunity to present that idea to the board.
That has not gone further, but I would also point out----
The Chairman. Do you want to give him a response?
Ms. Hallett. I believe there were individual responses to
him by several of our members, and when we went to the White
House it was for the specific purpose of telling them our
position on the DOT pricing guidelines. Interestingly enough,
that presentation on behalf of our board and the other two
unions was made by Duane Woerth, to indicate that we were all
in agreement that they were poorly written and that we were
opposed to them.
The Chairman. Well, let me strongly recommend that you
seize the opportunity, any opportunity to sit down with labor.
It is hard for me to imagine why the ATA would have nothing to
do with labor issues, since those are the major issues that you
confront. But I am not telling you how to structure, but
whoever represents the airlines, I would strongly recommend
that you sit down and at least have a continuing dialog with
labor.
This is going to be a long, hot summer, Ms. Hallett, and
any lines of communications that could be established, I would
strongly encourage.
Ms. Hallett. Before I turn it over to Mr. Smith, I might
just point out that, as you know, trade associations work on
the basis of agreeing on particular issues. If we disagree, we
do not get into them. There is not agreement on this issue, and
for that reason I would not anticipate that that particular
issue would be a matter that the board would vote on.
The Chairman. I believe it was Mr. Franklin that said you
hang together, or hang separately.
Mr. Smith. Senator, I just want to point out, it is very
important when dealing with this issue to again focus on the
history of the Railway Labor Act and these various phases in
the industry.
Mr. Buffenbarger mentioned that there needs to be a
termination point where everybody has got to cut off. I agree
with that, by the way, and I think there may be some
constructive dialog and I will commit to you that I will
personally attempt to see if we cannot develop an industry-
labor position that will solve some of these problems.
But it is important to remember that, during that
transition period from the advent of deregulation in 1977 for
cargo, in 1978 for passengers, up to more current times, there
was a tremendous push on the part of a lot of airline
managements to roll back wages. The most notorious, I guess you
would call it, was the Eastern and Continental embroglio.
One of the features that is good for labor in the Railway
Labor Act, which is not part of the National Labor Relations
Act, is the fact that during the negotiating period of time,
management does not have the ability to unilaterally impose its
own rules and working conditions. So during that transition
period, it was the labor side of the house that effectively
utilized the delay and stringing out the National Mediation
Board process, which had up until that time been pretty prompt.
I mean, it was more of a drop-dead date. The carriers had the
mutual assistance pact, which gave them more leverage in the
negotiation.
So it is important to recognize that we have gone through
these three separate periods, and now we are in a period of
time where things are radically different. The number of
carriers is smaller, the concentration in hubs, which have been
developed since deregulation, is greater. The ability of the
industry, because it has become more capital-intensive--I think
Ms. Hallett can give you some statistics that will show that
the fastest-rising cost in the last 15 years, other than labor
costs, has been the price of the airplanes, which have also
gone up far in advance of the rate of inflation, and so these
areas have become more fixed-cost-leveraged, giving them less
of an ability to deal with these issues.
It was part of that interregnum period of time that the NMB
process became much more drawn-out. I support the idea that
there needs to be a date, and then a mechanism to bring it to a
fair conclusion, and I think there are mechanisms that can do
that.
The Chairman. Thank you. I want to thank the witnesses.
Ms. Farrow, you are always welcome before this Committee.
Thank you for your leadership in a very difficult situation.
Senator Rockefeller.
STATEMENT OF HON. JOHN D. ROCKEFELLER IV,
U.S. SENATOR FROM WEST VIRGINIA
Senator Rockefeller. Thank you, Mr. Chairman.
There is no question--and Mr. Hall, this is uncomfortable,
and I think that the discomfort is, maybe, in your case, a
fact. I think overall, frankly, what the American people need,
and what I think the Congress and the general perception of
aviation, and the whole question of public interest and all the
rest of it, needs a certain level of discomfort in all of this,
because we need to know what is going on.
One of my constant--as the Chairman will agree, and I
actually commend them for holding these hearings, even though
they are outside of our jurisdiction. You are trying to get
some stuff out, and I mean, it is the same problem we faced
when we were trying to get people to understand that--it is a
little hard to look at doubling of air traffic in the next 8
years, and a doubling of package traffic, and all kinds of
traffic, inadequate gateways, new airports that are already too
tiny.
The American people pay attention when there are delays
during the summer, and you can read it on the front page of USA
Today, and then they forget about it. We cannot, if only on the
basis of the whole question of infrastructure, which, in fact,
we did finally do something about, but much too late.
You talk about a drop-dead date. Your word, I think, Mr.
Buffenbarger. I think one place where you get a drop-dead date
is the amount of time we allow for people to try to stop the
building of runways. I think 5 years ought to be enough. 13
years in Seattle, or whatever it is, 15 years, it is
ridiculous. That hurts the union, that hurts management, that
hurts the whole industry.
So from my point of view, at least, the crisis that we are
sort of getting at here is one about trying to be as open as we
all can with each other. All of us being uncomfortable, and yet
somehow, because of the discomfort and the openness that
results from that, coming to understand not only the Labor
Relations Act better, or the Railway Labor Act better, but the
whole situation.
I personally do not think this really is about labor-
management disputes. It may be that this panel is, and this
specific morning is, but I think the crisis is about capacity.
I think we need the best out of management. I think we need the
best out of labor, or else, I think, we are going to get buried
in this country, absolutely buried in congestion, with the
American people being so furious that it is not a question of
us deciding whether or not we are going to represent their
interests. I mean, they are going to come into our office by
the thousands, furious. I am not talking to you, I am talking
to the whole panel.
There are a couple of thoughts that I have. Number 1, I
thought it was very important that Chairman McCain and Majority
Leader Lott, I happen to agree fully with them that collective
bargaining is not at issue here. It is simply a fact, and it is
a right. Nobody is questioning that, and nobody should.
I mean, if somebody has 8 percent, somebody else has 60
percent, that is the process in this country. Some have more,
some have less. It is a whole question of how well people
organize, and all the rest of it. That is just a part of the
process. So I do not think collective bargaining is at issue,
and I do not think the labor-management disputes, in essence,
are really at issue, although they appear to be.
I think we in the Congress have to be extremely careful not
to blame either labor or management. But I think we do have a
responsibility to represent--and I am not looking at you now,
but everybody--the public interest. That is what we are here
for. We are not elected by management. We are not elected by
labor. Some of us are elected more by labor than by management
and others the other way around, but the democratic theory,
small d, is that we are here representing our people.
