Against the Current, No. 23, November/December 1989
Andy Pollack THIS WAS GOING to be the one that would turn labor around, the one that
would end the long streak of defeats since PATCO. To listen to the
promises of the AFL-CIO bureaucracy on behalf of the Eastern strikers,
this time there would be–to paraphrase a slogan coined in Austin,
Minnesota—no excuses, no surrender.
As of early October the strike, after months of withering on the vine,
appears headed for defeat under the combined assaults of Frank Lorenzo
and his friends among the creditors’ committee, the Wall Street banking
and insurance community; and the courts, which continue to chop away at
Eastern airline’s assets. The pilots are beginning to drift back to work
in alarming numbers, and a movement among the more militant appealing to
the Air Line Pilots Association (ALPA) to call an industry-wide poll on
a one-day pilot strike of all the carriers was undercut by the ALPA
leadership.
Some of the Machinists’ locals encouraged their own union to pledge its
support should the pilots walk out Given that the Machinists initiated
the strike against Eastern, with the pilots and flight attendants
respecting their lines, it’s a pathetic commentary on the International
Association of Machinists leadership that militant Machinists had to
call on their brothers and sisters to support a last-minute desperate
attempt by the pilots to revive the strike.
The IAM national newspaper had pledged before the strike to pull out its
members at other carriers and even in other industries-as did the
Transport Workers Union. Neither, of course, did anything of the sort As
a consequence, having brought the Eastern strikers to the doors of
defeat, the LAM went into negotiations with Carl Icahn in an extremely
vulnerable position.
Of course Icahn had in his favor at the bargaining table not only the
looming defeat at Eastern, but also TWA Machinists’ earlier betrayal of
Icahn’s flight attendants, which highlights the larger problem lying
behind these tragic events: the sad history of disunity in airline
unionism caused by single-craft, single-employer bargaining.
This failure to develop an industry-wide approach has not only made it
harder to get other unions to support a strike of any given craft at any
particular airline; it has also perverted the demands raised in many
strikes Thus even the Eastern strike, whose strategy was forged by a
fairly militant business unionist, District 100 director Charlie Bryan,
focused on finding a white knight” to buy Eastern from Lorenzo, even if
that knight would seek concessions from the members greater than the
dragon he was supposedly slaying.
Let’s look at the historical context the legacy of decades of political
and organizational divisions among airline workers and the failure till
now to find a way to unite on an industrial basis.
Airline unions, unlike most U.S. unions, are not covered by the National
Labor Relations Act, but by the Railway Labor Act, which was set up in
the 1920s to combat a growing industry-wide, rank-and-file militancy
that broke out in nationwide strikes in 1922 and 1926. Shortly before
passage of the RLA, William 1 Foster and his Trade Union Education
League (TUEL), picking up the legacy of Eugene Debs’ American Railway
Union (ARU), had led a movement for “amalgamation” of rail labor into
one big union and appeared to be making progress toward this goal. At
the same time even the conservative craft-union leaderships, who opposed
these militant strikes, supported the “Plumb Plan,” which proposed to
nationalize the industry and put it under management of a tripartite
board with appointees from labor, business and government.
In response to both these trends Congress, with the help of the
conservative craft-union leaderships (whose fear of rank-and-file
militancy was greater than their attraction to the Plumb Plan), wrote
the RLA in order to maintain permanently single-company, single-craft
bargaining. Textbooks on railway labor law say openly that the act is
designed explicitly to “prolong” and “delay” the bargaining process in
hopes of avoiding strikes. The act provides for compulsory mediation by
a national board, and allows strikes only when that board determines no
further progress can be made in negotiations and “releases” the union
from its obligation to work.
The first unions formed among the pilots in the embryonic airline
industry of the late 1920s chose consciously to have the RLA applied to
their bargaining. As a result labor relations in the airline industry
have mirrored those in rail: each craft has its own union, each company
bargains separately, and labor unity is structurally frustrated. The
divisions fostered among airline workers by this bargaining pattern hurt
them both economically and in the fields of racial and gender equity.
