How unionism has impacted the Airline industry in US
Penn State Harrisburg
In the wake of a sizable slump in demand driven by economic downturns, terrorism attacks (especially the events of September 11, 2001) as well as increased competition from low-cost carriers, many incumbent U.S. airlines have been attempting a fundamental restructuring of their operations. Many would argue that a central element in this restructuring should include an overhaul of the labor-management relationship. This paper presents information regarding labor unions in the airline industry of the US, in order to analyze and then summarize main points of how they have impacted and affected this industry overall.
1. Overview of the air transportation sector
In spite of many challenges, air travel remains one of the most popular transportation mean in the United States, expanding from 172 million passengers in 1970 to 757 million passengers in 20081 (Bureau labor of statistics, 2000). There were at that time, 19 mainline air carriers that use large passenger jets (more than 90 seats); 67 regional carriers that use smaller piston, turboprop, and regional aircraft (up to 90 seats); and 23 all-cargo carriers1 (Bureau labor of statistics, 2000). Mainline carriers are represented by network carriers, which have their own "hubs” which serve in the most efficient manner the greatest number of passengers and by low-cost carriers, which generally don't have a hub and only offer flights between a limited number of cities. Another type of passenger airline is the regional carrier, that operates short-haul and medium-haul scheduled airline service and connects smaller communities with larger cities and hubs. Cargo can be carried in cargo holds of passenger airlines or on aircraft designed exclusively to carry freight. Cargo carriers in the air transportation industry provide only air transport from an airport near the cargo's origin to an airport near the cargo's destination. Since 2000, the airline industry of the US has been hit from all sides. Thus, since 9/11, air travel has decreased dramatically and the US economy has been mired in a recession. In an effort to increase air travel security, the Federal government has required airlines to pay security taxes and to upgrade security measures, without providing any funds for these critical public safety improvements. The industry has also been hit with skyrocketing fuel and insurance costs. While demand for airline travel has declined, due to the combination of a recession, fears of terrorism and the war with Iraq, airline capacity has not, creating a tremendous overcapacity in the industry. Thirteen airlines have filed for bankruptcy in the past two years, yet there is still overcapacity and all of these factors have contributed to the crisis the industry is in2 (Joan Lowy, 2009). The airline crisis has large implications for the labor movement as a whole, since the aviation industry has one of the highest union densities of any industry in the country.
2. Legal considerations
The industry evolved in a heavily regulated market. The Air Commerce Act of 1926 gave the Department of Commerce regulatory authority over the industry. But most of its efforts were focused on safety. Economic regulation began with the establishment of the Civil Aeronautics Authority in 1938, which later became the Civil Aeronautics Board (CAB). CAB had tight rein on market controls of entry, exit, pricing and routes. CAB set fares based on distance traveled and forbade discounted fares. This left the carriers to compete almost exclusively on service. Airline unions, sensitive to the labor advantages of these regulatory controls, leveraged these protections to insulate their wages and working conditions from market variances and to make inroads into organizing a significant portion of the labor market 6 (Clark, 2002). The Airline Deregulation Act of 1978 lifted the route and pricing...
Please join StudyMode to read the full document