I represent a State that has very little air service, and
lots of problems, and lots of things to worry about for the
future. For example, I try to be even-handed about this, Carol
Hallett, when you were talking about the increasing trend
toward illegal job actions. I think you used the word--in my
judgment, exaggerated when you said these actions have had
catastrophic consequence and therefore what can we in Congress
do to fix that. I think you missed the point on that.
If Ms. Farrow's union, which is now before the courts, if
they decide that there is a major dispute--I think that is the
word involved--then selective CHAOS actions will be, in fact,
entirely legal. Now, they have not made that determination yet,
but they may. So there is a role here for the courts, and it
sounds a little bit like you are denying that, that Congress
has to come and fix this. Partly, that is what courts are for,
is to do that, and that is why people go to the courts. So I
found your position a little bit--a little hard-line on that,
and a little bit inaccurate on that.
I thought that Fred Smith was kind of on mark, generally. I
mean, I liked what you said about executive compensation. I
happen to agree with what the union people said about executive
compensation being very high, but that becomes a very easy
target, and very easy to blame. You know, that is the finger-
pointing business, and you know, you see that.
I have been involved in all kinds of steel strikes, because
I have been invited by both sides, by labor and management,
because I am good at helping to settle those things. We have
had a lot of them in the past, and I believe in settlement.
I believe in working things out. I participated in the
creation of what at that time, up until United, was the largest
formation of an ESOP in the history of the country, which was
Weirton Steel. I, in fact, did probably more than anybody else
to cause that to happen. But I just sort of dropped everything
else I was doing as Governor to make that happen, so I do not
know, I mean, I am not comfortable with finger-pointing.
The drop-dead thing, I understand that works. I remember
when John Lindsay was elected Mayor of New York, he ran into a
lot of problems with Michael Quill because he did not
understand the way labor-management relations worked--in this
case the transit workers--and the way it worked is there was
kind of a drop-dead date. You know, everybody understood that,
and people bargained, and then sometimes they went into hotel
rooms and played a little pinochle, et cetera. But when the
date came, usually things got settled. When John Lindsay did
not understand that, the whole thing blew up, and it was very,
very unfortunate.
On the other hand, I think labor, and I am sure labor does,
but I think labor needs to understand, as does management, that
the public interest is really the largest issue at stake here.
Labor and management are going to work out their problems one
way or the other. It is going to happen through the courts. It
is going to happen through collective bargaining, which is the
right way to do it where that is involved. If it does not get
worked out, the American public is going to suffer, and the
American public is going to take whatever action they decide
they want to take.
I do not know what that will be. It will certainly be
anger. But to me, one of the things that all of us have to do--
and we in Congress have not been responsive. We have not
fulfilled our responsibility to the aviation business, or to
the unions in terms of making possible the technology, the
infrastructure, the funding, the amplitude of people for the
FAA or elsewhere to make an aviation system that works
properly, which puts tremendous stress on everybody.
There is no more competitive business in the world than
airlines. They fight over every nickel, and sometimes they make
money and sometimes they do not. I understand unions being
nervous about mergers. In the case of United, I think the
merger, in terms of my State of West Virginia, would be very
helpful.
That is a parochial point of view, because propeller
airplanes are not the way jobs come into a State. I went to
West Virginia as a VISTA worker, and jobs are the most
important agenda every day of my life in West Virginia. I think
aviation has surpassed surface transportation, both rail and
interstates, by far, in the importance of the economic
development of regions of the country, and individual States.
So I am very sensitive to that.
I just want to say, Mr. Chairman, that I think this is not,
and should not be about finger-pointing. It should be about an
understanding of the public interest, and understanding that we
are actually bringing out here in some discomfort, but with a
lot of honesty, some real problems.
The Railway Labor Act does, in fact, have a role for
Government at the end. You may say you want to change that,
however, and with due respect to my colleagues at the panel,
you may want to rethink about opening up that Act in the
current Administration. I would say that to you. I mean, that
is just a little helpful thought I thought I might send in your
direction.
[Laughter.]
Senator Rockefeller. So just having expressed those
thoughts, how do each of you respond to what I have said?
Mr. Buffenbarger. Senator, if I could, in the last
Administration for 8 years we asked to take a look at the
Railway Labor Act, and the drop-dead date, and our friends--and
I am a registered Democrat, lifelong and loyal--did not help
us. Maybe it is this Administration that will want to help us
bring finality and conclusion to the process of collective
bargaining.
I am not proposing opening up the Act. It does not require
legislative action to do what we are asking for. It simply
requires the board, as it proffers its own rules, to insert
that in the rule and we can move this process forward, but we
cannot get there with the board.
Now, I would like to also comment on airlines and ESOPs and
where we are at in the state of bargaining in this industry. My
union has, in varying degrees, ownership, well, now of two--
until just a week or so ago--three airlines in this country,
TWA, Northwest Airlines, and United. How did this union, how
did the workers get into the position of actually being the
owners of the enterprises they draw their paycheck from?
It is because the airlines, in a deregulated atmosphere,
struggling for many years how to come to terms, what are the
new rules going to look like, how are we going to play this
game and compete, ran into trouble. They managed themselves
into trouble because they did not ask us for any ideas or any
help until it got very serious, and many of these airlines were
on the verge of folding.
So in crisis bargaining, we ended up owning varying degrees
of these airlines. In the case of United, with the pilots and
the machinists, the stock ownership is now 58 percent, and we
are relegated, as the owners of this airline--and I really
object to those who want to determine that we are asking for
excessive wages. What is wrong with that? We own it.
It is OK for the CEOs to demand excessive salaries, but
there is something wrong with the employees getting to share a
little bit of the wealth they helped create and, in fact, the
CEO works for those employees. They are not just shareholders,
they are stakeholders in that airline, and they do have a
right, pilots and mechanics and customer service agents and
flight attendants and everybody else that has a stake in that
airline, has a right to have high expectations that they can
share, get a little bit of the share of the wealth they helped
create. If that is wrong, and if that is dangerous in this
society we live in, boy, we have made a serious mistake
somewhere.
Senator Rockefeller. What about the public?
Mr. Buffenbarger. We are the public.
Senator Rockefeller. I know that, but the non-you part of
the public.
[Laughter.]