Herbert Northrup, in The Negro and the Airline Industry, citing the
openly racist decisions of the RLA’s National Mediation Board, points
out that in seeking protection under the RLA the early air unions also
inevitably helped the companies replicate the racist hiring and
promotion policies long standard in rail.
Craft unionism in the airline industry also meant that workers remain
pigeonholed in narrow career tracks that are highly segregated; ramp
service workers and flight attendants don’t bid on or receive training
for mechanics’ or pilots’ jobs. Craft unionism, and its inability to
challenge racial inequity, has also meant economic disaster for white
workers within each particular job track- B-scales have been introduced
in almost all crafts at all airlines, with workers of color tending to
disproportionately fill these jobs (except among the pilots); the
companies have then used the existence of the B-scale as a battering ram
to slash A-scalers’ wages and benefits.
Whereas rail workers experienced the fallout of several nationwide
depressions, driving home the need for broader organizing structures,
the airline industry was born and grew in size during a period of
unparalleled and uninterrupted prosperity for U.S. society at large. The
recessions of the last two decades are the first major economic
challenges to the industry-, the response of the biggest owners has been
to use the new tools provided by deregulation to crush their smaller
competitors.
The flipside of airline (and private car and trucking transport)
ascendancy has been the loss of hundreds of thousands of jobs in the
rail industry, which probably explains why there have been no more
industry-wide experiments like the ARU or TUEL in rail. But the economic
prominence of the airways, and its first exposure in the 1970s and ’80s
to economic crisis, may mean that the militancy rail workers displayed
in earlier periods will be transported into the airline industry.
The peculiar conditions under which the industry was built—a high degree
of government regulation and protection from destructive
competition—further encouraged the growth of a passive union officialdom
that never looked beyond its own company walls.
Airline fares and routes were set by the Civil Aeronautics Board, and
competition tended to be on the basis of different levels of service
rather than price advantage. Peter Cappelli and Timothy Harris point out
that although “historically unions had 90% of all revenue passenger
miles” in the industry, the unions never enforced uniform contracts
across this market.(1) <#N1>
Compared with the industries in which the massive industrial unions of
the 1930s were built, economic pressures forcing the development of a
union movement conscious of industry-wide problems were less present in
the air. This led to what Cappelli and Harris describe as a “local
autonomy, single craft-single employer structure, encouraged by the RLA
requirement that representation be by craft” (They add that this
craft-minded behavior was not seriously affected by the establishment of
a “special coordinating committee of air-transport unions within the
AFL-CIO.”)
There was one exception in the pre-deregulation days to this
single-employer bargaining in 1966 the Machinists engaged in a five
carrier, forty-three day walkout This strike against United, TWA,
Eastern, Northwest and National (now part of Pan Am) ended only after a
tentative settlement was rejected by members largely because of lack of
protection from war-induced inflation, and a better agreement was
produced.(2) <#N2>
During the strike noises were made in Congress about banning
multicarrier strikes, but no such legislation was ever passed. The
impression among many airline workers is that such strikes are now
illegal, but although it is the practice of the National Mediation Board
never to “release” more than one carrier at a time from its “cooling off
period,” there is nothing in the law forbidding it from doing so.
Deregulation, which occurred in 1978, was touted by its architects as a
means to deliver a newly competitive market, with boons for the
consumer, and for the first few years a number of new airlines with
cheaper fares (but also non-union and low-wage) did spring up. But
almost all of them were soon driven under by the major airlines, which,
nurtured to their giant size by decades first of government subsidy and
then of fare and route protection, are now free to throw around their
naked economic might in an openly competitive market As a result the
industry is even more concentrated today than before 1978; eight major
carriers now control 94% of the domestic market, up from 66% a few years
ago.(3) <#N3>
Neither the recession of the early ’80s nor competition from nonunion
upstart carriers led to permanently lower fares. Fares are up 15% in the
last year alone For the entire deregulated period the major airlines’
average fares have gone from 8.5 cents per passenger mile (in 1978) to
145 (in 1989). Some 200 new carriers crowded the industry after 1978,
but now starting a national car-tier is called in the business press an
“impossible dream.”
