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July 2003, Vol. 126, No.7
Labor contract negotiations in the airline industry
Andrew von Nordenflycht and Thomas A. Kochan
In the wake of a sizable slump in demand driven by the confluence of economic downturn, terrorism, war, and disease, as well as increased competition from low-cost carriers, many incumbent U.S. airlines have been attempting a fundamental restructuring of their operations. Arguably, a central element in this restructuring involves labor contract negotiations. Yet, even before the events of September 11, 2001, observers perceived strains in the industry’s labor relations system, claiming that contracts were taking longer to negotiate, rank-and-file rejections of tentative agreements were more frequent, and job actions were on the rise. Not surprisingly, then, calls for reform of the Railway Labor Act—the law that has governed airline collective bargaining since 1933—have gained momentum.
Recent work has demonstrated that carrier-level differences in the duration of contract negotiations are associated with the quality of the labor-management relationship and, consequently, with airline productivity, customer service, and profit-ability.1 Although the mechanisms of cause and effect are complex, changes in the regulatory framework could enhance the industry’s productivity and level of service. However, debate on reforming the Act has been based largely on anecdotal evidence regarding the duration of contract negotiations and the sources of variance in that duration. To date, there has been no systematic analysis of the actual length of time required to reach agreements in airline labor negotiations and only limited published information on how airline labor disputes are actually resolved.
This article presents and analyzes data on contract negotiations between the Nation’s largest air carriers and unions from 1982 through 2002. Descriptive statistics are given on the average duration of contract negotiations and the relative frequency of mediation and work stoppages; these averages are compared against National Labor Relations Act averages; and the effect of industry- and carrier-level factors that might be expected to account for variation in the duration of negotiations across carriers and over time is analyzed.
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1 See Jody Hoffer Gittell, Andrew von Nordenflycht, and Thomas A. Kochan, "Mutual Gains or Zero Sum? Labor Relations and Firm Performance in the Airline Industry, "Industrial and Labor Relations Review, in press; and Thomas A. Kochan, Andrew von Nordenflycht, Robert B. McKersie, and Jody Hoffer Gittell, "Out of the Ashes: Options for Rebuilding Airline Labor Relations, " Massachusetts Institute of Technology, Sloan School of Management Working Paper, 2003.
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