Senator Rockefeller. I do not remember getting on an
airline without paying for it. Where does the public interest
fit in? You see, we are still on labor-management relations
here, and I think what we are looking at is sort of public
interest capacity, and we are not. I understand we need to get
these things into the open, and it is uncomfortable, but I want
to go to both of you, and also you, sir, but I just want to
give you a chance. Where does the public interest fit into
this, the larger--you know what I mean by public interest.
Mr. Buffenbarger. Sure, life on earth, especially in the
United States. Listen, the members of my union do not want to
engage in strikes. They do not want to go without a paycheck.
Life is tough. It is expensive. They want to work. They want to
be compensated fairly. They care about the flying public,
because every day someone getting on an airplane helps make
that paycheck possible.
The members I represent, and the members I represent in
this entire group, are very intelligent people who happen to
work where, or are associated with airlines. They understand
the reality of that economic. Where does the public come in?
The public should support us, much as we support the public, in
our endeavors to be compensated, not unjustly, not exceedingly
gratuitously, or whatever, but to be compensated fairly, to be
respected at the work site, to have a little dignity, to be
recognized, in many cases as the owners of the enterprise, and
we want a satisfied customer. We want that person happy to fly.
We want that person to come back time after time after time to
fly our airlines, and that their children will do the same
thing.
What we need to do is have morale improved in the industry.
We need to have a focus in the industry where delay is not the
name of the game for the peons down here and executives can be
compensated very well for poor performance.
The public interest is going to be to see that these
airlines are successful, well-served, that the employees are
treated fairly, and the flying public in turn will enjoy
benefits of uninterrupted air travel when they need to go.
Senator Rockefeller. And I love that last part. I think
that the Chairman would agree with me on this--that the public
does not, for the most part, follow closely or understand the
state of negotiations, collective bargaining in whatever form,
as between unions and airlines. They do not follow that.
What they follow is whether they get on a plane that has
not arrived. The public interest is in that, in going from this
place to that place at the lowest possible fare as quickly as
they can do it. That is my definition of what the public
interest is in all of this. It would be good if they understood
all of the details of what is going on in bargaining, but they
do not.
Mr. Buffenbarger. Then we should not have deregulated the
airlines.
Senator Rockefeller. I agree with that. I wish I had been
in Congress.
Mr. Hall. If I can just respond to the original point that
you started with, and it needs to be said. I talked to the
Chairman about it earlier, about my frustration, my union's
frustration about the timing of this hearing. There are so many
things I have heard already that it is important to talk about,
but it is not correct to say this is not about collective
bargaining. We live in this world where the media will report
back on what we have said here.
We have said earlier that even though they say they are not
involved in labor issues, but they talk about how highly
compensated workers are. They already take up a third, or two-
thirds of what it costs for an airline to exist, costs that are
involved in the collective bargaining. All of this is involved
in collective bargaining. I just want to repeat, I hope
whatever we are going to do the next step--and there needs to
be a next step--that it is done in less of a public atmosphere,
if you will, where it affects and it causes a negative impact
on collective bargaining.
It is wrong to say what is happening in this hearing will
not affect collective bargaining. It is wrong to say even
talking about it in advance, way before there is a crisis--I
mean, there is nobody in my union at American Airlines talking
about a strike. None of us are doing that.
The Chairman talked earlier about irresponsibility. We
represent people just recently who were accused--and my union
was accused by American Airlines, where they said we were
involved in disruption of the service. Well, the court said
otherwise. The court said the union was not involved, that the
union did absolutely everything they could to avoid it, but you
cannot add to our frustration, the workers' frustration.
I mean, you need to help us. You need to work with us. We
have a lot of frustrated workers out there for a lot of good
reasons. My brother in IAM talked about people who paid a price
to make a better airline for this country, and now we are
looking for a piece of the pie that they have been left behind
on.
I think it is absolutely ridiculous, what they pay AC
mechanics in this country, licensed mechanics. They are nowhere
close to being compensated for what they should be, and so we
need to talk about that in collective bargaining. But you
cannot hold us responsible, Senator, and say well, we have
irresponsibility. Some workers out there may be frustrated and
may do something they should not do, even though the union
tells them not to do it, and at the same time, you add to
frustrating them.
You talk about how much money they are making already,
maybe suggest--have management talking about maybe we ought to
do away with some of the laws that we should be talking about.
We need to talk about--my brother talked about the issue of
maybe changing some of the rules. Yes, but let us do that
outside of the collective bargaining area.
I mean, the President talks about setting up PEBs. That is
not helpful to the situation. The fact that we talked about,
between railroads and airlines--and you know that as well as
anybody. Nobody is more involved in the railroads--both on the
carrier side and the people who need the service.
So all I am saying is, you need to help us--as you are
asking us to be more responsible, I would suggest you have to
give that some thought, too. We need to hold down our own
members to make sure they are not frustrated and make sure that
they can listen to their union, to make sure they can resolve
it. I see modes here that could help, from the President and
otherwise, saying do not worry about it, Big Brother will take
care of it, if you do not resolve it, I will resolve it. That
is frustrating to the system.
The Chairman. Senator Rockefeller, I have to assert my
privilege as the Chairman, since Mr. Hall for the second time
has directed his comments about how a hearing such as this
could harm collectively bargaining. Mr. Hall, I respectfully
disagree.
I respectfully assert my responsibilities as a Senator from
the State of Arizona representing all of my citizens, and as
Chairman of this Committee it is absolutely my obligation to
see what, if anything, is necessary to be done to prevent what
is a serious problem confronting the American people. That is a
broad variety of issues, as I discussed with the Majority
Leader earlier.
Lack of runways, modernization of the air traffic control
system, and labor issues are a part, and a significant part of
the challenges we face in providing Americans the ability to
move from one place to another at a reasonable price and with
some reasonable assurance of doing so. So I respectfully
disagree with the comments that you made for the second time. I
let it pass the first time, but the second time.
As far as your view, Senator Rockefeller about whether it
is appropriate or not, I would be glad to show you the charter
of this Committee, which clearly includes aviation, so we have
perhaps a disagreement in opinion, although our facts are that
this Committee has oversight over aviation issues.
Now, Mr. Hall, I respect your view, but no way can I accept
an allegation that somehow we are interfering with the
collective bargaining process, when this Nation is facing, in
the view of any outside expert, in the opinion of any outside
expert, there are looming, serious challenges facing the
aviation industry in America, and this is one of them. I thank
you for your opinion, but I soundly and respectfully reject it.
