Pilots and Seniority

I found a blog being maintained by an American Airlines pilot yesterday that was quite the experience.  Unlike most, this pilot was an ardent defender of Tom Horton and credits him with moving the airline forward through the large aircraft orders made and for making a case to grow the business to the board of directors all prior to Gerard Arpey’s resignation.   This blogger also contends that a merger will merely bring the America West / US Airways cat fight over seniority into the Allied Pilots Association and that stand alone is a better thing for pilots.  There is more there but we’ll leave it alone now.

I have a few specific and general thoughts here.

First, crediting Tom Horton with the aircraft order strikes me as overly generous.  More so the financing as being innovative.  To be true, things were negotiated in these orders that have the manufacturers generally providing financing for these purchases and I’m entirely unsurprised at this since the order was largely a historic one and getting a piece of it required the manufacturers to make an attractive deal.  But if we’re to credit Tom Horton for this order, let’s also credit him for the company devolving into bankruptcy as well.  We tend to pin that on Arpey alone and the truth is that Tom Horton was as much a right hand man in the operation of the airline (often to the exclusion of many other capable executives such as Dan Garton) and if we’re handing out credit, let’s hand out all the credit.

As for being the man to grow the airline, I would also point out that Tom Horton has possessed enough influence at the company pre & post Gerard Arpey to have already brought a great deal of influence into this direction.  He did have Gerard Arpey’s ear and let’s not portray the relationship that existed between the two as fundamentally different.  It just wasn’t.  Again, if Tom Horton was a visionary, his vision appears to have been ignored entirely until Arpey’s departure and we know that that just isn’t true.

Let’s also note that Tom Horton served as CFO for AT&T until it was purchased by SBC (Southwestern Bell).  During his time there, he essentially presided over AT&T not succeeding and needing a merger to survive and hence the merger/acquisition by SBC.  It has long been said that Horton realized he wasn’t going to replace the CEO and that current CEO of SBC, Randall Stephenson, had the inside track.  This in fact turned out to be true when Stephenson replaced former SBC/AT&T CEO Ed Whiteacre.

Enough of that.  The truth is that as I think of the conversation as it surrounds this merger between US Airways and American Airlines, it always boils down to arguments about seniority amongst labor.  I agree that integration of work forces is an important element in this merger and any other mergers among airlines.  The idea that a smooth integration is the norm of a successful merger is not correct, however.

We tend to look at the Delta/Northwest merger as the way it ought to always be done.  In truth, I wish it were that way but that was a very, very special case and even in that one the pilots nearly did the merger in but for the leadership of Lee Moak in that process.

In reality, mergers between airlines are almost always messy.  Integration is always difficult.  Successful airline mergers shouldn’t be measured in those terms.  In fact, I would argue that if the merger grew the airline, its revenues and its profits after a 5 year period, it was successful.  Messy or not.  (You’ve still got time United but the clock is ticking.)

The labor issues always revolve around seniority and a system of union representation that dates back more than 50 years.  The union system and its focus on seniority has made life exceptionally difficult for those employees for decades.  Today, among almost all legacy airlines, there is no job portability.  A pilot who merely finds dissatisfaction with his employer cannot leave and go to another airline without starting literally at the bottom-most rung again.  This is a major barrier to portability.

And if those same employees had some portability, I think that we would discover that airlines wouldn’t be in such a bad financial position in terms of labor costs and airline employees would actually be able to “vote with their feet” when an airline management treated them poorly.

Mind you, I’m not arguing against unions.  They’re the choice of the labor force.  I’m arguing against the idea that seniority and job security should be the overwhelming issue in representing their interests.  At the end of the day and in light of the furloughs and layoffs and ever increasingly slowed advancement that exists at an airline, is seniority really providing job security anymore?  And how about job satisfaction?

At the end of the day, airline employees love their inherent jobs but they’re also inherently disssatisfied with their management, their wages and their quality of life.  The roadblock to fixing those dissatisfactions is seniority.  This makes me wonder when someone is going try to come up with a better model for the future.

Wouldn’t it be great if an airline Captain with Airline A could quit a bad job and go to work for Airline B and be compensated on the basis of his experience and qualifications immediately instead of having to sit at the bottom of a seniority list and forever be “beneath” his peers who started at Airline B at the beginning of their careers?

And wouldn’t it be interesting to see airlines compete for airline pilots on the basis of that experience?  Remember that a desirable airline pilot isn’t just one with 10 or more years of experience.  It’s a person who has shown good judgement, safe judgement, efficiency and a can do attitude.  If I’m starting an airline, that’s who I want.  And an airline startup can’t really get those guys.  They’re stuck with the airlines they work for by and large.

Seniority imposes too much pain on both the employee and the employer at this stage in the game.  It is hurting competitiveness among airlines and impacting employees/labor in a very negative way over the long term.

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