The newfound power of the megacarriers has been used to demand and
receive concessions from the industry’s unions, the leaders of which
have claimed there is no alternative for the survival of their
individual carrier but to grant such givebacks. As Cappelli and Harris
point out, however, “by itself, competition should not necessarily lead
to pressures for concessions; after all, the highest union wages and
most stable industrial relations have historically been in industries
with competitive product markets, some of which were extremely
competitive.” But the practice has been the opposite: “Because
bargaining is carrier-specific, there is no mechanism to prevent the
different local unions from undercutting each other’s labor costs.”
Having merged with or driven under the upstarts of the early 1980s, the
remaining giant carriers are enjoying a boom period fueled by the Reagan
pseudo-recovery. Passenger-revenue miles are at an all-time high, as are
airline profits. But this situation is not a permanent one. When the
next recession comes, today’s concessions, intended to finance the wave
of mergers and to help the majors drive out the newer carriers, will
pale before the concessions demanded to help the industry out of a more
general crisis. And in such a situation the need for an industry-wide
union response will be even more of a practical necessity for workers’
survival.
Ironically, perhaps no other industry in the country is so well-suited,
by virtue of its technological basis and geographic spread, to being
organized by its workers under the umbrella of one big union. For the
same reasons few industries in the country are as ripe to be taken over
by the public and run for the benefit of workers and consumers.
As industries grow in a capitalist society they eventually reach a point
where they would function more efficiently if run as one big unit by and
for the industry’s workers and public. The airline industry reached that
point almost at its birth. The U.S. airlines in fact were only able to
survive their adolescence with the help of government subsidies for the
carrying of airmail; similar requirements of initial capital outlay and
organizational difficulties led to some European countries fostering
nationalized airlines from the start (although in the orgy of
deregulation sweeping the world many of these have since been
denationalized).
The enormous price attached to airplanes is perhaps the most glaring
example of the difficulties of running the industry as a private,
competitive system. New, bigger, more fuel-efficient, more automated—and
much more expensive—airplanes have been developed in successive waves,
and when they become available airlines scurry to buy them and rush them
into use. When this happens it creates a temporary problem of excess
capacity (that is, too many seats) and insufficient capital (not enough
cash or loans to finance the planes’ purchase). The industry as a whole
is thus even more prone than most to wildly dramatic turns from extreme
profitability to cash shortage.
One consequence of this is its dependence upon help from banks,
insurance companies and other sources of large amounts of capital. (In
Europe most recently some airlines have faced this problem by forming
consortiums, such as the one that developed the Airbus, in which private
companies from several countries were granted mammoth loans by a pool of
governments.)
The development of computerized reservations systems has made even more
obvious the objective potential for the airlines to be run for public
and not private use. These systems currently allow private airlines to
calculate with lightning speed the number of seats they need to earmark
at discount fares to attract passengers, and then to lower the number of
seats offered at those fares, or to withdraw them altogether, once a
certain level of sales has been reached.
Airlines also use their computers to engage in overnight fare wars with
each other The media often carries news of one carrier offering a
discount to gain entry into the ‘hub” of another; the other airlines
retaliate by offering discounts in the aggressive airline’s own hub at
an even lower fare, forcing it to withdraw its discount.
But in contrast to the fare wars of robber-baron days where tycoons
would spend weeks or months starving out competitors by slashing prices,
the fare wars of the airlines can take place in a matter of hours or
days, and the battlefield is on the screen of a computer these new
technological price wars are so brief that often consumers never even
have time to purchase these ‘discount’ fares before they vanish. This
capability has also become a weapon of the megacarriers against the
smaller airlines that sprang up after 1978: in the words of the former
chief executive officer of People’s Express, ‘I’m the world’s leading
example of a guy killed by the computer chip.”