Senator Burns.
Senator Rockefeller. Mr. Chairman, I wanted to give Mr.
Smith and Ms. Hallett a chance to respond to my question.
The Chairman. I am sorry.
Ms. Hallett. As long as I have the microphone in front of
me, Senator, I wanted to comment briefly about your statement
that I agree with, and that is that all passengers should be
able to anticipate uninterrupted travel, and that is something
that has not been happening. I would go back to last summer as
an example. When United Airlines was forced to cancel 9,400
flights because of illegal job actions that impacted 1 million
passengers, 1 million passengers had to find alternative ways
of travel because of the cancellation of flights.
Senator Rockefeller. That was not the point I put to you. I
put to you that we have to change the Labor Relations Act, we
have to fix it. I was suggesting in the case of Ms. Farrow that
the court decides a certain thing, that she has a right to do
that, so why are you suggesting courts do not have a role?
Ms. Hallett. I bring this up as a point, because this
Committee has dealt so regularly with this very serious
concern. I wanted to again go back to the term ``catastrophic
circumstances,'' because there was a very specific reason,
again, for using that, not only because of job actions. The
courts have ruled more often than not that those job actions
have, indeed, been illegal and at the same time that, too, is
what is impacting the travel of millions of passengers who in
turn, then, of course, are not only then very unhappy, and this
Committee hears about it, but we see this pattern continuing.
Whether or not it has anything to do with the changes in
the law, certainly we do have the opportunity to go to court,
and fortunately we do. But I wanted to make sure that the
Committee was aware of some of the job actions that continue to
take place and have a very adverse impact on the consumer, the
traveling public.
Senator Rockefeller. Mr. Smith.
Mr. Smith. Well, Senator, you asked the question, where is
the public interest in this, as I understood it. I mean, how
does that get handled. I think it is important, again, to
recognize that is why the Railway Labor Act exists, and why the
National Mediation Board has powers that the National Labor
Relations Board does not have, and why management and labor do
not have some of the freedom under the Railway Labor Act that
they have under the National Labor Relations Act.
The NMB has the power to freeze things in place and, as I
mentioned before, during the transition period of deregulation
that was supported in large measure often by organized labor,
because management does not have the right at the end of the
contract to impose its best and final offer without the
approval of the NMB. On the other side of the coin, the labor
organization does not have the right to strike or withhold its
services during that period of time. That is how the public
interest was supposed to be woven into it. The NMB is charged
with balancing all three of those interests.
The National Labor Relations Board is charged with only
balancing labor and management interests. As this process has
drawn out, understandably the labor unions get frustrated, and
so the response to that on occasion has been the withholding of
services illegally.
Now, I do not know the details of the issues, but I can
tell you that six courts have found that there were unlawful
self-help activities going on at American, at United, at Delta,
at Northwest, at Airborne Express, and CON AIR. When you are
released into self-help, both sides then can respond to the
situation. Management might decide, for instance, to shrink its
operation so it does not need as many employees to work.
But, it is this frustrating interregnum period of time has
created an awful lot of these issues we are talking about
today. The process of escalating up through the NMB process to
a PEB and then finally, if necessary, to the Congress, is too
long. It does not work, and the expectations are not realistic.
That is why there has to be some modification to that
mechanism after the contract is expired that brings it to
conclusion. That is where I think you have an agreement of
opinion up here. It is what that mechanism should be that will
obviously be the source of a lot of debate.
Senator Rockefeller. Thank you, sir.
Ms. Farrow, did you have any comment? Otherwise, I am
complete, Mr. Chairman.
Ms. Farrow. All I was going to say is basically to
reiterate some of the other things we have heard. It appears to
me in the last 7 years management has been relying more on the
fact that they can stall the process until government
intervenes, as in individuals have to go to the mediation
board, and then the process winds up being extended.
So there really needs to be an attitude change on,
actually, both sides to try to reach agreement before a third
party is brought in, and it would perhaps prevent some of the
concerns of the organizations being able to exercise their
right to self-help and prevent having to go to court, if the
attitudes were changed prior to getting to the mediation level.
Senator Rockefeller. Thank you all. Thank you, Mr.
Chairman.
The Chairman. Thank you, Senator Rockefeller.
STATEMENT OF HON. CONRAD BURNS,
U.S. SENATOR FROM MONTANA
Senator Burns. I just have a couple of questions, and I
want to clarify. Mr. Buffenbarger, I was a member of your union
at one time. When I started out, I came out of the United
States Marine Corps, went to work for the airlines in Kansas
City, started out with TWA and ended up with Ozark--Krazo
spelled backwards--back in those days.
Is there a time--and I will tell you what sort of got our
notice up here as far as the Northwest situation, as it existed
with their mechanics and their ground personnel. When they were
up here trying to persuade us, the Congress and also the
Administration, not to intervene, they had just turned down a
26-percent increase in salaries and benefits. To most
Americans, that really sounded like a lot. I cannot judge that,
whether it was a lot, because I do not know from where you
start and where you want to end, and I know that is not your
union.
With that, I got to thinking--and then the argument that
Mr. Smith brings up today, and also that Mr. Hall brings up
today--is there still a need for a Railway Labor Act? There is.
Mr. Buffenbarger. Definitely.
Senator Burns. Do you want to respond to that?
Mr. Buffenbarger. Yes. First of all, Senator, with respect
to the mechanics at Northwest Airlines, they were in
negotiations for a total of 5 years to get that percentage
increase that they got, whatever it turns out to be.
Senator Burns. The public only hears 26 percent.
Mr. Buffenbarger. The fact is, to the people involved--and
it was still a private industry matter, but 5 years, if the
public knew that too, they might think--that may just temper
their thinking a little bit.
Likewise, the company had promised back pay for all those
years they went without the collective bargaining agreement.
That rolls into that figure as well, and so the devils are in
the details, in this case, and that applies to a lot of us.
But as far as the Railway Labor Act is concerned, yes, we
still need a Railway Labor Act. One, the railroad magnates, the
barons in this country, will never permit Congress to do
anything to change the Act unless there is a real catastrophe
that affects them. Even in the railroads, which we have a very
large presence in, having been founded as a railroad union 113
years ago, it takes us 4 years and 5 years to get to an
agreement on the main carriers that are left.
