Monterey, CA
In recent months, a number of dangerous and counterproductive proposals have surfaced in a misguided attempt to promote competition in the air transportation industry. The AFL-CIO supports assuring consumers and businesses fair and competitive air transportation. This goal cannot be achieved by a policy of punishing established air carriers who respond to pressure from new entrants that too often compete by reducing safety standards and paying substandard wages.
Many carriers were able to survive deregulation only by working with their unionized employees to restructure the workplace, alter wages and benefits, and reform work rules and procedures. In 1993, Northwest Airlines, on the brink of financial collapse, turned to its workers whose cooperation allowed management to restructure debt and avoid certain and potentially disastrous bankruptcy proceedings. In 1994, pilots, mechanics and fleet service employees at United Airlines became part owners by exchanging a 55 percent stake in the company for almost $5 billion worth of concessions. At TWA, employees have worked with management and restructured their contracts more than once to help this ailing carrier survive continuing financial turbulence.
Airline employees who retained their jobs during deregulation became partners with and investors in their companies. Now these investments are starting to pay off as airline corporations are once again flying high with record revenues and profits. Unfortunately, some want to ignore recent history and alter the playing field with little regard for what the changes mean for workers whose sacrifices allowed this industry to become the economic success that it is today.
This point has been raised time and time again by unions that have voiced their opposition to the Administration's proposed policy regarding unfair exclusionary conduct — so-called predatory pricing guidelines. These guidelines inappropriately favor one segment of the industry — new entrant carriers — at the expense of established airlines and their workers. By restricting the ability of major carriers to aggressively respond to low-fare salvos into the marketplace, the guidelines favor new entrant carriers whose low fares are achieved by paying substandard wages and benefits and outsourcing safety-sensitive aircraft maintenance functions. Our government should not respond by rewarding these carriers with a policy-imposed competitive advantage.
To compensate for their higher fixed costs, which include good wages and benefits that support working families, established carriers have complicated fare structures. In order to compete effectively, these fares need to be flexible and subject to change. Instead of recognizing this competitive reality and the fact that these carriers support the highest safety and worker compensation standards, the guidelines punish major carriers who defend their routes and market share. Meanwhile, new entrant carriers are left free to use their lower wage scale to compete in a marketplace that is artificially protected by a government policy that actually deters vigorous competition.
The AFL-CIO will voice its formal opposition to the Department of Transportation's proposed policy statement regarding unfair exclusionary practices.
The AFL-CIO will work with interested affiliates to educate policymakers about the impact the 1978 decision to deregulate the industry had on the aviation workforce and the impact that subsequent government action would have on these same employees.