The waste for consumers and labor here is obvious; the New York Times
estimated that had the proposed merger of Pan Am and Northwest gone
through, for instance, $240 million could have been saved mainly by
eliminating the duplication of corporate overhead and marketing
expenses. Working people also lose thousands of hours of their leisure
time attempting to find out the lowest fare.
Ironically, the computer technology that fosters such wastefulness could
make the industry amazingly efficient. A unified, public airline could
use this massive computer apparatus to calculate costs and schedules in
a rational, stable way, as opposed to the fluctuating anarchy now
prevalent The savings in time and resources produced by such planning
could be devoted to freeing up workers to servicing harried, lost and
frustrated passengers, and, most importantly, to increased maintenance,
repair and inspection.
Further proof of the ripeness of the industry for public takeover is its
geographic spread. The operation of the air-traffic control system by
the government as one big public unit is one confirmation of this. The
inherent economies of scale flowing from the nationwide structure of air
transport has led not only to a reconcentration of the industry in
general but to superconcentration in specific cities. The eight majors
hold 95% of the available landing slots; in addition, twenty- to
forty-year leases on airport gates are not uncommon. These slots and
gates are dominated by one or two carriers in each airport.
The General Accounting Office recently found “abnormally high fares” at
fifteen airports dominated by one or two carriers. Perhaps the most
hideous example of the wastefulness of this private monopolization is
USAir’s blackmailing the city of Pittsburgh into promising it would
destroy Greater Pittsburgh Airport when the projected new one is
completed so as to deny access to these gates to other airlines.(4) <#N4>
An industry of such size tends inevitably to become dominated by a
handful of huge employers, and deregulation, despite the claims that it
would lead to more competition, actually helps chive out smaller
carriers, because it allows big capital to throw its weight around with
greater abandon. The development of “frequent flyer” programs and the
payment of commissions to travel agents have also helped the majors in
this area. The net result is higher profits for the remaining airlines,
but higher fares for consumers. But the newfound prosperity of the
megacarriers has meant less, not more, for airline workers, as the
massive capital accrued in the shakedown of the industry is used as a
weapon against its unions.
To make matters worse, just as the domestic mega-carriers are
consolidating their shakeout of the U.S. market, they are girding up to
do battle with the emerging overseas majors. In keeping with the trend
worldwide of the internationalization of capital, U.S. carriers are both
competing furiously with foreign carriers and increasingly collaborating
with them (several Western European carriers own major chunks of U.S.
reservations systems, and more recently have begun to acquire
significant holdings in the corporate parents themselves, for instance,
KLM’s shares in Northwest and British Airways’ in United). In this
looming internationalization of the industry’s battlefront, U.S. airline
unions, which have barely begun to reach out to each other, are far
behind the airline owners in forging links with their counterparts
overseas (although some solidarity has been expressed by European
unionists toward the Eastern strikers).
The fight against the reconcentration of the industry will lead some
liberals to call for “trustbusting” measures to “enforce” competition in
the industry; others will call for mild re-regulation.(5) <#N5> The
logical solution, on the other hand, is for the industry to be
nationalized and then managed by its workers along with input from
consumers. Such a solution is not at present, however, being raised by
any significant forces, least of all the airline union leaderships, and
will probably not be raised until a leadership with an industry-wide
vision is developed.
Which brings us back to the starting point of this article, and to the
immediate tasks of supporters of the Eastern strike: the need to develop
solidarity with Eastern strikers in a way that raises for the first time
the broader challenges and opportunities of the industry as a whole.
Although the ability of Eastern itself to survive a competitive war with
the megacarriers is open to question, the current conditions of the
industry are auspicious for a goal-line defense of the wages and
benefits of the strikers. Never has more money been thrown around in the
industry either to purchase planes or to finance acquisitions, and there
is no objective reason why that money cannot be used to maintain the
past gains of Eastern’s unions.