The Railway Labor Act serves the purpose. The rules under
which we bargain evolved over time, governed by the National
Mediation Board. It is simply finding a way to instruct that
board to put some time-lines, some guidance, something that is
not going to go on forever, so that the employees understand
there is finality in the process, that management understands
there is finality to the process, and the finality is a choice.
It is a decision, the ability--all we are asking for is the
right to make a decision on our conditions, and that is to
accept the terms and conditions of an agreement, as we do in
the processes in this country, and the members understand that
process. It is a very democratic process when you vote for your
conditions, or you say it is not good enough and we have to
strike.
If we know there is finality to it, the public is prepared,
whether they are shippers or passengers--and let me tell you,
all the airlines are not for their negotiations at one time. It
is not like the whole country gets shut down, and we have
witnessed this.
Senator Burns. It is when you live in Montana.
Mr. Buffenbarger. I will give you that, Senator.
[Laughter.]
Mr. Buffenbarger. Even when we had the Northwest strike,
other carriers managed to fill, not 100 percent, but a lot of
the gap that that left in the system, and that ability is
there. Listen, the airlines, too, engage in practices that the
mutual alliance they have to support one another in the event
of a strike, to help move passengers, to provide funds to the
struck carrier, there is a lot of things that have not come out
on the table yet, probably not properly before this Committee.
It is just incidental to the way we do business, but the fact
of the matter is, the Railway Labor Act is a good law. The
people who crafted it did a good job. They were wise in their
time.
It has been allowed to evolve the wrong way. When we
deregulated the industry in 1978, which this union vigorously
opposed, what we did not do, and what was suggested then, we
have to modernize the laws that govern us. Well, we deregulated
the industry and did nothing with the laws that govern us, and
now we are paying the price.
This was predicted, line item by line item, by one of my
predecessors, William Wipisinger, 23 years ago. Every single
bit of that testimony offered here in our Nation's Capitol has
come to pass. We are in a state that requires some action. I
think we can do it among ourselves and working within the
system that exists now.
Senator Burns. Did you want to comment on that, Mr. Smith,
or either one of you?
Mr. Smith. Well, first of all, Senator, I would say to you,
I remember Mr. Wipisinger very fondly. We had a number of
spirited debates in that era. I testified with him on a couple
of occasions.
I would just like to say for the record, we supported
deregulation, and I would submit to you, at least as it applies
to our industry, it has been of enormous public benefit. I am
sorry Senator Rockefeller has gone, because he would like to
turn back the clock. I do not think that is a good thing.
In the Railway Labor Act, specifically, again, it was put
in place by the Congress to represent the public interest,
whether it was in Montana, or Atlanta, or in our industry. Our
company, and our good friends at UPS, and to a lesser degree
Airborne Express, carry every day the most critical cargo in
the commerce of the country.
If one of those three carriers, particularly UPS or FedEx,
were set down on the express side--and I would point out to
you, when UPS had their strike, it was their ground operation
that was struck, and not the Air Express operation, which
continued to operate, the hospitals in this country could not
operate, the airplanes could not fly--there are so many
critical things going through these systems. The same is true
on the passenger side of the house.
When things are important, people fly, maybe they take an
automobile or drive on a vacation, so that is why the Railway
Labor Act was put into place. At the time, it applied only to
railroads and express companies. Air carriers were added to it
in the 1930s. So it is a good law. It is just that final
mechanism that brings it to a conclusion is out of date, given
the realities of the deregulated, concentrated industry.
Senator Burns. Well, I will just make a statement here,
because I am very much concerned, because not only are we
situated at the end of the line, as far as Montana is
concerned, and when we see these bigger contracts, we know that
the Delta thing is going to cost us more money to get to
Montana.
I will tell you what you can do, you can fly round-trip to
London three times for what it costs to fly one-time round-trip
to the State of Montana. I do not understand that, but
nonetheless, that is the way it is. But we are also captive
shippers from the railroad side, so we get beat up on pretty
good. So we will try to work our way through this thing, and I
appreciate your opinions on this.
I am not supportive of CHAOS. I just think that is a
terrible way to do business. But on the other hand, it is a
free country, and I just think that is a bad way to make your
point. I know you are going to make me pretty cranky if you
haul off and cancel a flight an hour before I go. This little
red-headed farmer is going to get pretty cranky over that. But
nonetheless, we have to face reality also, and I am aware of
that.
Ms. Hallett. Senator Burns, just a comment. First, with
respect to deregulation, and as a reminder, while this may not
be always the case as you go home to Montana, the price of
airline tickets, based on inflation, since deregulation has
gone down 38 percent. Prior to the most recent pilots'
agreement with Delta--and that, of course, has not been
ratified yet--wages have gone up 130 percent, so there is a
real benefit in terms of prices of tickets going down. That is
not going to remain the same, I can guarantee you, as these
labor contracts do continue to escalate.
But I would also just make the comment with respect to the
mutual assistance pact Mr. Buffenbarger commented on, because
while I believe that was ended when deregulation went into
effect, it is no longer the case today, although maybe it is
something we should look at again.
Mr. Hall. I just wanted to quickly mention, of course, we
all know that this session has nothing to do with collective
bargaining, although this sounds an awful lot to me like it is
about collective bargaining.
The Chairman. Mr. Hall, it has everything to do with labor
issues. I think we have pretty well explored this issue, this
aspect of it.
Mr. Hall. Let me just respond, then, for a moment. With
respect, I would like to just give a quick response to that. In
terms of the Railway Labor Act, I could not agree more with my
brother, and even on the side of management, talking about it
needs to be looked at. I would just suggest again that to do it
in a snapshot could be more negative than it is positive, but I
agree that some changes have to be made. I agree with my
brother, it is not necessarily in the law, it is how the law is
administered.
Senator Burns. Well, Mr. Hall, I would be interested in
taking a look at your recommendations, from all of you, on how
that should be and could be fixed to the benefit of both labor
and management and keep a vital industry viable and operating.
Mr. Smith. And the public, Senator.
Senator Burns. Yes. I look at it from the consumer's
standpoint, because I am one of those. Sometimes I think us
farmers and ranchers ought to have had the same kind of a deal,
but we do not.
Mr. Hall. Just let me respond, Senator, please.
Mr. Chairman, I hope you do not think anything I have said
is in any way disrespect to your responsibilities. We both have
responsibilities. I am doing my best to deal with it, but I
certainly do not mean any disrespect.
