H.R. 4766 a Major Win for Airline Employees, Language Will Prohibit Airlines from Breaking Contracts, Dumping Pensions on PBGC and Taxpayers
In a major victory this week for organized labor, airline employees and American taxpayers, the House Subcommittee on Commercial and Administrative Law has adopted language of an amendment into H.R. 4766 that will preclude U.S. airlines that are in bankruptcy from abrogating labor agreements and dumping pensions onto the Pension Benefit and Guarantee Corporation (PBGC) and ultimately the U.S. taxpayers.
The amendment, offered by Congressman Dan Maffei (D-NY) was passed in committee on an 8-4 roll call vote, contains language offered by the Airline Division of the International Brotherhood of Teamsters and supported by the Coalition of Airline Pilot Associations.(CAPA) Committee Chairman John Conyers (D-MI) and seven committee members, who are also members of the Judiciary Committee, voted in favor of the bill.
Under current practice, when an airline files for bankruptcy protection, management has the ability to unilaterally abrogate the existing labor contracts and may terminate employee pensions at will, despite the potentially hundreds of millions of dollars that employee groups may have in the plans or turn the plan over to the PBGC, an arm of the federal government, leaving the U.S. taxpayers to foot the bill for plans that were underfunded by the companies. Unions have been powerless to fight this provision of the bankruptcy code despite efforts to change it that have been ongoing for years.
In a press release, Captain Paul Onorato, president of CAPA said, “CAPA is pleased that Chairman Conyers, Chairman Cohen, and Representative Maffei voted to level the playing field for airline labor negotiations.”
The House Judiciary Subcommittee on Commercial and Administrative Law held a hearing on this issue in December of 2009 where Captain Chesley “Sully” Sullenberger testified about airline bankruptcy and the effects it has on the professional pilot. More than 170 airline bankruptcies have cost over 150,000 jobs and 180,000 pensions. Captain Sullenberger said at the hearing, “For professional pilots to have their retirement commitment broken – in large part because they do not have the same rights during a business bankruptcy as every other organized employee in the United States – is an injustice that needs to be rectified.”
The amendment language, written by the Airline Division and now contained in H.R. 4766, would no longer allow airlines to use the Bankruptcy Code to unilaterally reject a union contract. They would be required to follow the procedures outlined in Section 6 of the Railway Labor Act.
“Just like the railroads, the airline industry is unique,” said Captain David Bourne, Director of the Airline Division of the Teamsters. “Railroads have never been able to use the Bankruptcy Code to reject their collective bargaining agreements. That is because Congress did not want to upset and destabilize the special and delicate bargaining processes required by the RLA which governs railroad bargaining. Airlines are also subject to those same bargaining processes under the RLA. In adopting this amendment, Congress has now recognized that the inconsistent treatment of airline contracts under the Bankruptcy Code has been unfair and has helped to destabilize the airline bargaining process.”
Bourne went on to say, “Since the use of bankruptcy laws to gut airline employee contracts and pensions by Frank Lorenzo in the early 1980’s, this change has been needed to protect the rights of hard working airline employees. We have seen it happen at so many airlines since then and unknown hundreds of thousands of men and women have seen decades of sacrifice they put into their retirement pensions vaporized at the stroke of management’s pen. When this bill is passed, those days will be over.”
“We are focused on protecting the rights of all employees, regardless of union affiliation. This is a major game changer; and when passed by Congress, a truly incredible win for all airline employees. We call upon Congress to act quickly and decisively to pass the comprehensive Bankruptcy legislation that is now before them,” Bourne concluded.
FAA Proposal on Flight and Duty Limits met with Skepticism by Pilot Unions, Experts
With the publication last week of the FAA’s Notice of Proposed Rulemaking (NPRM) addressing newly proposed Flight Time and Duty Time restrictions on airline pilots, opposition and concerns are being raised about the proposal by major industry pilot unions.
The proposal was an outcome of the crash of Colgan 3407 in Buffalo, NY over a year ago, was spurred on by the families of the crash victims and revelations about the lack of rest being identified as a contributing factor. Public and congressional uproar over the issue; something that pilot unions and the National Transportation Safety Board (NTSB) have expressed concern about for decades, led to congressional hearings that forced the FAA to finally address the problem. It was only after the FAA was called to task at the hearings over their lack of movement on the matter that an Aviation Rulemaking Committee (ARC) was convened. Made up of industry and pilot union representatives, the committee presented the proposal recently to the FAA who has now published it for public comment.
In a press release on Thursday, the Coalition of Airline Pilot Associations, an industry group representing many U.S. carriers including American Airlines, USAirways, UPS, Atlas Air, Southwest and many others noted that, “Pilot fatigue is an ever present threat to the safety of traveling public and has been identified on the National Transportation Safety Board’s “Most Wanted” list of regulatory changes for two decades. Logical regulatory reforms must take precedence with government regulators over the economic interests of the airline industry.”
Captain Paul Onorato, president of CAPA was quoted in the press release saying, “You cannot make a pilot less fatigued by requiring them to fly more hours.”
Reached for comment, Airline Division Director Captain David Bourne stated, “I applaud the ARC for their work; however it does not go far enough in properly addressing the issue of pilot fatigue that results from flight time and duty time rules that are constant re-interpretation at the whim of airline managements.” “Fatigue is fatigue, and it makes no differentiation between good weather or bad, passengers or cargo, civilian flying or flying our nation’s troops. This is about the safety of passengers and flight crews and it’s time to put that ahead of industry politics,” he concluded.