Hiring is at an all-lime high in the industry, as are orders for new
planes. The rise of new capitalist powers in Asia, such as Japan,
Singapore and South Korea, has fueled massive expansion in U.S.
carriers’ Pacific routes.
The stock prices for the majors, especially United and Northwest, have
soared as speculators cast their eye at “undervalued” carriers and dream
up new takeover schemes.(6) <#N6> Passenger miles flown have doubled
since 1978, and the International Air Transport Association predicts
another doubling by the year 2000.
Yet this current abundance of cash in the industry has not stopped even
the most profitable from demanding concessions. American and United, for
instance, are the two most profitable lines in the industry. Yet
American has A, B, and C scales; has tried to cut its workers’ medical
insurance in recent negotiations; and uses part-timers to avoid paying
benefits. And at United a joint management-pilot defense against a
hostile takeover has meant massive cuts for all United workers, although
United is one of the airlines whose stock is currently “undervalued” in
the market and is thus viewed on Wall Street as a potential mother lode
of golden assets.
Wall Street has also taken advantage of the current boom by financing
mergers and takeovers. Sensing further expansion possibilities, it is
also calling on the government to open its coffers to the carriers.
Michael Lexton, senior vice president at the investment banking house of
Shearson Lehman Hutton, in the New York Times duly 6,1989), called for
the Federal government to assist the airline industry financially in
airport expansion, and to grant tax benefits to those (like Shearson
Lehman, no doubt) who would lend money for this purpose. He is talking
about a need for “major improvement programs” requiring “billions of
dollars.”
Cash is currently so plentiful in the industry that the Wall Street
Journal, commenting on the rash of takeovers in the airline industry,
singled out Pan Am as proof that even a supposed money-loser can find
cash when it needs to: “Pan Am, which was close to running out of cash
two years ago, is evidence that airlines have surprisingly plentiful
access to cash that can keep them operating despite heavy losses.” When
Pan Am wanted to buy Northwest, it was willing to increase its debt by
350% (from $1 billion to $3.5 billion), and Prudential-Bache Securities
and Equitable Life Assurance would have put $400 million into the
Northwest deal, with various banks contributing an additional $2.7
billion.(7) <#N7>
The most obscene example of the availability of funds, even to the
industry’s “losers,” is the announcement by Lorenzo’s Texas Air of a
$2.8 billion purchase of Boeing jets. In the face of this purchase,
Easter’s presence in bankruptcy court is all too reminiscent of the kid
who murdered his parents and then threw himself on the mercy of the
court as an orphan.
There is no reason the industry’s workers cannot share in the current
prosperity. Furthermore, their only protection against massive cuts when
the bottom does fall out in the boom-and-bust cycle is to organize as
one in times of opportunity like today.
But unless the rank and file of the industry develop an alternative
strategy to that of the leadership, this period of opportunity will be
lost Almost every week the newspapers report the inability of the
airlines to find enough workers in all crafts to meet their needs, yet
the unions’ officials have not taken advantage of this labor shortage to
draw the line against concessions in the industry, much less fight for
higher wages and benefits.
One of the demands of those Eastern pilots who pushed unsuccessfully for
a national one-day “suspension of service” was the right of Eastern
pilots to “go with their planes;” that is, as Eastern sold planes to
other unionized carriers the pilots should be hired by those carriers.
Such a demand points in exactly the necessary direction in this time of
industry reorganization: rather than seeking white knight corporate
saviors, or phony employee stock ownership plans, airline workers need
an industry-wide approach to maintaining, and eventually improving, the
existing level of jobs, wages and benefits, regardless of who owns any
given carrier at any one time, or of any given carriers’ current
profitability. Adopting the demand of “portability” of jobs could be
supplemented by drawing up a uniform standard for all airline workers
below which wages and benefits will not be allowed to decline.