The Chairman. Of course not, Mr. Hall. I thank you for
that, Mr. Hall, and I try to encourage at these hearings this
free and open dialog as much as possible so everyone feels when
they leave the hearing that their views and opinions have been
well-ventilated, because that is the purpose of these. That is
one of the reasons why we always have people that may have
different viewpoints on the same panel. I appreciate it and
respect your leadership. You are one of the most important
organizations in America.
I just wanted to repeat our obligation that I feel that we
have on this very important issue. I hope that the predictions
of the experts are wrong, that this summer everything is fine,
that we have everybody able to board an airline or get to their
destination, but I think the odds are significantly against
that, not because of the labor issue so much, but because of
the other issues which we have addressed in other hearings
before this Committee.
Would any of the other witnesses like to make a final
comment before we close the hearing?
Mr. Buffenbarger.
Mr. Buffenbarger. We will be glad, Senator, to offer in
writing to your office and to the members of the Committee some
ideas and thoughts on correcting the inequities and the
obstacles that prevent a more responsible way to get to a
collective bargaining agreement and, Senator, I thank you for
conducting the hearing and inviting us to participate.
The Chairman. Thank you.
Mr. Hall.
Mr. Hall. I would just comment to say that I understand the
fears you have of what could be for the future this summer. We
assure you we are going to reach an amicable agreement with
American Airlines, and your fears will not be realized.
The Chairman. Thank you, Mr. Hall. I feel a lot better.
Mr. Smith.
Mr. Smith. Well, Senator, I would just like to reiterate, I
think the Railway Labor Act has served this country well for
many years. I think that there are some mechanisms that can be
put in place that are fair to the public, labor, and the
carriers themselves, and we will work hard on that, and I
appreciate the opportunity to appear before the Committee.
The Chairman. Thank you, sir.
Ms. Hallett.
Ms. Hallett. Mr. Chairman, as I stated in my opening
comments, we felt this was an extremely important hearing. It
is very timely, and especially on behalf of consumers of
America, who utilize the airlines, we see this as a valuable
opportunity in which to bring a dialog out in front of, not
only you and the members of the Committee, but also the public
that is, indeed, concerned. I thank you very much.
The Chairman. Thank you.
Ms. Farrow.
Ms. Farrow. I would like to once again thank you for
allowing me to participate, and we will do our best to try to
work with our management so that you are not inconvenienced,
but if they are unwilling to cooperate, it may happen.
The Chairman. I thank you, Ms. Farrow, and I hope the next
time I am on United, which I am very frequently, your
appearance will earn me an extra bag of peanuts.
[Laughter.]
The Chairman. This hearing is adjourned.
[Whereupon, at 11:50 a.m., the hearing was adjourned.]
A P P E N D I X
Prepared Statement of Hon. John F. Kerry,
U.S. Senator from Massachusetts
I'd like to thank all of our panel for being here this morning.
This hearing occurs at a sensitive moment in the aviation industry.
Passenger and freight transportation is projected to grow dramatically
over the next decade. The airlines are, albeit slowly and sporadically,
improving customer service. And an unusual number of labor contracts
have become amendable this year. It is important for the airline
industry to recognize the importance of maintaining a workforce with
high morale so that it can effectively manage increased passenger loads
and improve service. Morale is improved by making employees feel
appreciated. And making employees feel appreciated means paying them
appropriate wages and providing important benefits.
We must proceed with some caution today. I know that some employees
and their airlines have come to tentative renegotiations agreements.
But I think every one of us in this room would do well to remember that
these agreements have not yet been ratified by the full unions, and
also to remember that there are still two major airlines that could
face labor-management problems this summer.
It is my hope that we can go through this discussion this morning
in a manner that doesn't unduly influence any union member or company
executive and cause them to back away from their tentative agreements.
I don't think it's appropriate for the Congress to throw itself into
the collective bargaining process at this moment, and I hope that we
can steer clear of doing that this morning.
As we discuss this sensitive issue today, we need to remember that
the right to bargain collectively is one that organized labor earned
over a long period of struggle. Today, it is one of the most
fundamental rights of workers in this country. The collective
bargaining process is sometimes confrontational, but it ultimately gets
results for working people. That's not anything we can jeopardize, and
with many airlines and unions currently working through the collective
bargaining process, it's also not anything we in Washington should
disrupt with inflamed rhetoric.
I hope we also remember this morning that the people who make the
airplanes run have unique technical and safety skills. However, they
are far from highly compensated. We need to keep in the back of our
minds that a senior level mechanic at Northwest only makes an average
of about $55,000 per year. The average flight attendant--industry
wide--makes about $33,000 per year. Yes, pilots, who are regularly
entrusted with the lives of hundreds of people at 30,000 feet, make
more. But the bottom line is that these folks have the same interests
as the passengers at heart: They simply want the airplane to reach its
destination as safely and quickly as possible.
Thank you, Mr. Chairman.
__________
International Association of Machinists and Aerospace
Workers,
June 12, 2001
Hon. John McCain,
Dear Senator McCain: On April 25, 2001, you convened a full
committee hearing on the status of labor issues in the aviation
industry. Representatives of both airline management and employees
presented testimony and, while there was consensus about the existence
of serious problems in the airline industry, there were strong
differences of opinion as to the causes of those problems. You invited
me and other witnesses to submit proposals for changes we believe would
improve the mediated bargaining process and lead to less protracted
negotiations. On behalf of the International Association of Machinists
and Aerospace Workers. AFL-CIO's (IAM), I am pleased to respond to this
request for the 130,000 air transport workers that the IAM represents.
Let me start by stating that the IAM categorically rejects the
notion, espoused by some at the hearing, that the current problems in
the airline industry are the result of too much union leverage,
lawlessness, and greed. Rather, we think that there are three distinct
problems contributing to the current level of passenger and employee
dissatisfaction--none of which fairly can be blamed on the vast
majority of airline workers. Specifically, these problems are: (1) the
lack of airport infrastructure and air traffic control modernization:
(2) the industry's failure to provide the majority of airline workers
wage increases commensurate with their previous sacrifices, while at
the same time providing huge compensation packages to its top managers:
and (3) the fact that contract expiration dates have become meaningless
because of the ``almost interminable process'' of negotiation and
mediation established by the RLA.\1\ Since the airport infrastructure
problem has been well documented by other experts in the field, I will
focus my remarks on the compensation and Railway Labor Act problems.
