[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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                            WASHINGTON : 2003
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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

                              ----------                              

                                                                   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.


                                  
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