Rank and filers participating in a discussion of a new approach would
have to focus most immediately around the goal of regaining the jobs of
the Eastern workers (and the recent announcement that all the IFFA
strikers fired by Icahn three years are now back at work should
encourage us to maintain this fight). In the process of doing so,
discussions can be held about developing an industry-wide standard for
wages, jobs and benefits about developing common bargaining strategies
and strike deadlines, common expiration dates for future contracts, and
eventually one contract for the whole industry. The end goal of these
discussions could be a study of the possibilities for organizing one big
union for all airline workers.(8) <#N8>
Developing industry-wide goals would help shift the focus away from
individual industry tyrants. No one will dispute that Lorenzo, Icahn,
Crandall (of American), Plaskett (of Pan Am) and the rest are all
vicious, greedy individuals; but more important than their individual
tyranny is their common cooperation in attacking airline labor as a
whole, in conjunction with the rest of the corporate community. The
banks and insurance companies that the Eastern flight attendants have
exposed through their work with Corporate Campaign as backers of
Lorenzo—Equitable, John Hancock, Prudential, J.P Morgan and
TIAAJCREF—are also assisting other airlines in their anti-labor drives.
Against this unity of airline employers and their financial backers,
airline workers must forge their own unity. The AFL-CIO has defaulted on
its promise to draw the line against anti-labor attacks at Eastern. But
the courage of Eastern strikers should inspire workers throughout the
industry and the country both to maintain their defense of the strikers’
rights, and to begin to examine what it would really take to win future
battles against all the Lorenzos of the world. Notes 1. Cappelli and Harris, Monthly labor Review, Washington, D.C.: Bureau
of Labor Statistics, June 1985. 2. During this strike the LAM took great pains to dissociate its strike
from any attempt to interfere with the air transport of troops or
goods to the war effort in Vietnam; in fact the union tried to draw
a link between the anti-labor views of Sen. Wayne Morse, author of
legislation seeking to break the strike, and his stand against the
Vietnam War. Ironically, two decades later, the IAM is one of the
leading anti-militarist unions in the United States while former
congressional “doves” of the Vietnam period have in general
reassembled behind U.S. militarism. The fact that the IAM bed its
fortunes openly in the postwar period to the U.S. war- driven
1wospeiity—and not to a broader social movement;, here and abroad,
against capital—is part of the reason It, along with the other
airline unions, was unable to develop a winning strategy when that
prosperity fell apart. 3. Although the phenomenon of deregulation and the merger and
acquisition craze lend this shakeout a unique flavor, the shakeout
of the airways and of other U.S. industries in the 1980s cries out
for comparison with similar episodes in the history of capital, when
crises of profitability have also led, by other means, to the
squashing of smaller, less efficient firms. 4. A particularly perverse consequence of this remonopolization under
private ownership is the Inconvenience caused consumers by the ‘hub
and spoke’ system, which means airlines will try to get passengers
to backtrack hundreds of miles through their hubs in order to reach
their final destinations. 5. Shortly after the Eastern strike began the Wall St reef Journal
pointed out that several of Loeenzo’s key advisers, including his
right-hand man Phil Bakes, were former staffers of Sen. Ted Kennedy.
The latter of course has long been the darling of liberal union
leaders such as the IAM’s William Winpisinger, even though Kennedy,
with the help of Bakes et al., was the main congressional architect
of the deregulation that is now savaging their members. 6. Even “losing” corporate raiders like Marvin Davis are able to reap
million-dollar fees or profits when their takeover bids “fail.” 7. This access to ready cash has not stopped Pan Am from refusing to
settle with its reservation agents, represented by the Teamsters,
who have been working under an imposed contract since February 1988.
Old-timers suffered an 8% pay cut;, elimination of vacation and
holidays, and total elimination of their pension plan; B-scalers now
start at $6.05 an hour (down from $8) and take fifteen years to
reach the A-scale. 8. A few years ago a Coalition of Unions of Flight Attendants was
formed, which has engaged in joint lobbying in Congress for uniform
rules on scheduling of flight crews to address health and safety
concerns. Until now, because of jurisdictional jealousies, the
Coalition has not developed into a means to unify the bargaining
struggles of flight attendants. © 2020 Against the Current November-December 1989, ATC 23