---------------------------------------------------------------------------
\1\ Detroit & Toledo Shore Line Railroad v. United Transportation
Union, 396 U.S. 142, 149 (1969).
---------------------------------------------------------------------------
The U.S. airline industry has come a long way since the early 1990s
when recession and subsequent slow economic growth devastated the
bottom lines of most carriers. The major carriers, as a group, have
been steadily profitable on an operating basis every year since 1993.
On a net basis, the industry has shown profits every year since 1995
and remains profitable despite the recent economic slowdown. See
Attached Figure 1.
While a healthier economy during this period was one factor which
promoted a better revenue environment, the successful rebound of the
airline industry would not have been possible without the substantial
sacrifices made by airline employees in the way of deferred wage
increases, changes in work rules, or even outright wage and benefit
concessions. The financial sacrifices made by airline employees in the
early 1990s had an immediate effect of lowering labor costs, but it was
the commitment and hard work of workers in the industry that
contributed to the impressive, sustained rates of productivity growth
in the industry, which made the current success of the industry
possible. Attached Figure 2 shows the trend in labor productivity in
the U.S. airline industry, over the period 1991 through 1999. This
series, an index of enplaned passengers per employee, constructed using
data published by the Air Transport Association, shows a steady
increase in productivity from 1991 through 1997, followed by a leveling
off later in the decade as capacity constraints began to be reached.
Overall, throughout the period, airline employee productivity grew at
an average rate of 3.7 percent per year, using this measure.
These advances in productivity contributed to an enhanced cost
structure for U.S. carriers, which, in the context of the positive
revenue environment of the mid- to late l990s, presented carriers with
the ideal conditions for profitability. But despite these formidable
increases in airline employees' productivity, which contributed to
cumulative industry profits of over $21 billion from 1995 to 2000,
employee compensation grew only modestly over the course of the late
1990s. As shown in Figure 3, average wages in the U.S. airline industry
adjusted for inflation fell steadily from 1992 through 1996. It was
only after 1996 that average wages began to grow faster than inflation.
However, by the end of the decade, the average airline employee was no
better off in real terms than she or he was at the start. In 1991, the
average wage in the industry was $42,087 (in 1999 dollar terms) by
1999, it stood at $42,379: a real pay increase of just under $300 a
year or $5.77 per week.
Airline executives, by contrast, enjoyed a substantial growth in
compensation over this period. To illustrate, annual compensation for
the CEOs of the top five U.S. majors grew at an average rate of 20
percent during the late 1990s, jumping from just under $7.5 million in
1996 to $13 million in 1999. Figure 4. (Note that these figures only
take into account cash compensation and benefits: they do not include
stock-based compensation, such as stock grants or stock options.)
The present level of labor dissatisfaction can be directly tied to
the practice of carriers of providing huge compensation packages to
their top managers, while refusing to provide the majority of airline
workers wage increases commensurate with their previous sacrifices. To
those who would claim that airline employees are ``lawless'' or
``greedy,'' we would offer the following comparison: at United
Airlines, a top rate mechanic's weekly pay increased by $80 between
1997 and 2000. During the same period, the CEOs' weekly pay increased
by $23,000! Now in 2001, all airline employees want is simply to engage
in the process of collective bargaining to negotiate for appropriate
and fair rewards for their contributions to their carriers financial
successes.
The third, and perhaps most critical problem contributing to the
current difficulties in the air transportation industry is the ``almost
interminable process'' established for negotiations by the Railway
Labor Act of 1926. The mandatory procedures for negotiating new or
successor labor agreements consist of conferences, mediation, non-
mandatory' arbitration, and intervention by Presidential Emergency
Boards.\2\ This multilevel process was designed to avoid interruptions
to commerce, admittedly one important goal of the Act, but one that has
been used by the NMB and the current Administration--to nullify the
other equally legitimate purposes of the RLA. In the IAM's view, these
statutory delays no longer serve their perceived salutary purposes,
they are not necessarily consistent with the original intent of the
drafters of the Act, and they overlook an equally important and
fundamental right established by the law--the right of employees to
exercise self-help in support of their legitimate bargaining
objectives.
---------------------------------------------------------------------------
\2\ Sections 2, Second; 5, First; 6; 7; 10.
---------------------------------------------------------------------------
Specifically, once Section 6 notices are served, conferences
concluded, and mediation commenced, the National Mediation Board (NMB)
controls the manner in which mediation is conducted and, most
critically, the duration of mediation. This process can and most
commonly does go on for years and is not, we submit, what the drafters
intended. It is only when the NMB decides that mediation has failed
that the parties can be released and a 30-day cooling off period can
begin. But even then, Section 10 of the RLA provides one final step
within the complete control of the NMB. If the NMB concludes that a
dispute ``threaten[s] substantially to interrupt interstate commerce to
a degree such as to deprive any section of the country of essential
transportation service,'' the NMB must notify the President, who may
create an Emergency Board to investigate and report on the dispute.
Indeed, Donald R. Richberg, one of the attorneys involved in
drafting the RLA for the railway labor organizations said that the
representatives of both labor and management had conferred for the
purpose of ``creating by agreement a machinery for the peaceful and
prompt adjustment of both major and minor disagreements. . .''
(Emphasis supplied.) \3\ The NMB clearly has ignored this goal of
``prompt adjustment'' and yet has been granted virtually unreviewable
authority to structure mediation as it sees fit, including the timing
and format of meetings, the duration of mediation, the timing of a
release, and any preconditions imposed on release.\4\ In the few cases
in which the NMB's authority to hold parties in mediation has been
challenged, the courts have held that they have no authority to review
the NMB's decision to keep a dispute in mediation.\5\
---------------------------------------------------------------------------
\3\ Railroad Labor Disputes: Hearings on H.R. 7180 Before the House
Comm. On Interstate and Foreign Commerce , 69th Cong., 1st Sess. 198
(1926) (statement of D.R. Richberg).
\4\ Machinistsv. NMB , 930 F.2d 45,48 (CA DC), cert. denied, 112
S. Ct. 173 (1991).
\5\ See, e.g., Teamsters Local 808 v. NMB, 888 F.2d 1428 (CA DC
1989); Machinists v. NMB, 930 F.2d 45, supra.