The proposed rule has caught the attention of industry safety experts. In a recent letter to Administrator Babbitt, Captain Chesley “Sully” Sullenberger, the Captain of the USAirways flight that made the emergency landing in the Hudson River stated, “The stated purpose of the rulemaking process was to enhance the safety of the traveling public by reducing pilot fatigue. This NPRM does neither. As a professional who has handled an extreme emergency situation, with no margin for error, I cannot stress strongly enough that these issues must be addressed. My First Officer and I had only 208 seconds from the moment we hit the birds until we landed-there was simply no time for fatigue.”
Gulfstream Negotiations Continue
After several days of preparation, the union Negotiating Committee met with management negotiators on Wednesday, Thursday, and Friday of this week. Management has continued to work with the union to improve the clarity of the Contract, and it is hoped that this will help as the parties move towards the more difficult sections of the contract.
Increasing Number of Airline Crashes Having Negative Affect on Insurance Premiums
The high number of recent aircraft crashes around the world in the past few months is creating a spike in aviation insurance premiums.
The latest in the series of plane accidents was the UPS Cargo plane crash in Dubai last week and recent crashes involving an Air Blue plane crash in Islamabad, Pakistan and an Air India Express flight disaster in Mangalore, India. More than 300 passengers died in the two passenger plane crashes, putting substantial pressure on aviation insurance, which covered the planes.
In an industry already suffering profitability problems based on fluctuating fuel cost and an unstable world economy, the aviation insurance market has also seen its problems because of the number of crashes and incidents worldwide.
London based Lloyds insurance, one of the world’s best known and respected operators, recently sold off Lloyds Aviation, the second largest aviation insurer in the London market for £2.6 million to the Charles Taylor Group PLC. This ended the famous insurers 50 year presence in the market where they provided aviation loss adjusting and surveying in the international insurance market.
UAL Discussions Continue, Tentative Agreement is reached on Training
Negotiations continued this week at the WHQ training center in Chicago, with the first day devoted to Joint Board of Adjustment (JBA) hearings.
Contract discussions commenced on the 14th with the Company passing a counter proposed Training article to the Union, and following additional discussions, the parties reached agreement. With the inclusion of language from the Continental Agreement, this article represented a positive fundamental shift in the way training will be administered. In addition to the T/A, a new Letter of Agreement, “Covered Employees Working as Full Time Trainers” was signed by both parties.
The remainder of the week’s negotiations focused on Article VI, Hours of Service. Extensive discussions were held on this article which covers all aspects of shift work, including hours and bids.
Negotiations will continue next week in San Francisco, beginning on September 21st.
Week In Review News Items
Labor Developments
Two union groups on Thursday rebuked the government's proposal to reduce on-the-job fatigue among the nation's pilots, a potential roadblock to the sweeping attempt to revamp pilot schedules…Southwest and the union representing its flight attendants said Wednesday that they had reached a tentative agreement on pay, rules and working conditions tied to the use of larger aircraft on Southwest flights.
Now that DOJ has signed off on the merger between United and Continental, the real work is about to begin. One of the toughest tasks, analysts said, will be getting the unions on board with the integration plan…customer service staff at British Airways have agreed to one year pay freeze, and to 500 job losses. The agreement with trade unions Unite and GMB means some 2850 staff based at Terminals 3 and 5 at Heathrow will take on new working practices.
Airline Industry Finances & Structure
Airline balance sheets have improved this year in part because of a sharp increase in business class fares, IATA said on Wednesday. IATA estimated that average ticket costs for business class flights have risen 8 percent in the first half of 2010…Aer Lingus can survive as a standalone airline but it might prefer to sell a stake to a larger player to take part in the sector's consolidation wave, its chief executive told the journal Aviation Week…shareholders of United's parent company and Continental Airlines are voting on a deal that would create the world's biggest airline. Results of voting that started in late August will be announced today.
China Airlines, Taiwan's largest airline, will join SkyTeam, strengthening the global airline alliance's Asia Pacific network, Air France-KLM said on Tuesday. The addition of China Airlines comes just a few months after China Eastern agreed to join SkyTeam, which has 14 members including Air France-KLM, Delta Air Lines and China Southern Airlines…United and Continental agreed on Monday to maintain a hub in Cleveland for at least five more years, as Ohio Attorney General Richard Cordray ended his antitrust investigation of the mega-merger.
When discussing mergers and consolidation, one of the constant refrains heard from opponents is that competition will be limited and these quasi-monopolies will result in higher consumer prices. That position is becoming less tenable as the process unfolds, partly because the present U.S. situation already implicitly grants regional monopolies and, increasingly, those fortresses are being challenged.
Miscellaneous
Despite lower fares, passengers consistently rank discount airlines higher in quality and service than better-known traditional carriers, a USA TODAY analysis of government and consumer survey data since 2004 shows…U.S. airlines were late more often in July than a year earlier, but there were only 3 planes stuck for more than three hours, the government said Monday…McDonald's Corp., Ingersoll-Rand Plc and Goodrich Corp. travel managers joined almost 290 companies in urging broader disclosure of airline fees for bags, seat assignments or changing tickets, a travel group said.