---------------------------------------------------------------------------
In addition to completely ignoring the critical need to resolve
bargaining disputes promptly, the NMB and the courts also have
overlooked another essential element of the labor relations framework
established by the RLA--the right of employees to organize and
effectively bargain collectively for the purpose of improving their
working conditions. This is a right that is meaningless unless
employees have the right to exercise self-help. The Act provides that
once the parties have exhausted the major dispute resolution machinery,
a union can utilize the ``full range of peaceful economic power [it]
can muster, so long as its use conflicts with no other obligation
imposed by Federal law.'' \6\ Indeed, the Supreme Court has said that
``we should hesitate to imply limitation on all but those forms of
self-help that strike a fundamental blow to union or employer activity
and the collective bargaining process itself.'' \7\
---------------------------------------------------------------------------
\6\ Railroad Trainmen v. Jacksonville Terminal Co., 394 U.S. 369
(1969).
\7\ Trans World Airlines v. Flight Attendants (IFFA), 489 U.S.
426,442 (1989).
---------------------------------------------------------------------------
But the simple fact is that airline employees increasingly are
denied their right to self-help either because the NMB refuses to
release them from mediation or the NMB recommends and the President
appoints a Presidential Emergency Board (PEB) to resolve the dispute.
This, we submit, is fundamentally inconsistent with a statutory scheme
that does not compel either party to submit a dispute to arbitration
and permits both parties to resort to self-help as a means of resolving
collective bargaining disputes. The appointment and threatened
appointment of PEBs is also fundamentally inconsistent with the
practice in the airline industry where prior to the recent Northwest
Airline PEB appointed by President Bush, only one PEB had been
established in the past 35 years.
What is the solution? Meaningful contract expiration dates and a
``drop dead'' date by which the parties will know they must reach
agreement or be prepared to exercise their economic strength. A
procedure that moves quickly to resolution might include some of the
following features:
Within 90-days of a contract's amendable date. the parties
must engage in face-to-face bargaining;
If the parties do not reach an agreement by the contract's
amendable date, the NMB's procedures must be invoked;
If the NMB's procedures do not produce an agreement within
90 days, a 30-day cooling off period immediately must begin running:
At the conclusion of the 30-day cooling off period, the
parties must be free to exercise self-help.
While there is room for discussion about the particulars of this
proposal, it has the advantage of reducing the process to a 6-month
time period from start to finish. This type of procedure would have
enormous advantages and would serve the interests of the public, the
industry, and the air transport workforce. Specifically, it would serve
the interest of the traveling public by eliminating the uncertainty
surrounding the timing of a potential strike; it would serve the
interests of both labor and management by focusing the parties on
reasonable proposals and eliminating the gamesmanship that the current
interminable system encourages; and it would serve the interest of
employees by giving them the bargaining leverage that is implicit in
the statutory scheme.
In sum, the IAM submits that any honest and meaningful effort to
eliminate the current problems in the airline industry must refrain
from scapegoating employees, must address the inequities in employee
wages, and must impose a strictly limited timeframe for contract
negotiations. We look forward to discussing our views with you at your
convenience.
Sincerely yours,
R. Thomas Buffenbarger,
International President.
[GRAPHIC] [TIFF OMITTED] T7256.006
[GRAPHIC] [TIFF OMITTED] T7256.007
Prepared Statement of Captain David Webb,
President of the FedEx Pilots Association
Mr. Chairman and members of the Committee, thank you for the
opportunity to submit written testimony. I am Captain David Webb,
President of the FedEx Pilots Association (FPA), which represents the
3,800 pilots who fly for Federal Express Corporation.
Our members are concerned that government intervention in the
collective bargaining process could have negative repercussions, not
only at FedEx, but also throughout the aviation industry. Therefore, I
urge the Congress to resist any further Federal intrusions into
collective bargaining negotiations as dictated by the Railway Labor
Act.
Due to the time-sensitive nature of FedEx's business operations,
our pilots fly grueling schedules. In fact, we fly one of the most
demanding route structures in the world. We consistently have workdays
extending well beyond 14 hours and usually are away from home some 14
to 17 days a month.
U.S. cargo jets carry about 8 million pounds of hazardous cargo
each day, and these jets take off and land at airports in high-
population areas and in proximity with flights packed with passengers.
Since we are certified as a supplemental carrier, our pilots are not
protected to the same degree as domestic or flag carriers by federally
mandated rest requirements. Fatigue is a constant concern.
Because we do not enjoy the same protections under the Federal
Aviation Regulations as commercial passenger pilots, supplemental
pilots must rely more heavily on the collective bargaining process to
achieve the safety rules and working conditions that help ensure the
public's safety.
At FedEx--and this is surely the case with every airline--labor and
management have similar goals. While we have our disagreements, we both
want to see the Company succeed. After all, we can't prosper unless
FedEx prospers. At times, these differences of opinion are not about
compensation but are over work rules. Through the collective bargaining
process, we attempt to reach an agreement that is satisfactory for all
concerned.
It is of paramount importance that the Congress and the
Administration allow the integrity of the collective bargaining process
to remain intact. Airline management is unlikely to negotiate in good
faith if they know entering the process that labor will be unable to
seek self-help.
Many labor disputes in our industry are settled during the 30-day
cooling off periods imposed under the Railway Labor Act. But when a
Presidential Emergency Board is established, the 30-day cooling off
period is negated, preventing a satisfactory solution to the dispute
before labor reaches the self-help period. In several Supreme Court
decisions, the Court has refused to limit the range of action in self-
help on the basis that to do so would undercut a statutory role of the
self-help period.
Historically, the Executive Branch has been reluctant to intervene
in airline labor disputes by establishing Presidential Emergency
Boards. In fact, 97 percent of the disputes over the past 50 years have
been settled without strikes. We hope that the Congress and the
Administration take this amazing percentage into consideration and
recognize that the RLA system works.
No one in the aviation industry wants strikes. Not management. Not
labor. We will do everything within our power to reach a satisfactory
result so that service is not disrupted.
To ensure the integrity of the process, however, employees must be
allowed to bargain in good faith and use all the avenues legally
available to negotiate on an equal footing with management. The
collective bargaining process is one the most fundamental rights
employees have in our democracy.
The day of the company store and company housing are long gone, Mr.
Chairman, and we can all be thankful for that. America believes in a
level playing field, and, for that to work, it must be level for both
management and labor. The integrity and structure of the collective
bargaining process must remain intact. Why fix something that is not
broken?
Thank you for your consideration.